asked the Chancellor of the Exchequer what evidence is required by the Commissioners of Inland Revenue to prove the existence of dependent relatives abroad for whom United Kingdom Income Tax allowances are claimed.

This varies with the allowance claimed. For wives and children marriage and birth certificates are normally called for. Where it is not practicable to insist on such certificates, alternative evidence such as an affidavit sworn by the dependant before a local magistrate is required; and a similar test would normally be applied for other dependent relatives abroad.

Is my hon. Friend aware that some immigrants seem to have an inordinate number of dependent relatives still living abroad and that some solicitors who swear affidavits may not be of such impeccable standards when they live abroad rather than here? Will my hon. Friend urge the Chancellor to look into this matter from the point of view that some immigrants seem to be paying no tax at all due to this cause?

I can assure my hon. Friend that the Inland Revenue has considerably strengthened its defences against unreasonable claims in recent years.

asked the Chancellor of the Exchequer what decision has now been reached regarding the desirability of defacing bank notes, due for destruction, before they are sent to London for pulping.

This matter, and the whole problem of the security of bank notes in transit, is under continuous examination by those concerned.

Would my right hon. Friend ask the Bank of England or the committee dealing with it to deal with the matter quickly because millions of used banknotes are coming back by train each week to London? There is a simple machine which can be used by provincial banks for defacing them, and in view of the two robberies last year in Aylesbury and Cardiff of over £2½ million, should not this machine be brought into use quickly?

I will certainly call that to the attention of those concerned.

asked the Chancellor of the Exchequer, following the proposals in the Industrial Training Bill, what new steps he is taking to ensure that all industrial civil servants under 18 receive both day release and suitable industrial training.

Day release is already an integral past of the training of apprentices who are about two-thirds of the total of young people in Government industrial establishments, and Departments are progressively recruiting more apprentices. Other young people are given suitable industrial training and are encouraged to continue their education by day release up to and sometimes beyond 18.

What steps are being taken about the one-third—the unskilled and semi-skilled workers—so that they will attend day release up to the age of 18 and will thus get much better training than they are now getting in some quarters of the Civil Service?

I can assure the hon. Gentleman that Government Departments are concerned and do their level best. We take the view that often better results are got by persuasion than by compulsion; and persuasion is certainly being used.

Is the Financial Secretary satisfied that there are enough establishments giving day release training to make this completely operative throughout the country?

I would require notice of that question.

asked the Chancellor of the Exchequer when he will publish the yield of the speculative gains tax for the year 1962–63.

Figures should be available in about a year.

Is the Financial Secretary aware that that is a long time to wait for the results of this very important tax? Is he further aware that in some quarters in the City it is now beginning to be realised that this tax has been of advantage to the speculator, who can write off his losses against the payment of tax under this head? Will he ask his right hon. Friend to look very closely at it again in the coming Budget?

I can certainly promise continuous examination of this and all forms of taxation, but, in response to the earlier part of my hon. Friend's supplementary question, I am afraid that this is the way in which the system works.

Is not the real position that the tax results in no revenue and that it does not diminish in any way the number of speculative transactions? Will he not now agree that it was a sham that should never have been introduced in the first place?

I can only advise the hon. Gentleman not to speculate in advance of knowledge of the facts.

Will he tell us, since the Treasury must have collected some revenue already, how much has been collected?

That is not the Question on the Order Paper. Perhaps the hon. Gentleman would care to study the Order Paper before asking supplementary questions.

asked the Chancellor of the Exchequer what is the total number of demands for Schedule A Income Tax that have been sent out for the current year.

About 3¾ million.

Is the hon. Gentleman aware that considerable confusion and concern have been caused by the receipt of demands for Schedule A, even though in some cases they have been accompanied by an explanatory memorandum? In the hope of clearing up this confusion, may I ask two simple questions? First, is it true that in the current tax year the owner-occupier of freehold premises no part of which is let has no liability to any Schedule A tax, and, if so why have the demands been sent? Secondly, is it not correct that after 6th April, 1964, no one will be liable to any Schedule A tax and that after that date Schedule A tax will be finally abolished?

If demands have been incorrectly sent, that is quite wrong and apologies will be made in any such cases. I should like to know of any such case, and perhaps I may have details of it. In response to the second question, perhaps I can best help the hon. Gentleman by referring him to my right hon. Friend's statement of 3rd April, 1963, column 457–8 of the OFFICIAL REPORT. If he remains in doubt, having read that original source of information, perhaps he will communicate with me.

When letters are written to the collectors of taxes on matters arising out of demands for Schedule A, will my hon. Friend encourage them to reply to such correspondence?

So far as I know, they do, but again, if my hon. Friend has any case in mind, I am sure that I can be of help to him if only he will tell me what it is.

Is it not the case that owner-occupiers in Scotland who pay feu duty will continue to pay Schedule A tax?

The position after this year will be that the owner-occupier paying either ground duty or feu duty will pay the full amount of that ground rent or feu duty, without deduction of tax, to the ground landlord who, in his turn, will be responsible for any tax that properly falls upon it.

Is it not also the case that the person who pays the ground rent will not be able to regard it as a charge on his income next year and, to that extent, will be worse off than he has been so far?

Rent has never been regarded in the light in which the hon. Gentleman is apparently now suggesting it should be regarded. It is a perfectly proper expense incurred by people on whom it falls to pay it, and there are no grounds for thinking differently now.

asked the Chancellor of the Exchequer what proposals he has for transferring part of the present cost of the educational services borne by local authorithes to the national Exchequer.

None, Sir.

Is my right hon. Friend aware that, because of the massive and welcome increase in educational expenditure, the effect on the rating system is becoming more and more disproportionate? Does he not agree that eventually much more of the cost of education must, in all conscience, be borne at the centre?

As my hon. Friend knows, we have decided to undertake a comprehensive review of central and local government financial relationships, and I do not think that I should anticipate the result of that review.

asked the Chancellor of the Exchequer if he will cause instructions to be issued to local inspectors of taxes that taxpayers who have referred their problems and grievances to their Member of Parliament for investigation are not for that reason to be subjected to discourtesy or obstructiveness in their dealings with local officials of the Department of Inland Revenue.

No, Sir. Inspectors of taxes and their staff have standing instructions to help taxpayers in every reasonable way, and I see no justification for the allegation that is implied in my hon. Friend's Question.

As my hon. Friend has been good enough to say that he sees no justification for the allegation, may I refer him to correspondence which I had occasion to have with his predecessor and in which there is given a very clear example of this sort of thing?

I understand that my predecessor, now my right hon. Friend the Minister of Health, sent a full reply to my hon. Friend explaining that no discourtesy was intended.

asked the Chancellor of the Exchequer what replies he has given to the proposals he has received from the Public Service Pensioners Council for the adjustment of pensions at 1st January, 1964.

My right hon. Friend the Chief Secretary saw a deputation from the Council on 26th November. He said that he saw no grounds for a further increase in public service pensions so soon after the considerable increases in the Pensions (Increase) Act, 1962.

Would not my right hon. Friend agree that when public service pensions were fixed it was intended to entitle the pensioners to a certain standard of living on retirement? Would he not also agree that pensioners are not able to exercise the same pressures as other sections of the community to safeguard themselves against changes in the value of money? Therefore, should there not be some formula which would keep the purchasing power of the pension in real terms without the necessity each time to introduce pensions increase legislation which hon. Members on both sides of the House believe to be an outdated procedure?

I doubt whether an automatic formula of that kind would be for the benefit of the pensioners in the long run. Successive pensions increase Measures have provided for the pensioners concerned in a very reasonable way.

Does the right hon. Gentleman remember that his right hon. Friend the Chief Secretary gave an assurance to the House, in response to considerable pressure from both sides when the Pensions (Increase) Bill was going through the House last year, that he would try to find a better way of adjusting public service pensions than having sporadic ad hoc pensions increase legislation? Has he anything to say about that?

What my right hon. Friend discussed with the deputation was the subject of adjustments in the near future. The point I was making was that he said in reply that the latest increases were so recent that a further immediate increase was not in his view justified.

Will my right hon. Friend bear in mind that one of the difficulties of getting Service widows' pensions adjusted is that so many public service pensioners are on a standard of pension which is derisory and that it is not so much new pensions increase legislation that is required as that the older pensioners should be brought up to a standard at which percentage increases would make sense?

That seems to raise the very broad question of parity and goes rather beyond the original Question.

asked the Chancellor of the Exchequer how much revenue he is losing in tax from licensees through the large extension of clubs, staff associations and other such bodies, who get liquor either on the premises or off materially cheaper than if they had to buy it through the normal trade channels.

None, Sir.

Does not my right hon. Friend agree that the time has come when he ought to look again at the provision which allows staff associations, clubs, town councils and local authorities generally to evade the ordinary provisions of the law and to get alcoholic liquor, particularly at Christmas and the New Year, much more cheaply than trade prices?

That question goes rather beyond my responsibility. The Question put to me was concerned with the revenue and I can only say that we suffer no loss of revenue by these arrangements. Whether for other reasons they are good or bad is a question for my right hon. Friend.

asked the Chancellor of the Exchequer how much revenue he estimates he is losing from the sales of liquor by registered clubs to nonmembers.

None, Sir.

What steps has my right hon. Friend taken to see that these clubs and others do not sell to non-members? Is he aware that the Customs and Excise is in close contact with the police so that cases like this can be followed up and prosecuted?

I understand my hon. Friend's point. Once again I can answer only for the revenue and say that it does not lose by this. The enforcement of the rules about sales to non-members is a matter for my right hon. Friend, and I will call his attention to what has been said.

Is my right hon. Friend aware that these questions were prompted by some members of the licensed trade, a very respectable body of people, whose books are checked by the Customs and Excise and who are subject to very strict licensing laws and who resent other people coming in and taking a large amount of their profit, which results in my right hon. Friend losing Income Tax which he would otherwise collect?

I see the point. The position is that I am responsible for safeguarding the revenue white responsibility for the enforcement of the law rests with my right hon. Friend the Home Secretary. I will call his attention to my hon. Friend's remarks.

Would it not be illogical for the Government to interfere in this practice when their policy in respect of resale price maintenance will mean its extension?

That seems a subtle supplementary question which hardly arises from the original Question.

asked the Chancellor of the Exchequer whether he proposes to prepare and present his Budget on the lines of Command Paper No. 2014 of 1963, The Reform of the Exchequer Accounts.

My intention is that the Financial Statement this year should be in the same form as in previous years. But I hope to indicate in the course of my Budget statement the lines on which I think we can best make further progress in revising the form of the Exchequer Accounts and dealing with related matters.

I thank my right hon. Friend for that reply. Will he try to bring out this year the financing requirement, which is, from the economic point of view, the only vital piece of information that we need to know?

I will certainly try to do that. This is not an easy problem to solve. The difficulty is to give the House as guardian of the public purse the necessary financial information and at the same time to give the House and the public the necessary economic picture.

Is the right hon. Gentleman aware that under the Provisional Collection of Taxes Act he must introduce his Budget by 4th May? May we take it that that is his intention?

That seems to me to arise on a later Question.

asked the Chancellor of the Exchequer how many dogs are licensed in the United Kingdom; what income he receives from their licences; and what is the cost of collecting this tax.

In 1962–63, 2,598,488 dogs were licensed in England and Wales and 194,418 in Scotland. In Northern Ireland dog licensing is the responsibility of the Government of Northern Ireland. Only the yield of licences issued in Scotland is paid into the Exchequer: in 1962–63 this yield was £72,855. To produce figures showing the cost of collecting dog licences would require a disproportionate amount of work.

Will my hon. Friend ask his right hon. Friend the Chancellor of the Exchequer if, when he prepares his Budget, he will look at this licensing tax and whether he will deal with it in the same way as he dealt with licensing for the sale of tobacco in his last Budget?

I will pass that message on to my right hon. Friend.

asked the Chancellor of the Exchequer if he will list the sales at each of Her Majesty's Stationery Office centres in Great Britain for 1963, and the comparative figures for the preceding 12 months.

As the Answer contains a number of figures, I will, with permission, circulate the details in the OFFICIAL REPORT.

I am grateful to the hon. Gentleman for providing these figures. Will he note that Newcastle-upon-Tyne will not be included in this list and that his reply to me on 3rd December about setting up a stationery office in Newcastle was slightly misleading in that retail sales to the public are not made in Newcastle? Will he look into this matter and ensure that we have a branch of Her Majesty's Stationery Office in Newcastle which includes sales to the public?

All I can say is—and hope that I am repeating what I said to the hon. Gentleman on the last occasion—that the door is not closed to such an establishment if the work would appear to justify it. I assure the hon. Gentleman that this matter is under constant review.

Will my hon. Friend also think of putting among those figures the reduction in the value of sales which may take place next year if resale price maintenance on the production of Her Majesty's Stationery Office is abolished?

I think I had better not enter into a double guessing game at Question Time.

asked the Chancellor of the Exchequer if he will make a statement on his recent talks with the Federal German Minister of Finance on the cost of stationing British troops in West Germany.

My right hon. Friend the Chief Secretary to the Treasury visited Bonn on 3rd December, 1963, for discussions with the Federal German Minister of Finance, Dr. Dahlgrün, about the implementation of the Agreed Minute of 6th June, 1962, on this subject. At the same time he stressed the need for new arrangements regarding the foreign exchange costs of British forces in Germany, when the period covered by the Agreed Minute ends on 31st March, 1964. Both sides hoped that it would be possible to find solutions to all outstanding problems.

I have arranged for a copy of the communiqué issued after these talks to be placed in the Library. German and British officials will meet in London in the near future for further discussions on the implementation of the Agreed Minute, and Dr. Dahlgrün has been invited to visit London in March to continue his discussions with the Chief Secretary.

Does not the right hon. Gentleman think it time that we tried to come to a firm and permanent understanding about these costs? Does not he think it rather humiliating that representatives of Her Majesty's Government should constantly have to go cap in hand and beg the Germans to observe their part of the agreement? If we cannot afford to keep these troops in Germany and the Germans refuse to make the contribution which they have promised, will the right hon. Gentleman think in terms of reducing the numbers of troops?

This procedure is working out well. I do not accept the suggestion that we are constantly going cap in hand to Germany. My right hon. Friend the Chief Secretary has been to Germany and Dr. Dahlgrün has been invited to visit London. This is the way that these things should be worked out between Governments.

How much is it costing us to keep our troops in Germany? Since this cost must obviously put an added strain on our balance of payments position, under what condition may we expect, one day, the troops to be brought home?

As I said in my Answer, the German Government have given us to understand that the agreed minute will be carried out by 31st March, 1964. During his recent visit Dr. Erhard undertook that his Government would give the subject of what happens after that their urgent and sympathetic consideration.

asked the Chancellor of the Exchequer what estimate has been made of the loss of revenue if retirement pensioners, over the age of 70, received their pension without deduction of tax, irrespective of other sources of income which they may have.

National Insurance retirement pensions are paid in full without deduction of tax, but they must be taken into account as part of the recipient's income in computing his tax liability, if any. The cost of exempting such pensions paid to people over 70 who have other income might be about £10 million a year.

I thank my hon. Friend for that Answer. Would not he agree that some of these sums which have to be recovered from pensioners over 70 years of age are very small and that the administrative costs of collecting them are high? Will he ask his right hon. Friend tae Chancellor of the Exchequer to consider putting this measure in his Budget, although I realise that it is a departure from normal taxation principles?

Because these pensions are a form of income, like other pensions, I cannot see sufficient ground to single them out for special exemption.

asked the Chancellor of the Exchequer what is the current Purchase Tax yield on rucksacks.

I regret that there is no separate information about the yield of tax from rucksacks.

Will the right hon. Gentleman look at this tax with a view to removing it in the next Budget? Is is not absurd that the Ministry of Education spends large sums of money on encouraging young people to take part in open-air activities and then the Chancellor of the Exchequer takes the money back from them when they pursue these activities?

I cannot speculate on what the Budget may or may not contain, but I will consider what the hon. Member has said.

asked the Chancellor of the Exchequer what was the yield of the licences for heavy lorries of 10 tons burden and over for the last financial year.

Precise figures are not available. An estimate of the yield from these vehicles based on a survey indicates an annual revenue of approximately £600,000.

Is my hon. Friend aware that some of us doubt whether these vehicles are making a full contribution towards the cost of the wear and tear that they cause to the roads, particularly in view of the problem which their proliferation is causing to the railways and the constant loss to the Revenue?

I understand my hon. Friend's point, but I think that it is very difficult to establish with any equity or accuracy what rates of licence duty for different classes of vehicle would precisely reflect the road costs for which each is responsible. This is a real difficulty.

Can the hon. Member say when last there was an increase in this rate of duty?

I cannot offhand, but I will write to the right hon. Gentleman about it.

asked the Chancellor of the Exchequer what is the yield on the tax on soft drinks during the present financial year.

The Budget estimate for the current financial year included £15 million in respect of purchase tax on soft drinks. Receipts to 31st December, 1963, amounted to about £10½ million.

I realise that this is a substantial contribution to the Revenue, but will my right hon. Friend bear in mind that this tax is causing a great problem for many small drinks manufacturers who provide useful employment in small towns?

I have had representations from bodies representing this industry, and I am considering them, but clearly I cannot comment on them at this moment.

asked the Chancellor of the Exchequer if he will now reduce the fuel tax for public service buses to the same amount as for other industries and diesel trains, namely twopence per gallon.

asked the Chancellor of the Exchequer if, in view of the emphasis laid in the Buchanan Report on making public transport relatively cheap, he will consider, when preparing his Budget, reducing the 300 per cent. tax on bus fuel oil.

asked the Chancellor of the Exchequer if he will give favourable consideration to the request for a reduction of the 300 per cent. tax on bus fuel oil from the Grimsby and Cleethorpes Joint Transport Committee, which is paying over £50,000 a year in tax and, though losing thousands of pounds every year, is faced with another claim for wage increases; and if he will make a statement on the letter sent to him by the hon. Member for Louth from the Committee.

I have received a number of representations about the duty on fuel oil used in buses and I am considering them carefully, but I cannot anticipate my Budget.

Is not the right hon. Gentleman aware that the Minister of Transport and the Buchanan Report both stress the vital necessity of encouraging more people to use public transport? Is he not also aware that the Underground has now become dangerously over-crowded? Is he not further aware that this heavy tax does not help the process of encouraging people to use public transport, which is much more economical in the use of road space than private cars?

These are arguments which are advanced by those who wish to see this tax reduced, but the hon. Gentleman will not expect me to comment on their validity or otherwise at this time.

While we do not expect the right hon. Gentleman to comment on their validity, does not he think that 2s. 6d. a gallon is a really extortionate and unreasonable tax? Does not he also agree that a bus which can carry 60 passengers occupies perhaps only twice as much space as a private car and that the increase in the number of private cars is slowly bringing traffic to a halt in our main cities?

The hon. Gentleman began by saying that he would not expect me to comment on the validity of these arguments and then proceeded to ask me whether I did not think they were right.

Is my right hon. Friend aware that £50,000 is a lot of money to take in this way from relatively small communities like Grimsby and Cleethorpes? Does not he agree that, since new housing estates are being built outside the centres of these places, and mostly young married people are going to live there, the extra cost entailed in travelling to the shops is an unreasonable burden? Will he look at this question from that point of view?

I cannot say more than that these are really serious arguments advanced by people on a serious basis and that I will consider them. But I cannot go further than that at the moment.

Is the right hon. Gentleman aware that people in the countryside would welcome the reduction of this tax in the rural areas, where public transport is so limited and where, by the time the Beeching proposals are implemented, the situation will be much worse? While I appreciate that he cannot tell us in advance what his Budget will contain, will he bear the rural people in mind?

I will certainly bear them in mind, but I cannot say what the result will be.

asked the Chancellor of the Exchequer what was the yield of Purchase Tax on gymnasium equipment over the last financial year.

I regret that there is no separate information about the yield of tax on gymnasium equipment.

Is the right hon. Gentleman aware that I am surprised that he has not the figures, because we debated this last year? Will not he scrap the tax altogether, since it has already been removed from a great deal of sporting equipment? Is he aware that this differentiation between various items of sports equipment is nonsense?

I will study that point.

asked the Chancellor of the Exchequer why economic aid from this country to developing countries amounted to £74·8 million during the first half of the current financial year, in view of the fact that the White Paper, Aid to Developing Countries, published in September, 1963, included an estimate that the total for the whole year would be within the range of £180 million to £220 million.

asked the Chancellor of the Exchequer what steps he is taking to increase the flow of aid to developing countries to meet the target of £180 to £220 million announced by Her Majesty's Government in the recent White Paper on Overseas Aid.

The figure of £180 million to £220 million given in the White Paper was not a target figure but a tentative estimate of the range within which expenditure on aid might fall in 1963–64. It is too early to give a firm forecast for the year as a whole. As the White Paper (Cmnd. 2147) made clear, the timing of aid expenditure as distinguished from commitment does not rest with us, but depends largely on the rate at which the recipients spend what we give them.

Does the right hon. Gentleman expect an increase in the second half of the current financial year? If not, is there not clearly a growing gap between what the Government intended to happen and what is actually happening? Does not this show the case for an overhaul of the aid programmes, which can only be done by having one Minister in charge instead of the present six or seven, each with a finger in the pie?

This is not what is happening. Our commitments are on a rising curve, but the rate at which the people who receive the aid spend the money depends upon them. I would like to see the actual expenditure of this aid closer in line with the commitment, but that rests with those who are getting the benefit.

Is the right hon. Gentleman aware that this is the second year in which this situation has arisen? Last year suggestions were made to try to prevent recurrence of the situation. Is the Treasury following up those suggestions in order to try to ensure that aid not absorbed is transferable to other purposes? Can the right hon. Gentleman say why the estimate in the White Paper was so greatly in excess of what is likely to happen?

We are doing our duty by offering people aid. It is growing, and has grown in recent years, very much. I should be very glad to see the rate of spending of this money more in line with the rate at which we offer it, but it does not rest entirely with us.

Will my right hon. Friend make it clear that Government aid is not the only way of helping developing countries and that private enterprise can help, provided that political and economic conditions are right? In these circumstances also, is not Britain playing her full part?

I entirely agree.

asked the Chancellor of the Exchequer if he will arrange for coast preventive men to have light vans instead of motorcycles.

Trials to establish the relative merits of light cars and motorcycles for use on patrols by coast preventive men have already been arranged. I will let the hon. Member know the result as soon as they have been completed.

asked the Chancellor of the Exchequer if he will refer the income of dairy farmers to the National Incomes Commission.

No, Sir.

Is my right hon. Friend aware that in the last five years the average dairy farmer's income has gone down 14 per cent. whereas his average unavoidable costs have risen by 30 per cent.? Would it not be a good thing to consider for a change an industry whose income has gone down?

That sounds like the opening shots at the Farm Price Review.

asked the Chancellor of the Exchequer whether he is aware that men on strike receive strike pay of up to £20 per week; and to what extent such payments are liable to Income Tax.

Strike pay received by members of trade unions is not liable to Income Tax, but I think that my hon. Friend is possibly exaggerating the level of such pay.

Is my hon. Friend aware that in the Sunday Times two weeks ago it was stated that the men on strike at Port Talbot were receiving £20 a week? Is it not unjust that such pay should be free of tax when it is practically double what an agricultural worker gets for a full week's work?

With respect, I do not think that the figure of £20 has very much to do with the level of strike pay received. It is possible that my hon. Friend and I are differing about the meaning of a word here.

Whatever the level of strike pay, would it be right to tax it if the original contributions to the union remained untaxed? In other words, should not an allowance be made for the original contribution if it was intended to tax the product of it?

The hon. Gentleman has his tax principles right on this occasion.

Is my hon. Friend aware that agricultural workers earn about half this sum and will regard it as unjust if they have to pay tax on their earnings while strike pay on this scale is free of tax?

I do not think that I can help my hon. Friend any further at this moment. If he would care to talk to me about the principle upon which these taxes are raised or are not raised, I shall be glad to have a word with him.

Will not the Financial Secretary agree that the statement by the hon. Member for Louth (Sir C. Osborne) is a gross exaggeration of the case at Port Talbot and that he should have some responsibility for what he is saying? Is the hon. Gentleman aware that the strike pay is nearer £2 10s. than £20?

Order. Ministers have to answer for lots of things, but not about the responsibilities of hon. Members behind them.

asked the Chancellor of the Exchequer, in view of his objective of reducing armament expenditure, why Her Majesty's Government forecast an increase of £265 million per year in such expenditure by 1967–68.

This figure, like all the others in the White Paper, is an approximate calculation of the prospective level of expenditure in 1967–68 on the basis of present policies and programmes; it does not represent a Government decision to spend this sum in that year.

Why cannot the Government cut the arms burden as America and Russia are doing and as the Prime Minister is continually stating that they will do? Why at least cannot they freeze the present level instead of increasing it by £100 million a year? Are the demands of the military sacrosanct for so-called defence?

The demands of national defence are sacrosanct, which is not the same thing as the demands of the military. It is difficult to calculate ahead expenditure on defence. We all hope that there may be opportunities for reductions of armaments but on the other hand, as we have seen in the last few months, there are dangers of unforeseen increases. We think it right in working out the pattern of Government expenditure a few years ahead to assume that the proportion taken by defence will be about the same as at present.

May I ask the right hon. Gentleman what economic theory he has been studying, whether it is Marshall or Marx, by which he can promise a reduction in his Budget and then proceed to increase the amount by £235 million? Are we to understand that in future when the Government say that there is to be a reduction there will be an increase, and when they say there is to be an increase there will be a reduction?

I think that the hon. Gentleman is a little confused. That question should be addressed to his hon. Friend.

asked the Chancellor of the Exchequer if he will take steps to control building society interest rates charged on mortgages to house purchasers.

No, Sir.

May I ask the right hon. Gentleman whether he does not consider that when these building societies affect, as they do, about 2½ million borrowers, with a total borrowed of about £3,000 million, and when societies as reputable as the Halifax Building Society can reduce their rates, he has some responsibility to exert some influence?

I think that building society charges on the money they lend are determined by what they have to pay in a competitive market for what they borrow.

With respect to the right hon. Gentleman, my Question is whether the Government will accept some responsibility for some degree of control over an organisation which has this large influence on the economy of this country? If some reputable building societies can reduce their rates, why should the Building Societies Association prevent others from reducing their rates?

I think that the word "control" is misleading. The only way to get the rates to borrowers down, compared with the rates that societies have to pay, is by providing a subsidy. If the hon. Gentleman means a subsidy, let him say so.

If the right hon. Gentleman is prepared to call into consultation people on the control of prices, wages, and profits, why should he exempt the money market on interest rates?

I think that we are far from lacking in consultation with the people concerned in the money market. But the principle underlying this is common sense. If building societies have to pay x per cent. for the money they borrow, they have to charge a related percentage on the money they lend.

asked the Chancellor of the Exchequer what is the result of the consultations he has had with other Departments concerned and the local authority regarding the possible establishment of a tax-free zone at Prestwick Airport.

The consultations are well advanced and I understand that the local authority considered the position at its council meeting last Tuesday.

I thank my right hon. Friend for that reply, but may I ask him whether he would agree that the very existence of a tax-free zone at the airport would be an enormous inducement to new industries to settle in the district and so relieve the general unemployment situation in the county?

I think that it would be wrong to comment overmuch on this. Consultations have been going on and this matter has recently been considered by the local authority, but we are not sure of its present view.

asked the Chancellor of the Exchequer what machinery exists to assess the size of the Imperial contribution paid by the Government of Northern Ireland; and what factors are taken into account for the assessment.

asked the Chancellor of the Exchequer how the amount of the Imperial Contribution paid to the Exchequer by the Northern Ireland Government is determined.

The Joint Exchequer Board, established under Section 32 of the Government of Ireland Act, 1920, and consisting of a representative of H.M. Treasury and a representative of the Ministry of Finance, Northern Ireland, with an independent Chairman appointed by the Crown, determines the size of the Imperial contribution each year. Section 23 of the same Act provides that they should determine a sum which they consider to be just, having regard to the relative taxable capacity of Northern Ireland and the United Kingdom. The Board works on the general principle that, so long as rates of taxation in Northern Ireland are the same as in the rest of the United Kingdom and expenditure on Government services is also on the same levels having regard to the special needs and circumstances of Northern Ireland, the Imperial contribution should be whatever is left over of the revenue of the Northern Ireland Government after meeting their actual and necessary expenditure.

May I ask the Minister whether he would agree that this can be used as a form of subsidy to Northern Ireland? In view of that, will he take note of the fraud case which has been heard in Northern Ireland, and at which a Committee of the Northern Ireland Government is looking but is unable to get copies of the transcript of the trial because of the lack of legislation on this issue here? Will the Minister ask his right hon. Friend whether, in view of the enormous importance of this issue to us who find certain moneys for this kind of thing, he will cause legislation to be introduced so that the Committee of the Northern Ireland Government can get copies of the transcript?

I am sure the hon. Gentleman knows that no British taxpayers' money is involved in this case. In addition, the hon. Gentleman will not expect me to comment on a matter which is within the competence of the Northern Ireland Government.

Can the Minister say whether the House has any control whatever over the public money which it authorities to be spent in Northern Ireland?

If the hon. Gentleman is referring to the Northern Ireland Government's financing of their own assistance to industry, it is done entirely out of their forms of taxation and I cannot answer for them in this House.

I am referring to the subsidies which this Government provide to the Northern Ireland Government and the relief from taxation which is also granted in Northern Ireland.

I have tried to answer the specific case as to how finance passes between this Government and the Northern Ireland Government. I assure the hon. Gentleman that I have absolutely no responsibility for, and therefore no ability to answer on, the precise case that he has in mind.

asked the Chancellor of the Exchequer whether he will now make an approach to the French Minister of Finance in order to secure joint control over the financial progress of the Concord supersonic project.

I very much doubt whether greater control over this project is attainable in this way, but I will discuss the report of the Estimates Committee containing a recommendation broadly to this effect with my right hon. Friend the Minister of Aviation.

Is it not a fantastic situation that here we have at least £85 million worth of investment in an agreement which the Ministry of Aviation announced to the House and which the Treasury has never even thought of discussing with the French Government to see whether there should be a break clause, or whether the Treasury should be represented on the board controlling the finance of the Concord? Indeed, what will be the position if the French decide to pull out of the agreement? Is it not fantastic that a Government of this sort, which looks after the finances of the country in a way which is displeasing to the lower income group, can throw £85 million away in this kind of incompetence?

I do not think that the hon. Gentleman has understood the system of financial control in this country, which has existed for many years. The financial control of projects is not solely the responsibility of the Treasury—it tends to be more so in France—but rests also with the Department concerned.