asked the Chancellor of the Exchequer how many solvent close companies have gone into voluntary liquidation since the Finance Act, 1965, came into effect; what estimate he has made of the number of cases in which the liquidation was due to the Finance Act; and what were the different trades.

I regret that separate statistics are not available in relation to close companies.

While accepting that Answer from my hon. and learned Friend, may I ask whether he would agree that a great deal of nonsense is spoken on the subject by hon. Gentlemen opposite, and that in fact the Corporation Tax is very largely of great benefit to small family companies? Where, as they often do, they pay no dividends, Corporation Tax is of very great help to this type of company.

I would agree with my hon. Friend. The figures that are available are for motions registered by private companies for voluntary liquidation. In the period mentioned in the Question, they show 2,135 out of a total of over half a million private companies, and there have been 15,000 new registrations in the same period. These figures do not support the idea that there has been widespread liquidation of close companies as a result of the Finance Act.

Does the Financial Secretary agree that the implications of Corporation Tax have not got through the pipeline to close companies, and also that this Question is quite irrelevant at this stage of our financial year?

I think that the message is getting through to these companies who go in for a policy of a high level of ploughback, because they will have considerable benefit from the tax.

asked the Chancellor of the Exchequer what steps he proposes to take to reduce the present inflated dollar premium.

I have no statement to make on this matter.

Since the dollar premium is now at a fantastic level of nearly 18 per cent., thanks to the actions taken by the Chancellor last April, would he now be gracious enough to do something to help the investor who has to pay the equivalent of a 5 per cent. capital levy when he realises dollar investments?

This is a way in which an investor overseas can do something to help the official exchange reserves. He is doing so, and I am very grateful to him for doing it.

asked the Chancellor of the Exchequer if he is aware of the benefits to be derived from new tax arrangements for horticulturalists similar to those in force in Holland; and if he will clarify the Government's intentions on capital allowances and investment incentives for agriculture and horticulture, and in particular for horticultural glass.

I would refer the hon. Member to the statement made yesterday by my right hon. Friend the Minister of Agriculture, Fisheries and Food in reply to a Question from my hon. Friend the Member for Norfolk, North (Mr. Hazell).

Will my hon. and learned Friend look at the account of this industry in the Westminster Bank Review for August of last year, and will he look specifically at the problems of the balance of payments situation arising from our imports of £15 million worth of Dutch glasshouse produce every year, with a view to helping our industry in the same way as the Dutch Government help theirs?

I am not aware of any arrangements in Holland bestowing greater advantages on their horticulturalists than the provisions announced by my right hon. Friend yesterday bestow on ours.

asked the Chancellor of the Exchequer whether, in his negotiations of further double taxation agreements, he will avoid using as a model his recent agreement with the United States of America whereby the United States revenue will, on average, take from the British investor and company 51·9 per cent. of distributed profits, whereas the British revenue will take only 44·5 per cent. from American investors in this country; and whether he will make a statement.

In negotiating double taxation agreements there are many factors to be taken into account not all of which are limited to the immediate taxation effects. Each case will be treated on its merits, having regard to the model treaty of the Organisation for Economic Co-operation and Development.

Will the right hon. Gentleman answer three questions? First, has this treaty been signed? Secondly, will he agree that whereas in the past we have taken £56 for every £100 of American profit earned here, we now take £45, and further that this precedent will have an adverse effect in negotiating treaties with other States for the protection of British shareholders? Finally, will he agree that this will cost the Revenue £10 million this year and a very considerable loss of dollar exchange?

I think that that is a rather loaded way of putting a very difficult series of propositions. The treaty has not technically been signed. The Americans and ourselves have reached heads of agreement which were made public for the convenience of those who wish to know about these matters. As regards the changes in deductions, I would not care to accept the right hon. Gentleman's figures quite in the way he put them. I think that he is over-stating the amount deducted initially. The amount to be deducted will depend partly on the rate of Corporation Tax. Whether it will have an adverse effect in negotiating treaties with other countries I do not know, but I do not think that it necessarily will. It is our aim to follow the O.E.C.D. convention, and indeed I have been pressed from the right hon. Gentleman's side of the House so to do. As for the cost to the balance of payments, it is impossible for the right hon. Gentleman or for any one else to quantify that. It depends on the amount of inward investment which flows from the fact that our tax rate is likely to be lower than that of the Americans.

Order. Long questions produce long answers.

Will the right hon. Gentleman say whether he does or does not accept the calculation which is made in the original Question on the Order Paper? If he does, will he explain why he has made such a bad bargain on behalf of this country?

Mr. Speaker, I hope you will agree that I did not waste any words in replying to the long question.

In view of the totally unsatisfactory nature of the reply, and in view of the abject—[Interruption.]—I will raise the matter—

Order. The right hon. Gentleman must give notice in the conventional way.

asked the Chancellor of the Exchequer if he will seek to remove Purchase Tax on sports equipment.

My right hon. Friend will bear this suggestion in mind.

In view of the fact that the Treasury has done much in recent months to introduce a fairer system of taxation, will my hon. and learned Friend consider taking the tax off the football field and putting it on the roulette table, and taking it off the slow-arm bowler and putting it on the one-armed bandit?

I do not know about the "slow arm bowler", but I think that my hon. Friend is bowling a wide.

asked the Chancellor of the Exchequer what representations he has received from the Association of British Chambers of Commerce about the contribution that gambling makes to the national revenue; and what replies he has sent.

I received a letter from the Association on this and other subjects, and replied that I would carefully consider the points made.

Does my right hon. Friend realise that there is a great need for national revenue to meet the road, school, health and educational programmes of the Government? Does he realise that if he introduced this he would be backing a winner, and that the odds would be as good as those on a Labour victory?

This is very tempting indeed. I notice that the right hon. Gentleman opposite referred to it as being a milkable industry, but I warn my hon. Friend and anyone else against any expectations of large revenue from this type of activity.

asked the Chancellor of the Exchequer whether, in view of the increase in gambling, he will tax it more heavily.

asked the Chancellor of the Exchequer if he will take steps to regulate gaming establishments through the medium of a tax upon the units of play, such as roulette tables and chemin de fer tables, of between £5,000 and £10,000 per annum, and a tax of £2,000 per annum per betting shop.

I cannot anticipate my Budget statement.

Does not the Chancellor agree that as gambling is now legalised and is, from the point of view of the State, an entirely non-productive activity—and as it is relatively very under-taxed, compared with drink and tobacco—it can contribute in larger measure to the national Budget and thus, indirectly, to the social and perhaps even the defence needs of the people?

These questions have been canvassed on many occasions. Every Chancellor has, perched on his shoulder, the ghost of Sir Winston Churchill, who last attempted to do this very thing.

asked the Chancellor of the Exchequer what was the total net withdrawal of National Savings in 1965–66 to the nearest convenient date; and how this compares with the same period in 1963–64 and 1964–65.

In the first 45 weeks the total outstanding fell by £2·7 million, compared with increases of £240·7 million and £268·9 million in the same period of 1963–64 and 1964–65.

Is it not clear that those are alarming figures? Would not the hon. and learned Gentleman agree that the attitude of the small investor has undergone a revolutionary change because of concern about the prospects of inflation which has coloured his attitude? Will the hon. and learned Gentleman say when he can make a statement about changes in the whole future of National Savings and in particular Savings Certificates?

I would not agree that the figures are very alarming. They are naturally disappointing, and we discussed the reasons for this at some length in a recent debate. I urge the hon. Gentleman not to take too pessimistic a view. The total outstanding in National Savings since the present Government took office has increased by about £140 million.

Would not the hon. and learned Gentleman agree that a reduction in National Savings must indicate a lack of confidence in the Government of the day?

Not at all. There are seasonal variations, and there are also variations when savers feel that there are other ways in which they can invest their savings more advantageously. I remind the hon. Gentleman that the total outstanding in National Savings at the end of October of last year, which is the latest figure I have, was £8,379 million.

asked the Chancellor of the Exchequer if, in any future instructions he gives to the Bank of England on restrictions of credit by the banks he will take into account the proposed development of the credit card system.

The banks are aware that credit restraint is intended to apply to all forms of bank lending to the private sector.

Would not the hon. and learned Gentleman agree that this appears to go beyond normal overdrafts, and is an extension of personal credit? Does he see it as possibly inflationary?

It need not be. It is a new form of credit, and it may be a useful one. What is important is that bank credit should keep within those limits which are necessary in the national interest, and the banks have co-operated very fully with the policy which was laid down by my right hon. Friend earlier last year.

asked the Chancellor of the Exchequer what further steps the Treasury proposes to take to deal with tax avoidance in connection with dealings on the Stock Exchange.

As I said in my Answer on 15th February it will take some time to complete the investigations into the recent series of transactions which may have involved tax irregularities. I cannot say yet what new tax legislation may be required to prevent these abuses.

Would not my right hon. Friend agree that there is some urgency in the matter because the small taxpayer pays his tax regularly and honestly and is much offended by this sort of practice on the Stock Exchange?

I assure my hon. Friend and the House that there will be no delay in dealing with this matter; but these arrangements are so ingenious that they will involve separate examination of many individual transactions, and it will take a great deal of the Revenue's time to try to pin them down.

Will the right hon. Gentleman confirm that although tax evasion is reprehensible, and can and should be corrected by this House, it has always been accepted that it is right for people, or at any rate open to them, so to arrange their affairs that they pay the least amount of tax on those transactions?

That is a matter of philosophy on the general issue. I hope that the right hon. Gentleman will not apply his remarks to this particular case, because I think that it may well go much further than arranging one's affairs to avoid the payment of the maximum amount of tax. In this case—I am choosing my words carefully—there may well be an example of something that is much more reprehensible.

Would not the right hon. Gentleman agree that it is the vigilance of the Stock Exchange Council which has brought many of these practices to the light of day?

Yes, Sir. If the hon. Gentleman remembers, in my Answer of 15th February I said exactly that. The Revenue would not have discovered it if it had not been for the activities of the Stock Exchange Council; but the fact remains that whether suspension from the Floor of the Stock Exchange is sufficient to deal with this matter is something that must be further considered.

Would not my right hon. Friend agree that while it is all right for individuals to make the best possible tax arrangements, they should do so within the rules laid down by this House.

That is the point I made.

With respect, it was not. It may have been the point which the right hon. Gentleman was trying to make, but the reason why these members were suspended by the Stock Exchange Council was that they did not observe the rules which had been laid down.

asked the Chancellor of the Exchequer what discussions he has had with local authorities on improving facilities for borrowing from the Public Works Loan Board.

My officials are frequently in touch with local authorities about their borrowing arrangements and the facilities for borrowing from the Public Works Loan Board have been improved in a number of respects since the Government took office.

I congratulate my right hon. Friend on the improvements made in the last 15 months, but does not he agree that it is to this kind of operation that local authorities look for improvement in obtaining their capital requirements?

Yes. I will not hark back to what we have just been discussing, but I am sure that, like tax-payers, local authorities make their financial arrangements in the way that will best suit themselves. This is not always the way that suits the Exchequer.

asked the Chancellor of the Exchequer whether, in order to encourage the small saver, he will introduce legislation to allow a moderate sum to be allowed free of Capital Gains Tax in any one year.

asked the Chancellor of the Exchequer if he will give exemption from Capital Gains Tax to the first £500 of gains.

The hon. Member's suggestion has been noted.

Why are the Government doing everything they can to penalise individual savers? Do they want individuals to become as spendthrift as the Government themselves?

I do not accept the hon. Member's proposition. He will realise that, whatever the advantages of his proposal might be, most of the benefit would go to the large investor who realises gains year by year.

Does not the hon. and learned Member appreciate that this proposal would reduce the almost intolerable load of administration of this tax, and that it should be considered seriously from that point of view, whatever the politics of the matter may be?

It is very easy to over-estimate the amount of work that this proposal would save. It would still be necessary to calculate the precise amount of an individual's gains, unless they were clearly below the exemption limit.

asked the Chancellor of the Exchequer whether he will publish a list of the British Government's present holding of dollar securities.

No, Sir. As stated previously, the management of a very large holding of this character is best conducted without publicity.

In view of the recent rise on the American market, did not the selling of dollar securities last year entail a large loss, running into millions of pounds of our securities? Which man in Whitehall was responsible for this grave misjudgment?

I think that it was the right hon. Member for Barnet (Mr. Maudling). I have no doubt that he acted on good advice, and, equally, I have no doubt that he was right. At whatever time he sold securities there would always have to come a time when they were either above or below the selling point.

asked the Chancellor of the Exchequer whether any British Government dollar securities were sold in June, July and August last and the proceeds not reinvested.

I have nothing to add to my reply of 3rd August, 1965.

I recognise that it is not a good thing that there should be too much publicity on this, but is it not highly undesirable that it should be necessary to consult official American statistics to find out what is happening to these funds, which are the property of the British Government and that we should be able to learn a great deal more from them than the Chancellor appears willing to tell us in the House of Commons?

I should not like that to be the case. I am not aware that it is precisely as the hon. Gentleman says, but I will, of course, look into the matter.

May I press the Chancellor on this matter? If his answer is that this would do harm to sterling, I have nothing further to add, but the Prime Minister gave considerable details of the pressure which sterling was under in those months. Would the right hon. Gentleman not consider that it might help, at this distance of time, to have a more complete answer now?

I do not think that this has anything to do with pressure on sterling. This is the conversion of dollar securities. I have, on many occasions, given the total value of the dollar securities which form the front line reserves. They amount to well over 1,250 million dollars. That amount is still there and still stands.

asked the Chancellor of the Exchequer when he now expects to receive the report of the Ministers' deputies of the Group of Ten on world monetary problems.

In the late spring or early summer.

Is not the Chancellor aware that there has been almost universal criticism of the Treasury's refusal to reveal even the outline of British ideas on these matters—if there are any? Will he think again about this and at the same time tell us why there has been such a long delay in the publication of this report?

The British proposals, like the others, were handed in confidentially, and it was agreed among all the participants that there would not be publicity. In fact, I did what other Ministers of Finance did, namely, gave a broad outline in a speech some weeks ago. What I said then can be repeated. On the second part of the supplementary question, it was agreed at the International Monetary Fund meeting that this should be the time-table.

asked the Chancellor of the Exchequer if he will now consider establishing a State unit trust.

asked the Chancellor of the Exchequer if he will give priority to the creation of State unit trust.

asked the Chancellor of the Exchequer if he will authorise the creation of a State-owned unit trust; and if he will make a statement.

asked the Chancellor of the Exchequer what consultations he has had regarding the formation of a State unit trust.

My right hon. Friend has taken note of these suggestions by hon. Members. He continues to keep this matter under review, but has not had any formal consultations outside Government circles about it. Naturally he would study with the care they deserve any representations which might be made to him.

Is my hon. and learned Friend aware that he has been taking note of this question and keeping it under constant review for a very long time? Does not he recognise that this would be very attractive for the kind of small investor mentioned in an earlier Question? Can he say what are the insuperable difficulties that are holding the Government back from action in this matter?

In his Budget speech last year my right hon. Friend said that the idea had many attractions but that he did not propose to embark upon it, as the Post Office would be busy with its new investment account, which he regarded as having first priority. There are difficulties about the scheme, although I do not suggest that they are insuperable. My right hon. Friend will need to consider them further. Some of them arise from the high cost of running a trust with a large number of small unit holdings and the very considerable administrative load that would be imposed on the Post Office.

Is my hon. and learned Friend aware that there is now great support for the idea, notwithstanding the difficulties, some of which he has touched upon and many others that we must recognise? Might not this be a device for tapping new layers of potential savers, which cannot be tapped by any of the existing institutions?

My right hon. Friend is aware of the support given by the N.E.D.C. to this proposal and will be glad to consider any representations that may be made on the subject.

Is the hon. and learned Gentleman aware that many people feel that a State unit trust could be used as a device to spread Government control of industry? When the Chancellor is considering this question further, will the hon. and learned Gentleman advise him to bear in mind the possibility of forming a unit trust of unit trusts?

That is an example of the way in which hon. Members opposite are hoist with the petard of their own silly propaganda.

As such a State unit trust would be based predominantly on British industrial securities, is it not pleasant to hear the confidence expressed by hon. Members opposite in British industry? Further, does it not highlight the fears of inflation that they have for the future?

I would remind the hon. Member that for the most part my hon. Friends represent those who work in British industry.

asked the Chancellor of the Exchequer if, in order to encourage low-cost inter-city air flights in Great Britain, he will reduce the tax on aviation gasoline for piston-engined aircraft to bring it into line with the tax on fuel for turbo-prop and jet aircraft.

The hon. Member's suggestion has been noted.

Is the hon. and learned Gentleman aware that the tax on fuel for jet aircraft is at the rate of 2d. a gallon whereas the tax on fuel for piston-engined aircraft is at the rate of 39d. a gallon? Since most of the intercity services are carried out by piston-engined aircraft will not the Chancellor do something to reduce the tax on the fuel of piston-engined aircraft, if he is not able to abolish the tax on both?

My right hon. Friend is aware of the facts relating to the incidence of this duty, but he must have regard to wider considerations in determining what changes should be made in the level of taxation.

asked the Chancellor of the Exchequer if, in view of the exporting for the first time of £100 million of Scotch whisky in a single year, he will now take steps to assist the in crease of the industry's sales at home.

I raise my glass to the Scotch whisky industry on this splendid export achievement, but it does not enable me to anticipate my Budget.

Does not the Chancellor think that a celebration of this splendid achievement is called for in particularly good measures? Is it not a fact that for the first time for many years the revenue that he has received in the first nine months since the Budget has fallen? Would not a possible celebration be to recover the £5 million lost to the Revenue as a result of his action in this respect in the last Budget?

I am ready to join the hon. Member in a celebration at any time, but it would be as well to wait for a longer period to elapse before judging the effect on the Revenue, because a considerable amount of forestalling went on before the last Budget.

Will my right hon. Friend consider reducing the tax on whisky and also the tax on tobacco? Does he realise that the cost of my living is rapidly increasing?

Perhaps I can help my right hon. Friend in another way, if he cares to see me afterwards.

asked the Chancellor of the Exchequer what has been the reduction in volume of home sales of Scotch whisky in the nine months April to December, 1965, compared with the similar period of the previous year.

asked the Chancellor of the Exchequer how much revenue has been collected from whisky duty in 1965–66 as against a similar period in 1964–65.

I have no figure for sales. Clearances from bonded warehouses were 7 per cent. lower, but there were unusually high clearances in anticipation of the last Budget. The amount of duty collected on whisky in the period April-December, 1965, was about £105 million compared with £100 million in the same period in 1964.

Does not this reduction show that the tax is too high and that the Chancellor may gain little, if any, extra revenue? Is not nine months a long enough period to even out any pre-Budget forestalling?

No, Sir, I do not think it is. I think that, as the months go by—for example, April to December was far better than the April to October figures which the hon. Member gave me when he came to see me—he will see the constant improvement continue.

Would the right hon. Gentleman not agree that, with the high taxation on whisky and tobacco, the law of diminishing returns is operating? How does the reduction on the produce of this revenue compare with his estimate in his last Budget?

I am afraid that the figures do not show what the hon. Gentleman seems to have been misled into thinking they do. I will gladly give the figures, if he will put down a Question.

Do not the figures also show that the amount of whisky sold to the consumer as a tot is far too small? Is it not time that the tot was allowed to grow into a toddler, at least?

My hon. Friend and I are completely at one on this, but I was under that impression long before the tax was put up.

asked the Chancellor of the Exchequer whether tax reserve certificates purchased by a company may be utilised in future in payment of Corporation Tax or in payment of Income Tax deducted from dividends to shareholders.

It was announced some time ago that tax reserve certificates of the present series and of future series may be used for payment of Corporation Tax. My right hon. Friend has now decided that they may also be used for payment of Capital Gains Tax. Future series held by companies will not be available for payment of Income Tax deducted from dividends.

Is the hon. and learned Gentleman aware that the last part of his Answer will cause disappointment? We welcome the fact that he is able to give this statement now, but is it not a little late—12 months after the Finance Act? Will he now make certain that the usual channels are aware of this information, so that industries which have not known where to go may now obtain the correct advice?

Full particulars will be available in the new prospectus for any new series. This is not the occasion either for great surprise or disappointment. Income Tax on dividends is not a tax on company profits; it is a tax on shareholders' incomes, which is paid by the company as collecting agent. The analogy is that of P.A.Y.E., and tax reserve certificates have never been available for that.

But does not the hon. and learned Gentleman realise that the tax situation has been greatly altered since last year's Finance Bill, that new principles now have to be observed by firms, and that there is a considerable pressure for the Chancellor to reconsider this matter so that the latter part of the Answer could be reversed?

I am aware that substantial changes have been made in our taxation system by last year's Finance Bill. The decision made is clearly in accordance with the principles on which those tax reforms were based.

asked the Chancellor of the Exchequer what representations he has received from local authorities in Ayrshire regarding tax policy on fuel oil used by public service vehicles.

My right hon. Friend has received three letters favouring the abolition of the duty on bus fuel oil.

Is the hon. and learned Gentleman aware that local authorities representing all political views in Ayrshire are united in the view that the tax is against the public interest? Will he, therefore, state clearly whether it is desirable, in his opinion, that costs in public service transport should be reduced and fares to the travelling public reduced also?

Part of that question is for my right hon. Friend the Minister of Transport and I certainly cannot anticipate my right hon. Friend's Budget Statement. I am aware of the widespread representations—highly organised—which have been made by local authorities on this matter. They are perfectly properly made, of course. However, any proposition to increase the grants—there is the grant of 6d. a gallon—must be looked at against our economic situation and the increased demands of public expenditure on our resources.

Were not these representations made to a succession of Tory Chancellors? What was the result?

I do not know what the result was from them—I think it was nothing—but the result last year was that the present grant of 6d. a gallon was made, which costs over £4 million a year.

asked the Chancellor of the Exchequer if he will estimate the gross domestic product for 1965, and what it would have been if it had increased during 1965 by the same percentage as the average annual increase of the previous six years.

Estimates of the gross domestic product for the year 1965 will not be available until late in March.

Is the hon. and learned Gentleman concealing these figures for political purposes? Is he aware that they will almost certainly show much less growth than in the past? Does he remember his party fighting the election on the pledge that the cost of Socialism could be met out of increased growth? Is he now prepared to admit that the cost of Socialism is not only greater but results in less growth?

It is impossible to conceal figures which are not available. I would remind the hon. Member that, under the previous Administration, pre-election booms, like that of 1964, were followed by several years of stagnation. When the figures are available, the hon. Member will see that, so far from stagnation, there has been continuing growth.

asked the Chancellor of the Exchequer whether he will extend the hours authorised for free attendance by Customs officials at London Airport.

My right hon. Friend is considering this as part of a general review of charges for attendance by Customs officials.

Would not the hon. and learned Gentleman agree that the £100,000 which is at present levied on operators through London Airport for Customs attendance outside the permitted hours is a serious handicap for one of Britain's major ports?

As I have said, the matter is being reviewed. I do not wish to comment further than that. I am aware of the figure mentioned.

asked the Chancellor of the Exchequer if he will take steps to allow Income Tax relief for travelling expenses where public transport is used and the annual amount exceeds £26.

No, Sir.

Would not my hon. and learned Friend agree that not to give some form of tax relief for these people who are compelled to travel by public transport and incur a cost of 10s. a week or more places them at a gross disadvantage compared with those who obtain a car from the firm for which they work or receive a substantial car allowance?

I think that my hon. Friend's proposal would work unfairly between different classes of taxpayers, including those for whom public transport may not be available. Generally speaking, our tax system does not take into account variations in living costs, and travelling costs are one such.

asked the Chancellor of the Exchequer whether he proposes to mark the fiftieth anniversary of the inauguration of the National Savings Committee in March, 1966; and whether he will use this opportunity to ensure a renewed inflow of National Savings, to encourage the voluntary workers in the savings movement.

Yes, Sir. There will be a ceremony at the Guildhall on 30th March to which Her Majesty The Queen has accepted an invitation followed by functions in other cities and towns. This will help to encourage the work of the National Savings Movement in its jubilee year.

Is it not satisfying that there are sufficient funds for the local and national committees to carry out the publicity of the celebrations of the jubilee? Would he not agree that, perhaps, a 1 per cent. bonus increase from 1st March would be a great incentive to savings?

As regards the first part of the question, the voluntary work of so many thousands of National Savings workers is being recognised in a very marked way by the allocation of sufficient funds to enable the celebrations to go on. I can make no comment on the second part of the question.

Is it not clear that public money is flowing out of savings certificates, in particular, in a torrent and that unless the Chancellor, in conjunction with the National Savings Movement, looks at some method of increasing the attraction of Savings Certificates, this trend will continue?

asked the Chancellor of the Exchequer if he will initiate studies of turnover tax as a substitute for Great Britain's present system of indirect taxation.

My hon. Friend will be aware of the Report of the Richardson Committee. None the less, I shall keep the issue under review.

May I ask the Chancellor to look at this urgently, in view of the fact that it is more possible to help exports without falling foul of the General Agreement on Tariffs and Trade under this system than under the one which we at present operate?

There was an argument about how far it helped exporters and I do not think that it was clearly resolved. The Richardson Committee did not reach the conclusion of my hon. Friend; but there are other changes taking place on the Continent in relation to value-added taxes which could be met in some ways by adjustments of our own system. I do not want to pre-judge that issue: that is why I say that we shall keep it under review.

asked the Chancellor of the Exchequer what steps he is taking to encourage the growth of investment clubs.

We are trying to reach agreement with the National Association of Investment Clubs on a simplified procedure in relation to Capital Gains Tax.

asked the Chancellor of the Exchequer why he decided to discontinue the ban he had placed on the payment of private pension payments to persons resident in Rhodesia.

In order to safeguard the interests of individual pensioners.

Would the right hon. Gentleman explain why, on 16th December, he firmly rejected the suggestion made by me that private pensioners should be included, that nothing further was said in the House, that a circular was sent out by the Bank of England in January and that no explanation has been given to the House for him completely changing his mind on this subject?

I understand—[HON. MEMBERS: "Answer."]—wait for it—from some private exchanges that there is involved in the question the suggestion that I misled the hon. Gentleman. I have read my Answer of 16th December and I think that it was open to two constructions. [Interruption.] If an attempt at courtesy is to be met in this way, then I really will have to say to hon. Gentlemen opposite that, in my view, my Answer could bear only the construction which I put on it and that the hon. Gentleman drew a different conclusion. There has been no change in policy and he was not misled.

asked the Chancellor of the Exchequer if comprehensive instructions have been issued to district inspectors of taxes from Somerset House, regarding the Finance Act, 1965, enabling them to give authoritative advice to tax payers on difficult tax questions.

Inspectors of taxes have had detailed instructions on the main aspects of the Corporation Tax and more will follow soon. They have also received memoranda on various aspects of the Capital Gains Tax and comprehensive instructions will be issued next month.

Would the Financial Secretary tell the House why there has been this long delay in the issue of comprehensive instructions? It is more than nine months since the last Budget. Is the hon. and learned Gentleman aware that the situation has caused difficulty for inspectors and delay for business men who are trying to plan ahead?

No, Sir. There has been no delay. This major task has been conducted as a matter of urgency. Inspectors have received detailed instructions about the various aspects of the new work when they needed them, and I understand that inspectors have generally been able to answer all the queries raised by taxpayers.

asked the Chancellor of the Exchequer whether, in order to assist home ownership, he will abolish the Stamp Duty on house mortgages up to £3,500.

I have noted the hon. Member's suggestion.

Would the hon. and learned Gentleman bear in mind, when he comes to consider these matters at the appropriate time, that Stamp Duty on home purchases up to £3,500 has been abolished but that the Stamp Duty on house mortgages is still levied? Are not those who must buy their houses on mortgages, certainly on the face of it, in greater need of relief than those who are able to purchase their houses outright?

The transfer duty exemption in fact applies to houses with a value of £4,500. I am aware of the position and I assure the hon. Gentleman that we have looked into the matter carefully. I might add that the Stamp Duty on a mortgage of £3,500 is at present £4 7s. 6d.

asked the Chancellor of the Exchequer whether he will exempt from the currency restrictions at present applying to Rhodesia any funds specifically directed towards institutions supporting multi-racial education.

No, Sir. Each case must be considered on its merits.

Will not the Financial Secretary concede, whatever other objectives might be thought to be either the desirable or inevitable consequences of the sanctions, that the obstruction of multi-racial education cannot be thought to be one of them? Will he reconsider his Answer?

The primary objective is to bring about a return to constitutional Government by making the sanctions affective. We do allow exemptions and each one must be very carefully considered. We realise the value of multi-racial education and some exemptions have been allowed.

Is not the Financial Secretary aware that charitable funds intended for missionary schools for the education of Africans in Rhodesia are being held up because of the policy of Her Majesty's Government? Is this what the Financial Secretary really wants? Does not everyone agree that education is the key to a proper future for Rhodesia?

I think that, generally speaking, charities have been appreciative and understanding of the Government's policy in this matter. The general rule is to allow remittances for current expenditure at the level of 75 per cent. of last year's remittances.

asked the Chancellor of the Exchequer if, in his decision to fix the level of Corporation Tax, he will take account of the need to encourage the smaller savers to invest in British industry.

My right hon. Friend will take all relevant circumstances into account.

May I ask the hon. and learned Gentleman whether the Chancellor of the Exchequer and his colleagues at the Treasury are particularly worried about the great drop which has occurred in savings of all kinds since this Government took responsibility for the affairs of the country?

I do not accept that there has been a great drop in savings of all kinds.

asked the Chancellor of the Exchequer if he is aware that the nation is still not living within its income; what are the main reasons for this; what new steps he proposes to take to achieve this end; and if he will make a statement.

The facts about the balance of payments have been published and are well known but they cannot be too frequently repeated. However, we have made good progress towards our objective of eliminating the deficit by the end of 1966, and if I judge that further measures are required to reach that objective, I shall take them.

Does the Chancellor remember that about a year ago he promised that he would try to make the nation live within its means? Why has he so far failed to achieve that objective?

The answer is, I think, that we have not yet got there, because we set ourselves a two-year target—[Interruption.] I said "a two-year target"—to eliminate the deficit. There is a very good prospect that by the end of this year, certainly on our current account, we shall be in balance.

asked the Chancellor of the Exchequer what is the internal purchasing power of the £ sterling to the most recent convenient date as compared with October, 1964.

On the basis of the index of retail prices, the purchasing power of the £, taken as 20s. in October, 1964, was about 18s. 11d. in January, 1966.

Did I hear the Financial Secretary aright—18s.?

I said 18s. 11d.

This is the greatest inflation since 1951. Can the Financial Secretary say what is the cause of this extraordinary and disastrous inflation?

Yes, Sir. Quite simply, most of the increase was in the early months, as a result of the measures we had to take in order to deal with the deficit which was left to us. Hon. Members can take comfort from the fact that the rise in the index in the last 10 months has been 1·7 per cent.

asked the Chancellor of the Exchequer if he will make a statement on the future of the temporary import surcharge.

My right hon. Friend has nothing to add to previous statements on this subject.

Can the Financial Secretary give any estimate of the feather-bedding which industry is now obtaining in not having to compete because of the surcharge aspects? Is it not now a nonsense that this should have been originally described as a temporary import surcharge?

No, Sir. I hope that industry has not been regarding this as a feather-bedding measure but has been taking advantage of it so as to be able to face the removal of the charge with equanimity.

Is my hon. and learned Friend aware that some of the steepest increases in imports have been in just those categories covered by the temporary surcharge?

In some cases that is so, but it surely emphasises that we were right to apply the surcharge where we did.

Can the Financial Secretary tell us how much longer he thinks the members of E.F.T.A. will tolerate this flagrant breach of the Treaty of Stockholm?

I think our friends in E.F.T.A. are showing great understanding of our difficulties and also understand that it is our intention, which they accept, to abolish the charge as soon as our balance of payments position allows.