asked the Chancellor of the Exchequer why he rejected the recommendation of the Consumer Council on units of decimal currency on the grounds that the proposed smallest unit would be too small for future use.

The Government rejected the 10s.-cent system, not for the reason the hon. Member suggests, but because they agree with the majority of the Halsbury Committee that the £-cent-½ system has greater advantages. The value of the smallest coinage units is the same in both systems.

Does the Chancellor of the Exchequer realise that it was reported in the Press at the time that he has rejected this recommendation for the reason given in the Question? Will he make his present view absolutely clear?

I am obliged to the hon. Gentleman. In fact, I have written to the Consumer Council, which originally raised this matter with me, telling the Council what I have now repeated in this Answer.

asked the Chancellor of the Exchequer why, in view of the Government's policy of restricting office building in the London area, accommodation for the Inland Revenue is being furnished in a new office building, New Maiden House, in the Royal Borough of Kingston-upon-Thames; what steps were taken to provide accommodation for the Inspectors of Foreign Dividends and the training school for inspectors of taxes outside the Greater London area; and what rent is being paid in respect of the provision of accommodation for the Inland Revenue in this building.

Because the staff in question could not be moved outside the London area, and the new office building was not affected by the office control. It is not customary to disclose the rent paid for Government offices.

Can the right hon. Gentleman reconcile that Answer with the information given to me by the Financial Secretary that one section of the staff—the Foreign Dividends people—have been brought into the London area from Hinchley Wood? Is it not absurd and unfair to install the Inland Revenue in offices in the London area when the borough council concerned is forbidden by the Board of Trade to consolidate its own offices to discharge its increased responsibilities?

As the right hon. Gentleman appreciates, any Questions relating to the Board of Trade should be addressed to my right hon. Friend the President of the Board of Trade. As regards the earlier part of the right hon. Gentleman's supplementary question, he will recollect that the office of the Inspector of Foreign Dividends is part of the Surtax Office and, therefore, is incorporated within it.

asked the Chancellor of the Exchequer if he will make a statement on the effectiveness of the measures announced on 20th July.

asked the Chancellor of the Exchequer what estimate he has made of the likely balance of payments outcome for 1966; and if he will make a statement.

The balance of trade is improving. The drain on the sterling reserves has stopped. In the domestic economy there is an easing in the pressure on resources and on costs. The evidence so far available therefore is that the Government's measures are having the desired impact.

What is the Chancellor's latest estimate for the restoration of the balance of payments? Would that include the servicing of our overseas debts but presumably not the capital repayment? What long-term plans has he for steadying up the growth in the rate of local government expenditure?

I see no reason to alter the forecasts made after the July measures, namely, about moving into surplus in 1967. That would include servicing the debt but not repayment of the capital or repayment to the International Monetary Fund, which I would expect to be borne on the reserves. As to the question about local authority expenditure, the Estimates season is coming round and an approach will be made to local authorities in due course about their spending.

Can the Chancellor of the Exchequer be a little more specific in his estimate for 1967? What progress has been made with the £100 million reduction in the level of Government overseas expenditure foreshadowed in the measures of 20th July?

I cannot be more specific on the first part. The second part is a separate question.

Does not the Chancellor of the Exchequer agree that the effects so far have included destroying investment in the private sector of industry, which has dropped calamitously in the last few months? What steps does the right hon. Gentleman propose to take to restore investment in the private sector?

I do not think it is true that private investment has dropped calamitously. I think that what caused the hon. Gentleman to use that phrase is a forecast of what investment will be in 1967, which is a different matter.

What is the maximum level of unemployment that the Chancellor now expects in the coming winter?

I have no reason to alter any forecasts that have been made so far.

asked the Chancellor of the Exchequer how many companies have issued increased dividends during the wages and incomes standstill.

asked the Chancellor of the Exchequer how many public companies have paid higher dividends since 20th July, 1966; and what action he proposes to take.

I would refer my hon. Friends to the reply given to my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) on 20th October.

Is my right hon. Friend aware that there is a very strong feeling in the country that the standstill is not being applied as strictly to dividend increases as to wages and salaries and, if this is so, is it not deplorable?

I am not aware of that feeling. If it is the case, I hope that my hon. Friend will help to dispel it by pointing out that, of the 628 companies that have declared dividends, 616 are within the standstill policy.

Notwithsanding that reply, does my right hon. Friend accept that between 20th July and 19th October some 78 public companies announced increased dividends? Will he set out in the OFFICIAL REPORT a list of the categories of exemptions he has allowed under the dividend standstill, itemising against each category the number of companies which have received exemption?

I am not aware of the figures which my hon. Friend quotes. When he sent me a list before, I found that it was not altogether complete in a number of respects, but I am satisfied that the great majority of companies are conforming to the policy. It does not help the prices and incomes policy to pretend otherwise. All the evidence that I am examining shows that a great many public companies are doing their best and following the advice and request of the Treasury to make their policy conform.

Can the Chancellor confirm that even under Part IV of the Prices and Incomes Act he has no legal authority to require a standstill on dividends?

Yes, Sir. It is the Government's view on this, as on other matters, that if voluntary co-operation can be secured it is the best way of achieving all these ends.

Does my right hon. Friend realise that his policies would commend themselves more to hon. Members on this side of the House if it did not appear that some people are more equal than others? Could my right hon. Friend say that despite the figures he has given, the Government can take measures to ensure that these amounts of money are not given out in the future under the guise of bonus shares or by any other means?

I believe very strongly from what I have seen that the present pressure on profits and on the return on capital necessary to ensure that there is modernisation of plant and investment is not excessive and is' not likely to be excessive during the next 12 months.

asked the Chancellor of the Exchequer what steps he is taking to ensure that private companies adhere to the incomes standstill in respect of distributions to shareholders.

The appeal for a voluntary standstill is addressed to all companies, but most private companies will be close companies and their dividends will have to take into account also the requirements of the tax rules.

Is my right hon. Friend aware that there are about 16,000 public companies in this country and some 523,000 private companies? Will he set out for the House the arrangements he has made in the Treasury to exercise some supervision over this very large sector of industry? Can he tell us how many of the 523,000 private companies are close companies?

No, Sir. As I have already explained to my hon. Friend on other occasions, a close company is not a permanent position. It varies from year to year and, therefore, no central list can be drawn up. As to the proportion between public and private companies, it is true that public companies represent only 2 per cent. of the total, but they account for the overwhelming proportion of the total profits.

If in close companies like this the Chancellor requests that dividends shall be restricted, will he still allow the Inland Revenue to direct for Surtax purposes?

Yes, Sir, because that is the law, and it would be a means of tax avoidance if it were set aside. I should like some of my hon. Friends to understand that.

Does the Chancellor agree, and will he explain to his hon. Friends, that the object of getting the close companies to pay dividends is to enable him to collect Surtax? Would he not agree that, if these companies did not make profits, Income Tax for the rest of the population would have to rise?

The proper policy is that companies should make a fair return on capital which would enable them both to accumulate savings to modernise their plant and machinery and to give a reasonable return on what is employed. It is foolish to try to equate return on capital in this way with some other items in the economy.

asked the Chancellor of the Exchequer what steps he has in mind to discourage or prevent any dividends now frozen by current policies from being paid in full immediately following the freeze.

There are fiscal powers and other means to prevent an excessive growth in dividends.

Does my right hon. Friend recognise the extreme vagueness of that Answer? Does not he recognise that a dividend payment frozen now is simply a payment deferred, whereas a wage frozen now is a wage lost for ever? It is this kind of vagueness which makes it difficult for far too many people to accept the justice of the Government's claim that the prices and incomes policy is just.

I do not know whether my hon. Friend was present when we had an earlier exchange on these matters.

I was.

In which case, my hon. Friend will have heard me say that there is a substantial pressure on costs now which will have a substantial reflection in profitability over the next 12 months. I do not believe that we are going to be concerned with a problem of an excessive return on dividends. We are going to be concerned with other problems apart from that.

Is the Chancellor aware that the only way to increase investment is to increase savings, that entirely different considerations apply to saving and investment than to wages, and that the best way of increasing savings would be to allow dividends to rise?

I am all in favour of higher savings, both personal and in a corporate capacity. That is one reason why Corporation Tax has been fixed at the low rate of 40 per cent., whereas, of course, if profits are distributed in the form of dividends there is a higher rate of tax. That is also why I introduced the new National Savings Certificates, which are achieving very good results.

Will my right hon. Friend acknowledge that, if there is a sudden upsurge of dividend releases during the severe restraint period—[HON. MEMBERS: "Oh."] This is important, and I know that hon. Members opposite consider it to be as well—all the appeals to wage earners to continue restraint will be totally ignored, with justification?

I accept that. That is why dividends were included in the White Paper on Prices. Incomes and Dividends. But what I am trying to point out is that this is not a genuine problem with which we are confronted at the present time. It is far more important that we should concentrate on problems which exist than problems which do not.

asked the Chancellor of the Exchequer why bars situated be yond the Customs barrier at London Air port are obliged to charge duty on the individual drinks which they sell, whereas travellers are able to buy spirits by the bottle duty-free.

Because drinks bought at the bars are consumed in this country, whereas bottles bought from the duty-free shops are exported for consumption abroad.

asked the Chancellor of the Exchequer when he will conclude negotiations with the Federal German Government regarding the foreign exchange cost of British troops in Germany; and whether it is still his policy to ensure relief from the whole of this cost.

asked the Chancellor of the Exchequer if he will make a statement on his talks with the German Government on 13th–14th October on the financial arrangements for the British Army of the Rhine after March 1967.

It remains the Government's policy that these costs should by one means or another be covered in full. It is my hope that the tripartite talks proposed by the U.S. Government will lead to a satisfactory outcome at an early date.

Does the Chancellor recall that, in his Budget Statement in May, he said that he intended to achieve agreement on this by the autumn? Can we take it that the autumn will run a little late this year?

Yes, Sir. I think we can.

Could my right hon. Friend tell us how much has been utilised against the offset arrangements already in existence for the two years to March 1966?

I should be glad if my hon. Friend would put that Question down. I have a figure in my mind, but I prefer not to quote it at the moment.

Will my right hon. Friend tell the Bonn Government that, if they are prepared to cover only half the costs, we shall reduce our military expenditure in Germany equally by half?

That position has been made clear, not in relation to the percentages, but to the necessity for getting full cover for the troops in Germany.

asked the Chancellor of the Exchequer if he will give instructions to the Inland Revenue to relieve the taxpayer from the obligation of calculating the historical cost of investments in cases where he is claiming a capital loss on the sale of such investments.

The Revenue does not insist on a precise calculation of the cost of investments acquired before 6th April, 1965, where it clearly exceeded the value on that date.

Can the Chief Secretary confirm that, where a taxpayer claims an allowable loss, the onus is on the Inland Revenue to say that he is not entitled to it because of the historical cost of the shares?

I could not reply in precisely those terms. Where the gain can be shown to be less in the period from Budget day than from the date of original acquisition, the gain is limited. Similarly, where the loss is greater, the loss is limited. It is only in those cases where the taxpayer wishes to establish the historical cost that the question arises.

asked the Chancellor of the Exchequer what progress has been made in getting a clause inserted in all Government contracts that no forms of colour and race discrimination shall exist.

The Government are consulting the Trades Union Congress and the Confederation of British Industry on ways of using Government purchasing to discourage racial discrimination in employment.

Would my right hon. Friend be a little more explicit? Is it the Government's intention to put a clause into all Government contracts, and, if so, is there any chance that such a clause will be finalised by the end of the year?

The purpose of the consultations is to decide the best way of achieving this principle. Therefore, I cannot give an answer at the moment to the first part of my hon. Friend's question.

Could the Chancellor tell us, on this important matter, whether it is legal difficulty—that is, basically the question of definition—that is holding this up, or whether anybody is raising objections on the principle of what it seeks to do?

I do not think it is legal difficulties or objections in principle. The matter has gone to the T.U.C. and C.B.I., who are turning their attention to what is the best way of achieving the principle, and I do not think that the legal difficulties concern them at the moment.

asked the Chancellor of the Exchequer whether he will allow fees paid by taxpayers to recognised accountants for completing tax returns to be deducted from gross tax liability, in view of the increased complexity of the returns.

No, Sir.

Will the Chief Secretary re-examine this? Surely it is in the interests of the Exchequer to get tax returns filled in promptly and accurately? Would it not gain more than it would lose by accepting this?

We are following the normal rule, whereby accountancy charges for valuations in arriving at the amount of the capital gain are deductible but charges for completing the income tax return are not allowed.

Do not a large number of taxpayers pay millions of £s a year in excess tax which they should not have to pay? Surely it is only right and proper that the Government should permit this allowance?

It has long been the practice for taxpayers to have freedom to get advice if they require it. Some taxpayers with simple tax returns get advice; some with complicated Surtax returns do not get advice. It is up to the individual to make his decision.

Is not this another of the anomalies, pursued with such vigour by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), of the difference between the Schedule D and the Schedule E taxpayer? Is it not the fact that the Schedule D taxpayer is entitled to set off some part of his accountant's expenses against his tax return, while the Schedule E taxpayer is not?

No, Sir, it is not anomalous. No, the Schedule D taxpayer is not so entitled. [Interruption.]

asked the Chancellor of the Exchequer whether he will now seek to exempt British consulting engineers from Selective Employment Tax, in view of their contribution to exports.

It is impracticable to exempt them from payment of tax. As promised, in the coming months I will be taking stock of a number of aspects of the arrangements of paying premiums or refunds. But I cannot anticipate now what changes, if any, will be made.

May I take it that one of the intended purposes of the tax is to increase exports? If that be so, why should a business which, in most of its firms, has at least 75 per cent. of its work going in exports be subjected to this tax, and why should it be subjected to the tax when most of its competitors abroad are being subsidised?

I shall be taking stock of a number of aspects of these arrangements, and this will undoubtedly come into consideration; but I could not give any promise on it.

asked the Chancellor of the Exchequer on what terms he has authorised the Bank of England to give gold guarantees in relation to credit held by foreign banks.

I have authorised no such guarantees and none has been given.

In that case, could the Treasury public relations officers make this important fact quite clear to the informed Press?

If we spent our time correcting all the misinformation in the Press, we should not have time to do anything else. But, on this particular matter, which was repeated in a weekly and in a well-informed Sunday newspaper, a correction was put out immediately.

asked the Chancellor of the Exchequer if he will take steps to extend to savings accounts in the joint stock banks the exemption from Income Tax for the first £15 of interest which is available to those with savings accounts in trustee savings banks.

No, Sir.

Will the right hon. Gentleman accept that, while the trustee savings banks have special arrangements with the Treasury regarding disposal of their funds, to an individual saver this just does not make sense? Is there any way by which he could get round it, and will he provide fair and equal treatment for all savers?

The present arrangement is to provide fair and equal treatment. On like accounts similar treatment is already provided.

asked the Chancellor of the Exchequer what changes have been made by the Treasury in the dollar portfolio; and how much of this has been liquidated since 1st January, 1966.

asked the Chancellor of the Exchequer to what extent he is continuing to liquefy the remaining portfolio of American securities; how much sales have amounted to in the last three months; what is the holding of cash and short-term bonds to the most recent date; how much of these has been used to support sterling in the last three months; and if he will make a statement.

I have nothing to add to my Answer to the hon. Member for South Angus (Mr. Bruce-Gardyne) on 28th July.

Will the Chancellor of the Exchequer state what the value of this portfolio is now and how much has been liquidated to date?

It is not the practice to give details of sales, but no transfers have been made to the reserves since my statement on 5th March last.

In view of the very welcome answer which the Chancellor gave to Question No. 4 this afternoon, when he said that the position of sterling was very much better—for which we are all very grateful—why cannot he give us more information on this matter, since it is generally felt that we are living on our seed corn? Why not give the details and dispel that wrong impression?

It has never been the practice to give details of this kind, because they do influence the market. I suggest to the hon. Gentleman that it is not in anybody's interest that he should press me to do so.

asked the Chancellor of the Exchequer if he will tabulate in the OFFICIAL REPORT the value of Government investment, Government loans, private portfolio investment, and manufacturing investment, respectively, in the whole world, in the United States of America, in Western Europe, the Commonwealth and developing countries at the present time; what was the income to this country in the year ended 5th April, 1966; and what was the return of capital invested in each of these areas and in total.

I regret that not all this information can be provided in the form requested by the hon. Member, but I will circulate the available information in the OFFICIAL REPORT.

Can the Chancellor confirm that the drain due to Government expenditure as outlined in the Financial Times is continuing at that rate? Further, will he confirm that return on investment—I mean investment overseas—has been improving over the last five to ten years and state whether or not he expects that this will continue?

Although I am an avid reader of the Financial Times, I regret that I do not recall that particular article. But I think that the hon. Gentleman, if he studies the statistics contained in the answer to his Question, will find the information he wants.

asked the Chancellor of the Exchequer what consideration is being given to the negotiation of a new double taxation agreement with India, in view of the hardship caused to the British business community in India by the devaluation of the Indian rupee.

There have been discussions with India on a number of occasions about a double taxation agreement, but so far it has not been possible to make one.

The British commercial community in India faces almost total destruction by reason of the devaluation of the Indian rupee. Does the right hon. Gentleman appreciate that important sections of that community believe that their position could be made tolerable if a new double taxation agreement were negotiated?

I recognise the importance of what the hon. Gentleman says, but there is no point in signing an agreement which does not contain terms which are satisfactory to both sides.

Will my right hon. Friend see whether he can do anything to help the few members of the old I.C.S. who remained in Indian Government service and whose financial conditions of service are now affected by rupee devaluation?

That is a very different question.

asked the Chancellor of the Exchequer how many members of the staff of the Inland Revenue are wholly employed on work relating to the Capital Gains Tax; and how many are employed part time on making Capital Gains Tax assessments.

Seven officers are wholly employed on Capital Gains Tax, but work on the tax forms part of the duties of a substantial proportion of Inland Revenue staff.

Is the Treasury making any study of the time which might be saved in staff duties by exempting, say, the first £200 of capital gain from tax?

This question has been gone into many times, and the proposal which the hon. Gentleman has made is not likely to result in any saving of time whatsoever.

Why is it that this staff are unable, with their other duties, to answer the question which I put to the Chancellor yesterday, namely, to give the total forward losses for Capital Gains Tax which have been agreed?

I am not aware of what Question the hon. Gentleman has put to my right hon. Friend.

asked the Chancellor of the Exchequer (1) whether, in view of the present difficulties of the motor industry, he will relax the present restrictions on hire-purchase dealings in motor cars;

asked the Chancellor of the Exchequer, in view of the heavy decline in demand for motor cars on the United Kingdom market and consequential increased cost per unit for production of motor cars for export, whether he will relieve purchase tax on motor cars by a reduction from 27½ per cent. to 15 per cent.

I regret that I cannot propose any relaxations of hire-purchase restrictions or Purchase Tax for the motor car industry at the present time.

Will my right hon. Friend agree that the belief that export sales are stimulated by restrictions on the home market has been completely disproved by past experience and that, in fact, export sales have always been highest when home sales have been highest? Is it not clear that it cannot be a contribution to the long-term economic strength of this country to weaken one of our major exporting industries, and will the Chancellor, therefore, at the very least reduce the deposit restriction from 40 per cent.?

I do not think that it is true that exports are necessarily helped or hindered by a home sales market. What is true is that, if the home market is restricted, there is an increase in unit costs and that, clearly does not help exports. On the other hand, in present circumstances, in view of the need to lower the pressure of demand at home, I hope that motor car manufacturers will press ahead with more exports during the next 12 months, because there is a good long-term market available.

I congratulate the Chancellor on his belated recognition that a diminution of throughput of motor cars must necessarily raise unit costs, but does he now understand that in the motor car manufacturing constituencies of the Midlands there is a 30 per cent. decline of output for the home market, which is raising export costs very steeply and making British cars highly uncompetitive in price overseas?

No, Sir; I do not recognise that. I believe that it is possible to export British cars, given the after-sales service, given delivery on time, and given good quality and reliability. It is not price that is making it impossible to export them. It is still true that car manufacturers can make a reasonable return on capital.

Does not my right hon. Friend recall that the practice of controlling the economy by tinkering with hire-purchase deposits was condemned long ago by the Radcliffe Committee as a harsh, abrupt and unreasonable way of controlling the economy? Will he reconsider this matter?

I acknowledge that, but it is necessary to use the instruments which are available, and in the circumstances of this year it was important to lower the pressure of demand.

Will the Chancellor explain to his hon. Friends that, as the difficulties of the motor car industry are the result of deliberate Government policy, the only way to assist is to change the political complexion of the Government and the political complexion of the membership for Oxford?

I have a feeling that the burgesses of Oxford City will not want to go back to the days when the right hon. and learned Member for St. Marylebone (Mr. Hogg) was a Minister, when Purchase Tax on cars was not at its present rate of 27½ per cent. but at 60 per cent.

In view of the unsatisfactory nature of the Answer about Purchase Tax, I beg to give notice that I shall endeavour to raise this matter on the Adjournment, as I am properly able to do.

asked the Chancellor of the Exchequer, since the motor car manufacturing industry now expects its gross profit to fall by £40 million as a consequence of Her Majesty's Government's economic policy of creating mass unemployment, how much less taxation he will get from this industry; what other major trades will be affected in the same way; how he proposes to deal with this problem; and if he will make a statement.

Any estimate of the effect on tax receipts of the current trend of output in the motor industry is highly conjectural, and I have no statement to make.

The Chancellor must know that the Motor Traders Association issued a statement saying that it expected a reduction of £40 million on its earnings this year, which will mean that he will not collect nearly so much in taxation. This experience will be the same in other industries. Will not this affect his estimates for the collection of taxes from companies during the current year?

Yes, Sir, but I have no statement to make on it today.

asked the Chancellor of the Exchequer if he will seek to amend the Selective Employment Tax so as to enable part-time workers to be employed for 16 or more hours instead of the present eight hours before employers have to pay the tax on them.

A watch is being kept on the effects of the tax on the employment of part-timers. I shall bear my hon. Friend's suggestion in mind.

While I thank my right hon. Friend very much for that Answer, may I ask him whether he thinks it a good thing for the country or for the individual that elderly, disabled and other part-time workers should be suffering a shake-out because of this? It is already beginning to happen.

No, Sir. I do not think that it would be a good thing. Indeed, we are keeping a very special watch through the Ministry of Labour on the extent to which this is happening, and I am glad to say that there is no strong evidence yet that it is taking place.

Does not the Chancellor agree that we might listen to the hon. Member for Salford, East (Mr. Frank Allaun) with more sympathy if he had supported the Opposition in the Amendments they moved to the Selective Employment Payments Act which dealt with part-time workers, the disabled and the elderly?

asked the Chancellor of the Exchequer, in view of the investment slump in the private sector of British industry, and calculated decline in productivity in ensuing years resulting from this investment slump, what steps he proposes immediately to take to encourage increased investment in the private sector.

This matter is under continuous review and the Government will be ready to consult with industry at all times.

Has the right hon. Gentleman observed that the Board of Trade itself has postulated a reduction of 7 to 10 per cent. in investment in the private sector next year, and that the C.B.I. has now said that it estimates it at 15 to 25 per cent.? As these are grave figures, cannot the right hon. Gentleman expedite his incentives for increasing industrial investment?

I did not indicate in my Answer that there are to be incentives for increasing industrial investment. I said that we were ready to consult with industry.

While accepting that, in the present circumstances, any incentives could only be of marginal effect, may I ask my right hon. Friend to bear in mind that there would be a very important psychological effect if he brought forward the payment of the cash grants?

I will certainly take that into account, but it is primarily a matter for my right hon. Friend the President of the Board of Trade. There are, of course, administrative problems concerned with this, but, although there is clearly some difficulty about liquidity, the real problem for industry is that it must have some belief that there is going to be a long-term market in which to sell its goods. That is why some of the measures proposed would not necessarily achieve the objectives that those who want to stimulate investment have in mind.

Will the Chancellor accept that the aspect of the present economic situation causing most concern is the question of investment, and if, as he indicated in answer to an earlier Question, he sees something of a slide coming in 1967, more serious perhaps than we have seen before, how soon can we expect a statement on the Government's intentions?

I agree that this is the matter that the House and the country should concentrate on. We need, in present circumstances, to maintain a high level of investment, and it is the Government's desire to encourage this by adopting measures which will successfully stimulate it and will not just mean the expenditure of more public money. I cannot go further today than my original Answer. The matter is under continuous review, and I am ready to consult with industry about it at any time.

asked the Chancellor of the Exchequer whether he is aware that uncertainty exists over the effect of Section 77 of the Finance Act, 1965, on the liability for Corporation Tax of close companies; and whether he will publish an explanation of the tests that are being applied by the Inland Revenue to determine the required standard under Subsection (3)(a) of that Section.

I am not aware of any reason for uncertainty. The tests referred to are the same as those which have applied for many years under the company Surtax legislation.

Is the right hon. Gentleman aware that some close companies are interpreting the Section as an encouragement to pay the greater part of their profits out as dividends instead of using them for re-equipment and expansion? This would appear to be contrary to Government policy. Will the right hon. Gentleman clarify the position?

There is no reason for that kind of interpretation. It has been made clear time and again that a company which has good business reasons, as laid down in the Section, for retaining profits is entitled to do so irrespective of how small the resulting dividend might be.

asked the Chancellor of the Exchequer if, for the period of the voluntary dividend standstill, he will suspend for publicly-quoted close companies the provision in the Finance Act, 1965, requiring them to increase their dividend where they increase their profits.

No. Sir.

Is not this quite a Gilbertian situation? Would the right hon. Gentleman confirm mat publicly quoted close companies, of which there are a number, are forced to pay out increased dividends on the Stock Exchange if they increase their profits, while publicly-quoted non-close companies are encouraged not to increase their dividends? What possible logic is there in this situation?

The logic of that situation has been explained many times from this Box. There is no differentiation to be drawn between publicly quoted and not publicly quoted close companies. Close companies exist; and for the purposes which we all know—in order to comply with the tax rules and to prevent the avoidance of Surtax—dividends to correspond with the provisions of the Act have to be declared.

asked the Chancellor of the Exchequer what was the amount brought in by the tax introduced in 1962 on short-term capital gains for the period until 5th April, 1965; and what is his estimate of the cost of collecting this sum.

About £4½ million. The cost of collection cannot be segregated from the cost of collecting other taxes.

Would not the right hon. Gentleman agree that the ratio of expenses to amount collected under the tax instituted by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) was a far better ratio than anything achieved to date by the Capital Gains Tax system introduced by the present Chancellor?

I could not possibly offer any statement at all, for nobody knows what either ratio is.

asked the Chancellor of the Exchequer why he has withdrawn entitlement to first-class travel for chief preventive officers in the Customs' Water-guard Service.

As explained in my hon. and learned Friend's letter of 22nd September to the hon. Member, this was a consequential effect of a pay agreement reached earlier this year, and the arrangements conform with the standing conventions in the Civil Service as a whole.

But surely there was no need to take away the privilege of first-class travel from those who had it?

I can only repeat—and the hon. Gentleman will recollect this from his own experience—in the Civil Service these matters are consequential upon salary levels.

In view of the unsatisfactory nature of the Reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

asked the Chancellor of the Exchequer by how many the number of civil servants has increased since 15th October. 1964.

The number of non-industrial civil servants (excluding the Post Office) increased by 19,500 between 1st October, 1964, and 1st July, 1966.

When does the Chief Secretary estimate that the number of civil servants will fall below the number which it was on 15th October, 1964, under a Conservative Government?

No such estimate has been prepared.

Would the right hon. Gentleman agree that the total extra annual cost involved must be very nearly £25 million?

The simple normal way of calculating these costs is about £1,000 per civil servant.

asked the Chancellor of the Exchequer if he will seek to increase the concessionary allowance for luncheon vouchers, in view of the rise in the cost of meals since the concession was introduced.

No, Sir.

Is my right hon. Friend aware that the value of this concession has been progressively reduced by inflation over the past 15 years, placing the recipients of luncheon vouchers at a great disadvantage compared with those who have canteen meals?

I do not know whether my hon. Friend realises that a daily luncheon voucher of 3s. is equivalent to a tax-free payment of some £35 a year and, in comparison with normal canteen subsidies, 3s. is still on the generous side. It was that comparison which caused the original issue of free luncheon vouchers.

asked the Chancellor of the Exchequer if he will make a statement on the Press cutting service made available by his Department to hon. Members.

My Department does not provide any such service for hon. Members.

I thank my right hon. Friend for the fact that the Treasury pays £2,800 a year towards this new scheme. As he has some responsibility, will he bring the attention of hon. Members to this library, which will help them to do their work far more effectively and more quickly and which is a replica of the service provided by The Times Press cutting service?

I am grateful to my hon. Friend, who is, of course, referring to the service provided by the Library.

Is the Chief Secretary aware that a Press cutting service for hon. Members is allowed as a charge against Schedule D but not against Schedule E, and will he therefore reconsider his earlier answer, which was entirely wrong?

I shall be grateful if the hon. Gentleman will send me any particulars, which I shall be only too glad to look into. I expect that the hon. Gentleman was talking about his own affairs. I confirm the precision of the words which I used in my previous statement.

How long has this Press cutting service been in existence?

I think since June.

Will it be noted that the Press cutting service will have been charged by the hon. Member for Worcestershire, South (Sir G. Nabarro) as a deductible expense in his capacity not as a Member of Parliament but as a public entertainer on television?