asked the Chancellor of the Exchequer if he will publish the findings of the Civil Service Pay Research Unit in order to provide a comparison of pay and conditions between private employment and the norm accepted by the Civil Service National Whitley Council.

No, Sir. Much of the information received by the unit is available only if treated as confidential.

Will my hon. and learned Friend accept that this was intended to be a helpful Question? Would not he agree that the very important finding of this unit would be helpful in setting an objective standard by which we could decide precisely who were the lower paid workers?

I accept what my hon. Friend says about his intention, but the difficulty about publication is that the usefulness of this work depends on retaining confidentiality.

asked the Chancellor of the Exchequer if he is satisfied that the staffing and working methods of the Inland Revenue are adequate to meet all the demands of economic and social planning especially in the field of personal taxation; and if he will make a statement.

The Inland Revenue has been staffed to carry out the work which Parliament has directed it to do. Working methods are kept under continuous review to meet changing requirements.

Will my hon. and learned Friend confirm that changes in taxation which are necessary on social grounds will not be held up on the plea of administrative difficulty?

That is rather a wide proposition. Administrative factors are often very important in deciding what alterations one can make to the tax position, but I assure my hon. Friend that social considerations are very much taken into account when considering taxation proposals.

Would not the hon. and learned Gentleman agree that it is desirable that all forms of taxation should be operated by the fiscal departments, and as we had a most serious departure from this last year with regard to the Selective Employment Tax, can he say when the normal Department will regain control of this tax?

The right hon. Gentleman will understand that I cannot make any statement on that at this stage.

asked the Chancellor of the Exchequer what loan repayments will be made during 1967 by Her Majesty's Government to the International Monetary Fund.

The Government will repay in full by 2nd December, 1967, the drawing of £357 million taken in December, 1964. The balance outstanding has already been reduced to £311 million as a result of drawings of sterling by other countries from the Fund, and this figure may be reduced still further by similar drawings during the year.

Will my right hon. Friend say whether, in certain circumstances, the remainder of the debt for 1967 will be delayed, and can he give target dates for the other loan repayments to the International Monetary Fund?

No, Sir. I see no prospect of delaying the payment of the first instalment. It will be very much to the credit of this country when the repayment is undertaken in full. The second drawing is repayable some time between 1968 and 1970.

Has the right hon. Gentleman made any estimate of the proportion of Government portfolio investments which might be needed for this repayment?

I am not able to make any statement about that today.

asked the Chancellor of the Exchequer (1) what was the total cost to Great Britain, including loss of trade, loss of invisible earnings, loss of sterling balances, subsidies to Zambia, military and naval policing, and all other measurable effects, direct and indirect, of the Government's sanctions policy against Rhodesia, in the first full year;

(2) what he estimates will be the total cost to Great Britain, including loss of trade, loss of invisible earnings, loss of sterling balances, subsidies to Zambia, military and naval policing, and all other measurable effects, direct and indirect, of the Government's sanctions policy against Rhodesia for the first full year following the implementation of the United Nations resolution on mandatory sanctions.

asked the Chancellor of the Exchequer what has been the effect on the British economy of sanctions against Rhodesia.

asked the Chancellor of the Exchequer if he will now publish a White Paper showing the cost to this country of Rhodesian sanctions bearing in mind military costs, loss of trade and invisibles, emergency loans, and, taking 1964 as the norm, increased import prices and cost of foreign exchange for raw material substitutions.

I would refer the right hon. and hon. Gentlemen to the Answer which my right hon. Friend the Prime Minister gave to a Question by the right hon. Gentleman, the Member for Streatham (Mr. Sandys) on Tuesday, 21st February.—[Vol. 741, Cols. 1433–8.]

But is it not patently absurd for right hon. Gentlemen opposite to continue to try to pretend that they can separate the cost of the sanctions policy from their total attitude and policy against Rhodesia, and will they now come into the open with the House and say how much it is costing the country, instead of writing it up in the Commonwealth and trying to play it down here?

That seems to be largely a matter of opinion, but if the hon. Member reflects he will see that it is impossible to measure the effect on the balance of payments arising out of sanctions as distinct from the whole illegality of the action. I ask any Member who disputes this to reflect how it is possible to determine what effect there would have been on the cost of copper under certain alternative circumstances, and how one is supposed to enumerate that in the balance of payments. That is why I have consistently given the House of Commons the effect of the loss of exports and the direct effect on the Exchequer.

Surely the Chancellor must be able to make an estimate. He must have some idea of the cost of Rhodesian U.D.I., directly and indirectly, on the British economy. Cannot he give the House an approximate figure. Is it £100 million a year, or more?

On a number of occasions I have given the House the direct cost to the Exchequer. [Interruption.] The hon. Gentleman asks for both the direct and indirect cost. As to the indirect effect, there are so many alternative assumptions which can be made that in my view no reliable estimate can be made, but if I had to make a guess I would guess at a figure somewhere between £50 million and £100 million.

Surely whatever the Chancellor may say in this House, this sum has been worked out by his Department. Surely he can tell the House what that sum is. I have given details to him not of copper but of other things.

That is putting the same question in a different way. I have nothing to add to what I have already said.

Will my right hon. Friend bear in mind the possibility of suing the Rhodesia Front and its supporters for the cost of their action?

That is a different question from the one I answered.

How is it that the Chancellor says that he cannot give an estimate, when the Prime Minister was able to give an estimate of about £100 million for the total cost to Britain, at the Commonwealth Prime Ministers' Conference last September?

I have already said that it is not possible to give a reliable estimate of that. If the right hon. Gentleman has any evidence perhaps he will produce it and tell us where he got it.

asked the Chancellor of the Exchequer what was the annual amount received from petrol tax for the years 1960, 1961, 1962, 1963, 1964 and 1965; and what was the annual amount received from car registration fees for the same years.

With permission I will circulate a table of figures in the OFFICIAL REPORT.

Can my hon. and learned Friend say how much it would cost the Inland Revenue account to register one car?

Not without notice.

asked the Chancellor of the Exchequer what would be the loss to the Exchequer if the annual registration fee was reduced from £17 10s. per annum to £2 10s. per annum; and how much per gallon would have to be added to the present tax on petrol in order to recoup such a loss

£145 million and 8d. per gallon.

I do not ask my hon. and learned Friend to anticipate his right hon. Friend's Budget, but I suggest that he has sufficient information in these two Questions to form the basis of a reasonable reform in April.

I do not know whether my hon. Friend appreciates that, since commercial and industrial vehicles use more petrol than private vehicles, what he is proposing would represent a substantial shift in taxation from private motoring to industrial costs.

asked the Chancellor of the Exchequer if he will introduce legislation to enable the Board of Customs to be amalgamated with or taken over by the Board of Inland Revenue.

No, Sir.

Is the hon. and learned Gentleman aware that if this suggestion were adopted the Commissioners of Customs and Excise might contract the desirable habit of repaying money to which they have no entitlement? Will not he examine Customs procedures, especially with regard to bonding and returnables, because their inflexibility tends to produce both inefficiency in trade and injustice?

If the hon. Member has anything to support his wild allegation I will consider it. The case that he has in mind—which I know he has been discussing with the Chief Secretary—is not one in respect of which I accept his point of view.

In view of the most unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

asked the Chancellor of the Exchequer if he will introduce measures to provide a financial inducement to cigarette smokers to change to the smoking of pipes or cigars.

As this is a budgetary question, no comment can be made now.

Is the Financial Secretary aware that a transfer from cigarette smoking to the smoking of pipes and cigars could result in a future saving of thousands of lives every year? Secondly, will he accept my assurance that it would be an easy matter to impose a stamp duty on each packet of cigarettes while making an overall reduction in tobacco duty, so as to maintain the revenue at the same level?

The hon. Member's latter suggestion is not as simple as he thinks. This matter was raised in the debate on last year's Finance Bill. I can assure the hon. Member that my right hon. Friend has taken note of what he has said.

Does not my hon. and learned Friend agree that 30,000 deaths a year in this country from lung cancer form a strong argument for changing tobacco taxation? Will not he assure the House that he will consult his right hon. Friend the Minister of Health before the final Budget proposals are brought before the House?

My right hon. Friend has already taken note of this and will consider the matter with my right hon. Friend the Minister of Health.

Will the hon. and learned Gentleman resist these blandishments to use the tax system for a purpose for which it was never devised, namely, to warp consumer choice? Will he leave it to consumers to decide what they smoke?

If the hon. Member will read carefully what I have said I think he will find that I have neither accepted or resisted the blandishments.

Does my hon. and learned Friend realise that if he took some tax off tobacco it would have a remarkably calming influence on hon. Members?

asked the Chancellor of the Exchequer what proposals he now has for reflating the economy.

asked the Chancellor of the Exchequer if he will make a statement on the reflation of the economy.

asked the Chancellor of the Exchequer in view of the lack of confidence now felt in many sections of trade and industry and the depressed balance sheets being reported, when he proposes to take steps to reflate the economy; what will these steps be. how long they will take to become effective; and what effect they will have on his plans to strengthen sterling.

I cannot anticipate my Budget statement.

Does that reply mean that the Chancellor hopes to make some progress towards this end in his Budget statement?

No, Sir. It means that I cannot anticipate what I shall say on 11th April.

Notwithstanding that reply, does my right hon. Friend accept the view of the London and Cambridge Economic Service that the loss to the British economy in 1967 caused by the Government's policy of deflation will amount to £1,000 million, in terms of lost output? If so, does not he agree that this is a most shortsighted and socially undesirable way of solving a phoney balance of payments crisis?

No, Sir.

Does the right hon. Gentleman look for a fall or an increase in productivity this year?

An increase in productivity.

asked the Chancellor of the Exchequer what tax rebates have been made to public schools in each of the years 1960, 1961, 1962, 1963, 1964, 1965 and 1966; and what is the estimate for 1967.

I regret that this information is not available.

Does my hon. and learned Friend agree, if it were necessary to have to agree, that by no stretch of the imagination can these exclusive institutions be described as charities and that the Government should give early priority to defining the meaning of a charity in law?

That is a separate question, not for my right hon. Friend. It would be an invidious task for my right hon. Friend to have to pick and choose between different charities.

Whatever may be the social arguments, is it not abundantly clear on financial grounds that these schools save the taxpayers far more than the schools could ever get in rebates?

asked the Chancellor of of the Exchequer what plans he has to exempt registered charities from Purchase Tax on Christmas cards.

asked the Chancellor of the Exchequer whether in order to enable printing contracts to be placed in good time for next Christmas he will reduce Purchase Tax now levied on Christmas cards sold by charitable organisations.

I would refer my hon. Friends to the reply given to the hon. Member for Belfast, South (Mr. Pounder) on 21st February, to the effect that such a reduction would result in unfair competition with other Christmas cards which have to bear the tax.—[Vol. 741, c. 241.]

Does not my hon. and learned Friend agree that, in view of the important work done by charities in promoting a sense of social responsibility and in practical social work, there is a need for an urgent review of this tax, and its elimination altogether?

For the reason that I have given I do not think that this would be acceptable. Where charities enter into trading activities, most people would expect them to trade on an equal basis with those with whom they compete. Their profits are free of tax.

Instead of protecting commercial Christmas card operators, would it not be better if the Treasury reviewed this matter in the light of the economic squeeze which has made life very hard for charities for the last few months?

I do not think that charities are suffering in this way. It is not a matter of protecting other traders, but protecting the Revenue.

In view of the fact that the Chancellor told me previously that he has received no representations from manufacturers or retailers protesting against the system which gave preference to charities, will not he reconsider the question and at least consider repaying to charities, in the form of a grant, the difference between the tax as it now stands and the tax that he proposes to impose?

The principle involved is an important one. It cannot be confined to Christmas cards. If this concession were to be made there are many other fields in which charities could turn to trade, and trade on terms which meant that they did not compete fairly. The suggestion that the hon. Member is making would mean concealing what would still exist—discrimination in favour of charities.

asked the Chancellor of the Exchequer whether he will introduce legislation to secure the posponement of any increases payable under the Civil List Act, 1952 until the end of the period of the wages standstill and severe wages restraint.

No, Sir.

Is it not both unfair and provocative that thousands of men taking home less than £13 a week should be denied a small increase, when an 18-yearold schoolboy can have his income doubled to £30,000 a year?

I do not think that that is the position. The Civil List Act of 1952 laid down quite clearly in Section (2) what were to be the payments to the Duke of Cornwall, and it is that legislation which is now being fulfilled.

asked the Chancellor of the Exchequer what plans he has to simplify the tax system.

I would refer the hon. Member to the Answer my right hon. Friend gave on 17th January to the hon. Member for Folkestone and Hythe (Mr. Costain)—[Vol. 739, c. 6]—and to my speech in the debate on 27th January. —[Vol. 739, c. 2006–20.]

Would not the Treasury be well advised to start a pro- cess of simplification with the abolition of the grotesque and inequitable Selective Employment Tax and so save us the trouble of abolishing it when we return to power?

That is hardly a very good example, because the Selective Employment Tax is one of the simplest and cheapest taxes to collect.

Would not the hon. and learned Gentleman agree that the Chancellor of the Exchequer, in introducing his first Budget, said that it was his intention to simplify the tax structure? Would he not also agree that any accountant or secretary will tell him that the taxation system has never been more complicated than it is now and that it is most important to arrive at an accurate assessment of tax liability?

Most accountants would tell the hon. Gentleman that the introduction of Corporation Tax has enormously simplified company taxation.

asked the Chancellor of the Exchequer if the revision of the Public Office Rules has now been completed; and when a Statutory Instrument will be made.

Yes, Sir. The Statutory Instrument bringing the new Rules into operation should be laid before Parliament at about the end of next week.

asked the Chancellor of the Exchequer what countries, Governments, former Governments and similar groups have blocked gold reserves in the Bank of England; and what sums are involved in each instance.

None, Sir.

Is the right hon. Gentleman saying that the former Baltic States have no gold reserves located in the Bank of England?

The gold which was owned by the former Baltic States was vested in the Custodian of Enemy Property in 1941 and the House gave legislative effect to that in 1951.

asked the Chancellor of the Exchequer how many representations he has now had from members of the public and from trade organisations expressing a preference for a decimal currency based on a £1 unit and expressing a preference for a 10s. unit.

Since the issue of the White Paper on 12th December last I have received 355 representations on decimalisation from members of the public and trade organisations. Of these 44 were in favour of a £, and 153 of a 10s. major unit.

Would my right hon. Friend agree that these figures and the Gallup Poll published last week invalidate his statement on 31st January that the general public, on the whole, prefer the £? In view of this, would he agree that, if his argument is strong enough—I should like to support it if it is—it would be better to leave it to the free judgment of all the Members of the House of Commons?

This is a matter in which it is the clear duty of the Government to give a lead to the House on the best system. I am looking forward to the debate on the issue. When it comes, it will then be for the House to make up its mind, but the Government must advise their supporters to support—[HON. MEMBERS: "Oh"]—one cannot flop around on an issue like this with a free vote. It is the Government's duty to give a lead to their supporters, and this lead has been given.

Would the right hon. Gentleman accept from me that, in all parties and on both sides of the House, this is a matter of very great concern indeed, and that, as far as I at least am concerned, it has nothing whatever to do with party politics—[Interruption.]—nor for the Chancellor of the Exchequer, I accept that. But, because this is so, would he please not make up his mind in advance of the debate which we are to have in this House, and would he take the opinion of the House into consideration before final decisions are made?

As far as I know, there is no means of dragooning anybody into a Lobby, but it is the Government's job —[Interruption.]—if there is, we are singularly unsuccessful at it. It is the Government's job to say what the policy should be and it is for the Government's supporters to support the Government, the choice having been made.

Has my right hon. Friend received any representations over the last week as a result of certain incidents in this Chamber last Thursday? Is he aware that many hon. Members on this side, for various reasons, are very anxious that he should make a cast-iron case for the choice which he has made?

I have been waiting since 1st March last for the opportunity of doing that, and I am looking forward to the debate very much indeed.

Would the right hon. Gentleman accept that, in a matter like this, which will affect this country perhaps for 1,000 years or so, it is vastly more important to make the right decision than to make an early decision? As this is not in any political party's programme, would he not treat this on a different basis from the ordinary discussions in the House and genuinely consult the House of Commons on this matter?

It is very late for the Opposition to raise this question. I announced the proposal to decimalise on the £ over a year ago. There was not even a cry from anybody—

Oh, yes, there was from me.

Except for the hon. Gentleman—I will give him that. But he is not, in name, yet a member of the Conservative Party.

I published a White Paper in December. Again, apart from the hon. Gentleman and a few others, there was very little protest. The protest started on the day that the Bill was introduced. This is not a hurried decision, but a decision which has been talked about now since 1963. It is the duty of the Government to give a clear lead to their followers and the House on this matter and not to shilly-shally around and say, "We do not mind whether it is one or the other." We do. I am confident that the case for the £ is very strong.

Does the right hon. Gentleman agree that the figures which he has given this afternoon show that four times as many people are against the Government's decision as are in favour of it? Will he publish a list showing the important organisations—such as the Consumer Council, the C.B.I., the Trades Union Congress and the Institute of Chartered Accountants—who are opposed to the Government's proposal, so that members of the public can make up their minds on the basis of the expert advice which has been given?

We are going to debate all this, but it is a dangerous assumption that it is the people who are in favour of the Government's decision who write to the Government. On the whole, I find that it is those who are opposed to such a decision who write and not those who are in favour of it.

If my right hon. Friend thinks that he has such a strong case on this matter, why does he not rely solely on his powers of persuasion?

What the hon. Gentleman is challenging is the normal basis on which business in this House is done on both sides. There is nobody on that side of the House who would stand up and offer a free vote, if he were in my place here, on an issue of such importance. I would say to my hon. Friend that I have not the slightest doubt that, when he hears the argument, he will come in willingly, freely, hand-in-hand and arm-in-arm with me.

Is not the reason for the Government's obstinacy about this free vote, as in the case of the Ombudsman, that they have already taken administrative action which has committed them to taking a wrong decision?

It is a matter of opinion and I should like to remind you, Mr. Speaker, that we are going to debate this issue. I would say to the hon. Gentleman that the decision is, in my view, the correct one. Administrative decisions—[HON. MEMBERS: "Answer."]—I am about to answer. Administrative decisions have, of course, been taken —[HON. MEMBERS: "Oh."]—and a number of companies, based on the decision announced by the Government over 12 months ago, have already entered into particular commitments on this matter. That seems to me to be a matter of elementary prudence and common sense on their part.

On a point of order. Is it not a gross breach of order for any member of the Government, no matter how exalted, to attempt to instruct you, Mr. Speaker, in your duties?

I did not understand the right hon. Gentleman to be trying to instruct me. If he had attempted to do so, it would have been an attempt in vain.

asked the Chancellor of the Exchequer if the National Institute of Economic and Social Research has yet completed its study of the effect of the large-scale inflow of immigrants on Great Britain's balance of payments.

I understand that the National Institute expects to report in about 12 months.

Would not the right hon. Gentleman agree that that is a rather long time to wait? Would he not further agree that this is a very important problem, particularly in view of his reply to me on 22nd November, in which he accepted that problems were involved arising from the effect of this on our balance of payments?

The National Institute has told me that it is undertaking a very deep-ranging study which will cover the general economic effects as well as the specific balance of payments effects of immigration.

asked the Chancellor of the Exchequer if he will make a statement as to the cost of administering the Selective Employment Tax as it affects agriculture and other industries entitled to a refund.

The cost of administering refunds to the private sector is about £375,000 in a full year, and about a third of this is for refunds to agriculture. The cost of collection cannot be separately identified.

Does the Financial Secretary recognise that this imposition is a waste of time and money? Would not he agree that it would be better to abolish this tax entirely, certainly for those industries which are given the refund?

As I said in answer to a previous Question, it is not a waste of time and money. This tax, including the cost of paying the refunds, is an unusually cheap tax to administer.

asked the Chancellor of the Exchequer whether he will announce the results of the studies he has made of the effects of the Selective Employment Tax on those parts of the country with the smallest proportion of employees engaged in manufacturing industry.

I cannot anticipate my Budget statement.

Does the right hon. Gentleman realise from the figures he has already given that those parts of the country least able to pay are bearing the biggest burden? Will he give an assurance that he will put this right at an early date?

The hon. Gentleman will understand from my original reply that I can give him no assurance, and that he can draw no deductions from my original Answer.

asked the Chancellor of the Exchequer why the fee of an accountant for preparing the Income Tax return of a taxpayer is not allowed as an expense against the income which is declared in the return.

Because it is an expense which is unrelated to the earning of the income and is a personal outgoing for which the law does not give relief.

Does the hon. and learned Gentleman realise that the Government have made the Income Tax laws so complicated that very few taxpayers are now able to make a return of Income Tax without the assistance of an accountant? That being so, is this not really an expense which is pertinent to the income being returned?

No, Sir. I do not agree, and many taxpayers do make their own Income Tax returns.

Is it not a fact that taxpayers who are in business are allowed to set off the expenses which they incur in preparing their tax returns? Would not there be a saving of time and expense to the Exchequer if this concession were allowed to all taxpayers?

In the case of business and professional men, it is only because it would not be practicable to divide an inclusive accountant's fee into the part relating to the preparation of the accounts and the part that would not be deductible because it related to personal income that this exception is made.

asked the Chancellor of the Exchequer whether he will reinstate the 6d. denomination of savings stamps for the benefit of young savers.

No, Sir. The abolition of the 6d. stamp was necessary to reduce the very high administrative costs of the savings stamp scheme. I am confident that young savers will soon acquire the habit of collecting their sixpences until they can afford one of the new 2s. stamps.

Is the right hon. Gentleman aware that the very young saver gets the saving habit only because his parents teach him the habit? Is he aware that many parents cannot afford to provide their children with the money to buy these 2s. saving stamps, as a result of which a great disservice is being done to the National Savings Movement? Does he also recognise that this is causing a complication in the make-up of the 15s. savings book?

I do not think so. This matter was thoroughly discussed with the National Savings Movement before the abolition took place. One factor was that more than 90 per cent. of the stamps were cashed before they were converted into securities. It was, therefore, felt that this was an administrative saving that could be made without harming the movement.

asked the Chancellor of the Exchequer whether he is aware that Her Majesty's Inspectors of Taxes respectively at Willesden, Cheltenham and Stratford, E.15, have requested from taxpayers lists of investments at 6th April, 1965, contrary to Treasury instructions and not required by Statute; and, as this practice represents unwarranted and illegal intrusion into private monetary affairs of investors, whether he will issue a general direction to all tax inspectors forbidding such practices in connection with capital gains duty.

If the hon. Gentleman will let me have particulars of the cases to which he is referring, I will look into them and consider whether any reminder should be issued that there is no statutory requirement on taxpayers to supply this information.

While thanking the hon. and learned Gentleman for that invitation—and I will submit the evidence to him at once—may I ask him to recall that months ago the First Secretary assured the House that the Treasury was not conniving at inspectors of taxes breaking the law by demanding these details, which are personal and private to the taxpayer? Will he make it abundantly clear that no taxpayer has any statutory obligation to divulge these details?

I think that the hon. Gentleman is under a misapprehension. No question of breaking the law arises. Not even civil servants need statutory authority to ask questions. The only thing that would be wrong—and I will consider the matter from this point of view when I see the evidence which the hon. Gentleman says he will give to me—would be inspectors suggesting that there is an obligation on taxpayers to provide this information. However, many taxpayers find it convenient to give it, and I do not see why we should stop them from doing so.

Do the inspectors point out on every occasion that taxpayers have no obligation to answer such questions?

I will look into that matter when I have had the opportunity of studying any examples which may be given to me.

In view of the most unsatisfactory nature of the hon. and learned Gentleman's Answer, I give notice that I will raise this matter on the Adjournment as soon as possible.

asked the Chancellor of the Exchequer what was the value of the United States securities owned by British nationals when these were compulsorily acquired by the British Government during the last war; and what is the value of these securities today, including the proceeds of sales already made.

The value of United States securities acquired by Her Majesty's Government from British nationals during the war was about £163 million. Many of them were sold during the war and in more recent years. Securities to the value of £316 million held in liquid form were transferred to the first line of reserves in February, 1966. The value of those which remain is approximately £180 million.

asked the Chancellor of the Exchequer whether Her Majesty's Government have completed the sales of British-owned United States securities.

No, though much the greater part of the portfolio is now in liquid form.

Would not the right hon. Gentleman agree that the increase in the value of these securities as well as being most satisfactory is rather startling? Would not he consider that if he needs money to repay loans, it might be better to use these assets as a security to raise a loan instead of using the proceeds as if they were current earnings?

I agree that it would be an alternative proposition. I have followed what I thought was an excellent precedent set by my predecessor, and I do not feel that it would be right for me to depart from it at this stage.

asked the Chancellor of the Exchequer what would be the estimated cost to the revenue of allowing depreciation at the rate of 10 per cent. per annum to be written off for new commercial buildings.

The cost would rise annually to about £160 million a year, assuming current rates of expenditure.

Is not the Financial Secretary aware that, in view of the enormous increase in building material stocks at present, this might well be a very good way of using an investment grant? If he cannot give an investment allowance, will he consider giving an investment grant for commercial buildings?

That is an entirely separate question and one which the hon. Gentleman should address to my right hon. Friend the President of the Board of Trade.

asked the Chancellor of the Exchequer what progress has been achieved within the Group of Ten towards an agreement on the present international liquidity problems, as a result of the recent discussions on this subject.

Welcome progress has been made in the joint talks between the International Monetary Fund Executive Directors and the Group of Ten Deputies. Two further meetings have been fixed for April and June.

Is not my right hon. Friend disappointed at the slow progress that is being made towards solving the real problems that are involved? Can he forecast any real advance being made during the course of this year?

I am, of course, disappointed that faster progress has not been made, but when dealing with international problems and when a number of countries have to be carried along at the same pace, one must temper one's disappointment with realism. As to future prospects for discussing this matter, two meetings have been fixed and they will show whether, when we get to Rio de Janeiro in the autumn, there are any likely prospects of agreement.

Does the right hon. Gentleman still expect to get agreement on a contingency plan in time for the I.M.F. meeting? Does he believe that this will be much more than a scrap of paper in view of the attitude of the creditor countries about the use of credit facilities?

If heads of agreement were reached before September, then I would certainly feel, the nations having put their hand to them, that they intended that it should be more than a scrap of paper—otherwise we would all be wasting our time. As to future prospects, I think that the two meetings which are to be held will show us more clearly just what the prospects are.

asked the Chancellor of the Exchequer what action he is taking to increase industrial investment and industrial production.

A temporary increase in the rates of investment grant was announced by my right hon. Friend, the President of the Board of Trade, on 1st December last. The reduction in Bank Rate on 26th January, the fall in interest rates generally, and the special aids given to the development areas should also be helpful to industrial investment, and hence to the prospect for industrial production.

Is my right hon. Friend aware that in the last six months the Index of Industrial Production has fallen from 135 to 131 and that investment this year is not expected to be better than 10 per cent. behind last year and that, despite the many burdens which my right hon. Friend has to bear, the House expects him to accord the highest priority to investment and output of industry in this country?

I entirely agree with my right hon. Friend.

Right hon. Friend?

He will soon be my right hon. Friend. He will certainly be right hon. before the hon. Gentleman is. I agree with my hon. Friend's general philosophy on this matter and it is for this reason that special aids have been given for investment. We must ensure, however, that there will be a reasonable return on capital when an investment has taken place and that there will be a market for the product; and the Government's policy on this matter has been clearly stated.

Does the Chancellor of the Exchequer appreciate that even special aids when not—as I think they are—wrongly directed, will not affect this issue as long as industry and commerce do not see any reasonable sign of consumer demand? They will not be bribed merely into producing.

The Government's policy is not to have a general consumer reflation. It is to encourage investment through greater exports, which, I am very glad to say, is already taking place, and through increasing investment in particular ways that will enable healthy growth to follow.

Would not my right hon. Friend agree that his report is an indictment of the private manufacturing sector of the economy, and will he not seek to utilise the resources of the State, including the Industrial Reorganisation Corporation, to offset the weaknesses of private manufacturers?

I do not think that it would be possible for the State to undertake all the private investment that I expect manufacturers to do. I do not think that it is an indictment of them if they look cautiously ahead at market prospects and decide what their future will be, but it should be the aim of all of us, on all sides of the House, to ensure that when we have a healthy period of growth the markets will be there.

Is the Chancellor of the Exchequer aware that the Index of Industrial Production is rather below what it was at the end of 1964? Are we to look forward to another 100 days of dynamic Government?

The Index of Intrial Production is not the most reliable of the indices we have to provide. I remember that once during my predecessor's term of office it was revised by four points in two months, in an upward direction on that occasion, but clearly we need an increase in industrial production, and it is towards that that the Government's policy is directed.

asked the Chancellor of the Exchequer what proposals he now has to encourage private savings.

I am glad to say the level of personal savings remains high. I would, of course, like to see this level even higher, and am always willing to consider ways of increasing it.

Can the right hon. Gentleman assure the House that he is actively considering such further steps, in view of his own observation last year that the higher savings were, the less the need for tax?

Yes, Sir. The right hon. Gentleman has in his time gone through a period similar to that through which I am passing at this moment.

asked the Chancellor of the Exchequer what percentage of his earnings above £5,000, £8,500, £10,000, and £15,000 a year is retained after payment of income tax and surtax by a married man with two children and no unearned income; and what are the comparable figures for a similar man after payment of direct taxation in the United States, France, West Germany and Japan, based on information he derives from international organisations.

It depends on how much extra earnings he has. I will, with permission, circulate a table in the OFFICIAL REPORT.

Does the Financial Secretary accept that economic harm is done to the country's competitiveness if rates of personal taxation remain higher than those on comparable people in competing countries; and that, indeed, once we were in the Common Market these rates would be impossible to maintain?

No, Sir. I think that the right hon. Gentleman's proposition is much too wide, and perhaps he had better wait until he sees the table.

Is my hon. and learned Friend aware that many wage earners are receiving incomes not sufficient to keep their families at subsistence level? Is it not more important to turn attention to that type of person before turning to the more highly paid executives?

We shall take all relevant matters into account, but I agree with my hon. Friend that our prime object is to get fairness in our tax system.

asked the Chancellor of the Exchequer if he will give an analysis of the estimated saving of £100 million in foreign exchange forecast on 20th July, 1966, together with a comparative analysis of the savings to date.

I would refer my hon. Friend to the Answer I gave to the hon. Member for Belfast, North (Mr. Stratton Mills) on 22nd February. —[Vol. 741, c. 319–20.]

Does that reply mean that there will be a saving of at least £100 million in 1968–69; that this will be the real net saving, and not be offset by increases elsewhere?

The figures that were published in the Defence White Paper, which I gave in my earlier reply, show that defence savings will build up to an annual rate of about £75 million by the end of 1967–68.

Will the Chancellor of the Exchequer remind the House that the Answer to the Question to which he refers shows that the saving during 1967–68 would be only £70 million, some £30 million short of what the Prime Minister promised on 20th July?

That is the figure I gave of the savings I could see at this moment building up during 1967–68.

asked the Chancellor of the Exchequer what is his estimate of

It is estimated that the exchange control measures taken in July, of which travel restrictions were one, will save about £50 million a year in foreign exchange. A decision about the next travel year will depend on the balance of payments prospects generally, and on experience of the present arrangements.

I had understood that this restriction was to last only 12 months. Does this reply mean that it could last longer? Is not my right hon. Friend aware that this restriction is giving a totally false impression of Britain abroad, and would he perhaps reconsider the Answer he has given?

No, Sir. I see no reason to reconsider the Answer I have given, which is that the decision for the next travel year will depend on how well we do on balance of payments generally.

asked the Prime Minister what new efforts he has made to solve the Rhodesia problem.

I would refer the hon. Member to the many Answers to Questions on this subject given by my right hon. Friends and myself in recent months.

While recognising that the Prime Minister has many problems on his mind, may I ask him whether he is now able to answer the question he failed to answer on 21st February when I asked him a supplementary question, namely, whether the Government, being unable to take on South Africa, are contemplating the use of force against Rhodesia?

I was not aware that I had failed to answer the question. The answer is that we are certainly not contemplating and certainly do not intend to use force.

In view of the many grave complications that are bound to arise—for example, in the repudiation of debt guaranteed by the British Government and other matters—can my right hon. Friend say whether an initiative will be taken at some time, or is it to be left to the United Nations?

Debts are a separate question. There has been a whole succession of defaults by Rhodesia on international borrowings. As to the United Nations, as my right hon. Friend knows, it was through the United Nations that the resolution on mandatory sanctions was obtained, and this will have its effect on Rhodesia.

Since the Prime Minister has told us that the estimate of the cost of the Rhodesian crisis which he gave to the Commonwealth Prime Ministers has proved too high, why does he so doggedly —[Laughter.]—refuse to give us the revised figure? Is this not another example of his contemptuous attitude towards Parliament?

No, Sir. My contempt was to the right hon. Gentleman for his failure to tell us where he got that document from; and also to the fact that he has systematically tried to represent my statement to the Commonwealth Prime Ministers as being the cost of sanctions when it was the then estimate, which was never withdrawn, of the total cost to us of what Rhodesia has involved us in. With regard to a revised estimate we do not have final figures, but if the right hon. Gentleman cares to put down a Question I will certainly do my best to give him the up-to-date figure for 1966.

Can we have an assurance that the necessary contingency planning has been made if at the end of the day we have to snuff out Smith and his rebel clique by military means?

I have already made it plain that the right way to solve this problem, after the very serious efforts we made in December to do it by discussion, does not include the use of military force.

asked the Prime Minister if he will make a progress report on his visits to the European Economic Community countries; and if he will now make a statement of the Government's future intention on joining the European Economic Community.

asked the Prime Minister if he will make a statement on the situation resulting from the visits he has so far made to European capitals on the question of the United Kingdom joining the Common Market.

asked the Prime Minister whether it is now the intention of Her Majesty's Government to apply to join the European Economic Community.

asked the Prime Minister whether he will make a statement on the progress of Her Majesty's Government's policy towards the European Economic Community.

I have at this stage nothing to add to the reports I have already given the House on the visits of my right hon. Friend the Foreign Secretary and myself to Rome, Paris, Brussels, Bonn and The Hague.—[Vol.739, c. 643. Vol.739, c.1765. Vol.740, c.769. Vol.741, c.1427. Vol.742, c. 267.]

Does my right hon. Friend agree that a majority of people in this country are neither fanatically for or against our entry but believe that we should go in if suitable conditions can be negotiated, and will he agree also that there are certain matters, such as the free movement of capital, which will need a good deal of negotiating before our entry?

I agree that there is a considerable body of opinion, the majority of opinion in this country, which thinks that we should enter the European Economic Community if the right terms can be obtained. The purpose of our visits is to learn more about the sort of conditions which could be obtained. Certain aspects of the question of the free movement of capital raise one of the difficult questions which I have told the House still remain unsolved.