asked the Chancellor of the Exchequer whether, taking the value of the £ sterling at 20s. on 1st November, 1967, he will state its value today.

Taking the internal purchasing power of the £ as 20s. in November, 1967, its value in May, 1968, the latest date for which information is available, is estimated at 19s. 3d. This estimate is based on movements in the index of retail prices.

Will the hon. Gentleman tell his right hon. Friend the Prime Minister, in words of one syllable and four letters, that this is what has happened to the £ in our pockets?

It is unnecessary to give my right hon. Friend this information in words of any particular number of syllables.

asked the Chancellor of the Exchequer (1) whether it remains Her Majesty's Government's policy to discontinue the purchase of newly-mined gold by the Bank of England for monetary purposes, either from South Africa or other sources, indefinitely;

I have nothing to add to the Washington communiqué with regard to the Government's policy towards the buying and selling of monetary gold, about which I made a statement to the House on 18th March. Discussions with South Africa have been confined to normal Central Bank contacts.—[Vol. 752, c. 40–9.]

Does this mean that the size of the United Kingdom gold reserves will depend entirely on its balance of payments with the other nine of the Group of Ten, and that there is no question of accepting either newly-mined gold or monetary gold from outside this Group?

I do not think that the hon. Gentleman is right in that assumption. We could acquire gold from sources other than those within the terms of the Washington communiqué.

asked the Chancellor of the Exchequer whether it is his policy to limit weekly increases of rent of each Government controlled home to 7s. 6d. in a 12-month period, as recommended in Command Paper No. 3604.

The recent rent increases for houses owned by Government Departments are within the recommended limits of an average of 7s. 6d. a week for standard rents, and a maximum increase for any individual house of 10s. a week, in any one year.

Is the hon. and learned Gentleman aware that the tenants of Government-controlled property will have had a 30 per cent. increase in rents, spread over 3 years, up to 1970? Does he appreciate that this is making tenants believe that the Government have no hope of stabilising the cost of living in this period, and that it is a very bad example for other landlords?

This is not a bad example for other landlords. There has been no increase since 1958 and the average increase in these rents will be about 3s. 4d. a week in the next three years. The largest individual increase is 8s. 3d. a week in any one year, which is less than the recommended limit.

How does this increase compare with that allowed under the recommendation of the Prices and Incomes Board to local authorities?

It is within the limits recommended, and within the policy announced by the Ministry of Housing for local authority tenants.

asked the Chancellor of the Exchequer what has been the number of months since October, 1964, in which Bank Rate has been at 7 per cent. or higher.

Since October, 1964, Bank Rate has been at 7 per cent. or higher for a total of approximately 20 months.

Is the Minister aware that Bank Rate has never been so high for so long since 1694, when records were first kept? In the light of the Labour Party's statement at the last election, about the level of interest rates, would the Government deal with this rather "grotty" performance when it has its confessional in the autumn?

I do not recall the reference to incidents of 1694 in the Labour Party's election manifesto. On the other hand, our rates have to keep in line with world rates, and world rates are at a pretty high level, historically speaking.

Is the Minister aware that one of the consequences of this continued high Bank Rate is that the 3½ per cent. War Loan, £2,000 million of which is held by ordinary people, stands at its lowest ever, 46 per cent., and unless Bank Rate is reduced the holders of Government stock will continue to be swindled? Will he do something to help?

It is a logical corollary of an increase in interest rate that the value of unredeemable stock will decline correspondingly. We are anxious to see interest rates throughout the world come down, but ours cannot go out of line, and we can only have more freedom for action when our balance of payments has been put right.

asked the Chancellor of the Exchequer if he will make a statement on the present operation of the two-tier gold system.

asked the Chancellor of the Exchequer if, in view of current strains in the two-tier gold price system he will reconsider the Government's decision to oppose a change in the official price of 35 dollars per ounce for gold.

The two-tier gold system has been working satisfactorily. I see no reason why it should not last a considerable time.

But since it is almost certain that there has been some leaking of gold between these two tiers, can my right hon. Friend make an estimate, however approximate, of how much it might be?

No. I would not necessarily accept my hon. Friend's assumption. I certainly could not make an estimate.

Has the Chancellor noticed that Dr. Emminger has said that one of the effects of raising the price of gold will be to enable all countries to pursue more expansionary economic policies? Does the right hon. Gentleman agree with that forecast, and does he regard it as an advantage or disadvantage in raising the price of gold?

I have not noted this statement of Dr. Emminger, although in general I note statements from him and other central bankers with close attention and great interest. Raising the price of gold would be one way of increasing liquidity, but, in our view, it would be an irrational and lopsided and, possibly, disrupting way.

While hoping that the two-tier system will give us adequate breathing space, may I ask my right hon. Friend whether he feels that there is an adequate amount of liquidity, bearing in mind the reducing deficit in the United States and the long time it will be before the S.D.R.s come into force? Does my right hon. Friend feel that some further action might be needed fairly soon to increase liquidity?

This problem requires constant attention. The progress which we have made and which we hope to continue to make with the S.D.R. scheme will be a substantial move in this direction, although I do not close my mind to other methods.

In view of the pressures on the two-tier system, should we not be well advised to ask the Americans to raise the price of gold from 35 dollars?

No. The assumption three months ago would have been that the gap between the two prices would be substantially in excess of that which exists at present.

asked the Chancellor of the Exchequer what forecasts he intends to publish during 1968.

It is not my intention to publish during the remainder of this year revised forecasts of the short-term economic outlook comparable in scope and detail with those embodied in the Financial Statement for 1968–69.

Would my right hon. Friend give an indication of his intentions about publishing future forecasts, and, in particular, can he say whether he intends at some time to publish forecasts giving indications of some of the elements in our balance of payments?

My general intention is to move, as I have tried to do in the forecasts published in association with the Budget statement, in the direction of disclosing more fully than has been done before the basis on which we make our forecasts with a view to having an informed discussion. We made a big step forward this year. It is reasonable to see how it goes for the time being.

While accepting and welcoming the fact that the right hon. Gentleman has given more information than any of his predecessors, may I urge him to continue the good work and to give even more forecasts and not be too disheartened by the fact that every one he has given so far has been wrong?

I thought that the right hon. Gentleman was being almost too agreeable to be true in the early part of his supplementary question. I shall not be put off by the latter part, except to say that he is wrong. Our forecasts of exports and of the growth of the national product show every indication of being in line with what we suggested. But, whether they be accurate or not, I will bear in mind what I took to be the more serious part of his supplementary question.

asked the Chancellor of the Exchequer what steps he will take to encourage Government employees to take their holidays outside the peak season.

I do not think that such encouragement is either necessary or practicable.

Would my hon. Friend consider this matter again, because if he could encourage Government employees to do this we would avoid the near shut down of some Government Departments in August and help the economy of the tourist areas considerably in the out-of-season period?

Civil servants must have the same measure of choice in these matters as other citizens.

And Members of Parliament.

There is a limit to what we should properly do in the direction suggested by my hon. Friend.

asked the Chancellor of the Exchequer what estimates the Treasury has made of the yield from a 10 per cent. sales tax on art and jewellery sales in Great Britain; and if he will take steps to introduce this form of taxation.

As regards the first part of the Question, the information is not available on which to base a reliable estimate. On the second part of the Question, I have nothing to add to what my right hon. Friend said in his Budget Speech about new methods of taxation.— [Vol. 761, c. 273–4.]

However, would my hon. Friend accept that it is difficult for workers on the shop floor, coping with prices and incomes policy, to understand the Government's attitude to these sophisticated spivs trading in art treasures worth many hundreds of thousands of £s and paying the minimum of taxation?

Who says that they are spivs?

I would not accept that people trading in art and similar matters should be regarded as spivs. But they are regarded by the Inland Revenue as trading for tax purposes and are charged tax accordingly. I cannot understand any special reason for anxiety concerning private citizens.

Since when has the Director of the National Gallery been a sophisticated spiv?

I do not think that that follows from the Question or the supplementary question.

asked the Chancellor of the Exchequer whether scrip issues may now be made by companies.

As the provisions in the Prices and Incomes Bill adequately control increases in dividends, there is no need to duplicate safeguards by seeking powers in relation to scrip issues.

Is it not idiotically silly to put control of scrip issues into the voluntary guidance published by the Treasury? Would the hon. and learned Gentleman accept that it is very dangerous to have government by Ministerial circular, which proves that things of this sort can go wrong and silly mistakes can be made by the Treasury?

It was very important in the context of the prices and incomes policy to deal with matters which could be widely misunderstood, but the Prices and Incomes Bill makes it clear that any increase could be subject to control.

asked the Chancellor of the Exchequer whether he is aware that pupils' tables which are now becoming more widely used by education authorities in place of desks are tax-free if provided with an ink-well, but are taxable if no ink-well is provided; and if he will take action to correct this anomaly.

There is no anomaly. Pupils' tables specialised for school use are not taxable, whether or not provided with ink-well holes.

May we assume, therefore, that it is part of the leap forward into the technological age to induce local authorities, against their will, to provide tables for earthenware ink-pots for use with quill pens?

I do not know whether the hon. Gentleman appreciated the purport of my Answer, but the implication of his supplementary question is that we tax desks for schools according to whether or not they have ink-well holes. I do not see any reference to quill pens. There is no anomaly in this matter. The desks are duty-free in either case.

asked the Chancellor of the Exchequer whether he is satisfied with the results of devaluation in the light of the latest balance of payments figures; and if he will make a further statement on the general economic position.

The main effects of devaluation and the Budget have not yet had time to work through, particularly on the volume of imports, but export performance has been encouraging.

Now that the half-baked "I'm Backing Britain" campaign has died a natural death, would my right hon. Friend consider introducing a Government-inspired drive to encourage import substitution? Would he consider instituting research into every method in and outside G.A.T.T. which can be used to give advantage to home-produced products?

Import substitution is of great importance at present. It is, I think, difficult: to stress enough the advantage which there is for the business community and for the community as a whole if we pursue this matter energetically, because it is the key to a steady growth affecting both profits and real wages over the next few years.

Did the right hon. Gentleman read the article in the Economist on Saturday which stated that the balance of payments deficit for the first six months of this current year was running at £1,300 million against a so-called £800 million deficit in 1964? Does he accept those figures?

We have not yet seen figures for the first half of this year. I read the article. Questions have been tabled about the first quarter which I shall answer later.

Has my right hon. Friend had an opportunity of reading the Report of the "Little Neddy" on the agricultural industry concerning the opportunities for import savings of up to £220 million by 1972? Will my right hon. Friend give it the most favourable consideration?

I will certainly pay careful attention to this Report.

I should like to reinforce what was said by the hon. Member for Caithness and Sutherland (Mr. Maclennan). The Eastern Counties are prepared to help. Will the Chancellor study carefully this way of saving imports by the agriculture industry?

I shall study this matter carefully in relation not only to the Eastern Counties, but to the whole of the country. However, it is necessary to have some regard to the public expenditure aspect of the matter as well as the import saving aspect.

As imports are causing the greatest concern, will the Chancellor give his estimate of the import figures for the remaining six months of the year?

No. I have no further forecast to offer to the House.

In the light of the figures which are available, will the Chancellor tell us whether he thinks his main forecast or his higher forecast is more likely to be achieved, or does he think we shall fall below both?

I think that the export position is at least as promising as I indicated in my main forecast.

asked the Chancellor of the Exchequer what steps he is taking, following the successful reopening of the free London gold market, to ensure that the transition to a general system permitting reasonable flexibility in the rates of exchange of the world's main trading currencies takes place in an orderly way.

I would not favour a move to a system of greater flexibility in exchange rates than at present.

Is it not becoming evident that the whole Bretton Woods concept of permanently fixed exchange rates and an immutable price for gold are a vanishing vision? Should we not accept it with gladness? Would it not be statesmanlike for the Government in the management of sterling to shape their policies accordingly?

I think that it would be extremely rash to take the view that the 20 or nearly 25 years of the international monetary system, based on the Bretton Woods Agreement, which we have experienced and which has led to the most rapid growth of world trade and the national wealth of most countries participating, has not, on the whole, been a successful system. I do not say that it does not need modification, but it would be foolish to turn our backs on it and say that we want something utterly different rather than something built upon it.

asked the Chancellor of the Exchequer whether he proposes to accept the published design of the new 50 new pence coin proposed by the Decimal Currency Board.

asked the Chancellor of the Exchequer if he will now ask the Decimal Currency Board to make further recommendations on the form and style of a 50 new pence coin.

The Government's acceptance of the Decimal Currency Board's recommendation on the shape and size of the new 50 new penny piece was announced on 9th May. The design has not yet been decided.

Does that mean that the design that was exhibited in the Members' Library, which caused widespread unfavourable comment, has not been accepted and that there will be something better?

The design of the coin has not yet been decided, but its shape, which will be an equilateral curved heptagon, has been settled.

Why are the Government so reluctant to seize the opportunity to put a high value of much smaller coins? In view of the current rate of inflation, will not these very large and heavy coins be valueless in about 10 years' time.

It is thought that this will be a convenient coin for a fairly large sum which can be readily distinguished from other coins. For that reason, it has to be larger and somewhat different in shape.

asked the Chancellor of the Exchequer what estimate he has made of the effective increase in purchasing power that would follow from a total abolition of Surtax; and what estimate he has made of the effect on the net yield of taxation within one year and within five years of the change.

I estimate that, once the change was fully operative, the abolition of Surtax at present rates would increase incomes, and therefore purchasing power, by about £280 million. The direct increase in demand would be much less because a high proportion of the additional income would be likely to be saved. I have made no estimate of the effect of abolition on the net yield of taxation, but at present income levels the gross yield would be reduced by about £200 million in the first year after the change and by about £275 million in the fifth year.

Is it not clear that there is no genuine moral justification for this tax, or even an economic justification for it, and that, in the long run, the entire economy would gain if this vindictive survival from the class war were brought to an end?

This vindictive survival from the class war survived vindictively throughout Conservative Governments. I am afraid that its total abolition cannot be readily envisaged, but some reconsideration of rates and the replacement of the revenue from similar classes in society might well be envisaged.

asked the Chancellor of the Exchequer, in view of the need to restrict foreign expenditure, whether he will refuse to allow dollars to be spent in the United States of America by the broadcasting authorities for the rights to perform parlour games which were invented in Great Britain.

No. There are no exchange control restriction on current payments of this kind.

Is the Financial Secretary therefore saying that any citizen may contract, without any "no say" by him, to pay to an American citizen, if it is the basis of contract, any amount for performing rights or the right to repeat anything?

What causes the hon. Gentleman surprise is the obvious and only sensible rule that Governments can apply unless they want to supervise individually the contracts entered into by British businessmen.

asked the Chancellor of the Exchequer whether, in the light of the 2·2 per cent. rise in the cost of living during April, he will now revise his estimates of the effect of the Budget and devaluation upon price levels.

The rise in the retail price index between March and April was 1·8 per cent., not 2·2 per cent. The magnitude of the rise was allowed for in the forecast to which the hon. Gentleman refers.

Is it not a fact that the right hon. Gentleman forecast a rise over the year of some 5 per cent.? How can the Chancellor justify a rise of almost half that level in a single month?

Clearly because by far the greater part occurred as a direct result of the indirect nature of the Budget proposals which I introduced. I gather that indirect rather than direct taxation commends itself to the hon. Gentleman's hon. Friends. At least that is what they have been saying in Committee.

In this context, would my right hon. Friend be prepared, with his right hon. Friend the Minister of Agriculture and his right hon. Friend the President of the Board of Trade, to examine these increases, particularly in the confectionery and toilet retail sectors, which are causing some irritation?

These individual points are not matters for me, but I have no doubt that my right hon. Friends will take note of what my hon. Friends says.

asked the Chancellor of the Exchequer if he will review the operation of the present method of basing the rating assessments of licensed premises upon barrelage.

No, Sir. The method has been approved by the courts for many years and I am not aware of any good reason for reviewing its operation.

Are we to deduce from that Answer that the Financial Secretary is wholly satisfied with the arrangement whereby the landlord's private residential rooms in a public house, which may amount to more than a third of the whole, are rated according to the amount of beer sold in the public rooms?

I am satisfied that this method of assessing the rental value of the premises as a whole is reasonable and fair, and the courts have so found.

asked the Chancellor of the Exchequer what was the balance on invisible account in the last quarter of 1967 and in the first two quarters of 1968, respectively.

There was a deficit of £10 million in October-December, 1967 and a surplus of £86 million in January-March, 1968—seasonally adjusted. Figures for the current quarter will be published in September.

Since these figures indicate a considerable improvement in the invisible balance, can the Chancellor tell the House why the same sets of figures show such a falling off in the current balance, and, further, whether this represents an increase in net private investment overseas?

I am not quite sure of the hon. Gentleman's terms. There was a deficit on visible account counteracted to some large extent by this near record surplus on invisible account. There was also a substantial deficit on long-term capital account, a large part of which was caused by an exceptional investment transaction by an oil company, and some of which was caused by an increase in private portfolio investment abroad.

asked the Chancellor of the Exchequer if he will amend the Exchange Control Regulations to prevent payments in foreign currency to convicted British traitors or their agents; and if he will give details of all sums known to have been so paid in the past.

asked the Chancellor of the Exchequer whether he will take steps, by legislation or otherwise, to ensure that persons living abroad do not benefit financially from the results of criminal activities in this country, for instance, by the receipt of royalties from writings describing their alleged exploits.

I do not think it would be right for the Treasury to seek to operate through exchange control a moral censorship. Nor would it be practicable; the attempt would involve individual scrutiny by the Bank of England of the thousands of payments to non-residents generally for literary work or other current purposes on the chance of picking out the few considered objectionable. The delays imposed on perfectly legitimate transactions would be intolerable.

What kind of logic or morals are involved when one has to go through the inquisition of a means test before a fiver can be sent to an impoverished aunt living abroad, whereas there is no difficulty whatever in sending several thousand pounds to a convicted British traitor living abroad?

The payments to which the hon. Gentleman takes exception, which are not attractive to any right hon. or hon. Member, are covered by a general permission. The only way of dealing with this matter to the hon. Gentleman's satisfaction would be to abolish the general permission or, within it, to search through tens of thousands of applications in the hope of finding the odd one that was a payment of this kind.

Is my hon. Friend aware that his reply is not as satisfactory as his letter to me on this subject on 5th June last? Is he aware that many millions of honest taxpayers in this country get very angry indeed when they read about such things as £10,000 tax-free going to spies? Will my hon. Friend look at this question again?

My hon. Friend must not talk as though these payments are made to spies for spying. These payments are made under a general permission for literary and newspaper payments to be made. The only way in which I could control them would be to abolish this general permission and scrutinise each of the tens of thousands of applications individually, and the honest taxpayer would resent paying the cost of that far more than the dissatisfaction he feels at the money going to these thoroughly unworthy people.

Is it really so difficult to pick out these very few cases? Thank goodness we do not have more than one or two traitors.

It is not a question of the number of traitors; it is the number of applications falling within this class. They amount to tens of thousands. It is not merely difficult, it is virtually impossible for me to pick out the two or three payments which are made per annum on this basis and segregate them from the others.

Is it not a simple matter for the Chancellor to introduce a provision into the Finance Bill saying that no convicted criminal shall have money sent to him abroad?

I am afraid that when my hon. Friend has reflected on his simplist proposition he will not find that it commends the unanimous assent that he would suppose.

asked the Chancellor of the Exchequer what representations he has received from the Inland Revenue staff associations regarding the complexity of his taxation proposals; and what reply he has given.

I have received no such representations.

Does not that show how docile the staff must be? Is it not a fact that the incomprehensiblity of the proposals put forward by the Chancellor are causing difficulty even among the experts at the point of collection?

All tax systems are in one degree or another complex, and I have received no such representations of the kind implied by the question.

asked the Chancellor of the Exchequer if he will seek to impose further restrictions on the outflow of capital to advanced countries within the sterling area.

The voluntary programme already operates in this field and I have at present no proposals for further action.

Does not my right hon. Friend agree that he is simply frittering away the advantages of devaluation by continuing to allow £190 million worth of capital to leave this country as it did in the first quarter of 1968, the highest figure in any quarter for the past 11 years? Will he now impose a standstill on the outflow of private capital to advanced countries like Australia, to which capital at the rate of £1 million a day has been flowing in the first quarter of this year, principally to buy Australian gold mining shares.

I think that my hon. Friend somewhat exaggerates the size of the problem when he refers to £190 million having gone out. As I said, this was to a large extent accounted for by one exceptional transaction. I agree that there has been some disturbing increase in the outflow of private portfolio investment by individuals to Australia in the first quarter, but I have to consider the position of the sterling area as a whole, and also the fact that this is not a net charge on the reserves.

Can we take it from the Chancellor's statement that he does not intend to limit portfolio investment by people resident in the United Kingdom taking shares in Australia?

I think that what the hon. Gentleman can take is exactly what I said, that the voluntary programme already operates, and at present I have no proposals for further action.

Is it not regrettable, but still a fact, that the admirable intent of the voluntary programme has not had trie fullest success hoped for, and therefore will my right hon. Friend think again about this matter?

I think that my hon. Friend is under a slight misapprehension. The voluntary programme relates to direct investments and to portfolio investments by institutions, and I think that it has worked satisfactorily.

Does the right hon. Gentleman agree that in the interests of the standard of living in this country it is important that we should have some part in the wealth explosion which is taking place in Australia?

I think that it is very important to preserve a balance. Overseas investment can be of considerable advantage, but it must not be made at the expense of stultifying our home economy.

I recognise the difficulties, but would not it be better to face the problem of breaking up the sterling area itself rather than allow this continuation of capital outflow at the expense of our own economy?

I have to consider this matter in the context of many other considerations.

Does the right hon. Gentleman accept that the mere act of devaluation has of itself rendered the restrictions on overseas investment that much less necessary, and will he resist the pressure from the benches behind him to tighten up still further the damaging policy he was following before?

I am not sure that I follow the hon. Gentleman's argument, but I take note of his final point.

In view of the unsatisfactory nature of that reply, I am bound to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

asked the Chancellor of the Exchequer if he will make a forecast on the balance of payments position in the second half of 1968.

I do not wish at this stage to add to what I said on this subject in my Budget speech.

Since then imports have continued at a rather high level, though this seems to have received some check recently. Exports have come well up to my expectations. Our net invisible earnings have done well. The first quarter saw some exceptional investment transactions but these will not affect the prospects for the rest of the year.—[Vol. 761, c. 253–8.]

Does my right hon. Friend accept the National Institute's forecast of a deficit of about £200 million on current account in the second half of 1968, and will he look again at the question of reintroducing import controls to reduce the amount of manufactured and semi-manufactured goods coming to this country, especially since devaluation?

I always take note with interest and attention of the National Institute's forecasts. I do not necessarily accept them. I note that the Institute itself said that it was little if any more certain than those which they made last time, in other words, three months before, which forecast an entirely different outturn. I take note of them, but I do not necessarily accept them. I have nothing to add to what I have said on previous occasions about import controls.

If the Chancellor is now relying on his main forecast for exports rather than the higher forecast, which I understood from his reply to an earlier question, and if imports are much higher than he expected—as we know they are— how can he possibly maintain that his forecast can work out for the second half of this year?

The right hon. Gentleman is not correct in assuming that I am necessarily relying on my main forecast. What I said to the hon. Member for Worthing (Mr. Higgins) was that I thought the position looked at least as good as the main forecast. It may turn out to be better, but there is no doubt that the high level at which our imports have run is higher than we would have hoped. This means that at any rate for the first half of the year the out-turn cannot be as satisfactory as we would have hoped, but I have nothing further to say about the second half of the year, and still less about 1969, for which I still believe we have every prospect of earning a very good surplus indeed.

asked the Chancellor of the Exchequer whether it is still his estimate that the United Kingdom will achieve a balance of payments surplus in the second half of 1968, and a surplus of £500 million in 1969.

asked the Chancellor of the Exchequer if his estimate that the balance of payments deficit will be eliminated by the end of 1968 still holds good; and what deficit he now expects for the current year.

I have nothing at this stage to add to what I said on this subject in my Budget speech and in my Answer to a Question from my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) earlier this afternoon.

Does a very good surplus for next year mean more or less than £500 million? Is it not clear that we are heading for another massive deficit this year? Is the right hon. Gentleman satisfied that our overseas creditors are prepared to put up yet again with hope deferred from this Government?

I am satisfied that we are on the right lines and that it is essential to continue this strategy. I believe that we can achieve a surplus in the fairly near future, and a very good surplus, of the biggest size possible. Anyone is extremely foolish who thinks that he can predict this accurately within £50 million or £100 million, but a sizeable, very big surplus for 1969 must and will remain the main objective of our policy.

How can this course be justified and give the right hon. Gentleman satisfaction when again the Economist has calculated that we are running at present at a deficit of £1,300 million a year? How on earth can we have a surplus in the second half?

It was clearly understood that there would be a deficit in the first half, but we hoped to counteract this in the second half and then move into substantial surplus.

Would not a large part of the deficit be overcome if the Government ended their net overseas military spending across the exchanges of £232 million a year?

My right hon. Friend will be aware that, in January, we took measures, which admittedly will take some time to work out, substantially to reduce our overseas military commitments and the burden which we carry in that respect for the first time since the war, to bring it into line with that of our main competitors in Europe.

Can the right hon. Gentleman give us a clear answer to this question, which he has ducked at least half a dozen times this afternoon? In his Budget statement, he said—I think that these were his words—that he "hoped and expected" a surplus in the second half of 1968 and a surplus of £500 million as soon as possible. Does he hold to that or not?

I said a surplus "of the order of £500 million", and I certainly hold to that as being an objective to which we must work as quickly as we can. I have every intention of continuing to make this a central objective of my policy, as, I believe, any Chancellor should.

In view of my right hon. Friend's renewed assertion about achieving this excess on our balance of payments, does he agree with the statements made by his colleagues in recent days that the projected reduction in our expenditure east of Suez will enable us to increase our expenditure in Europe? Does he not think that this policy must be earnestly reviewed so that we continue to reduce our expenditure in Europe as well as east of Suez?

This raises very much wider issues, but it is certainly my view, as we have said and as my right hon. Friend the Prime Minister said in January, that it is necessary for us to bring our overseas military commitment as a whole into line with what we can afford.

The right hon. Gentleman has evaded the question once more. Does he or does he not, in his own words, "hope and expect" for a surplus in the second half of this year?

I certainly hope that we may achieve it in the second half of this year. Clearly, no one can predict this with certainty, and I have nothing firmly to add to the forecast which I gave in the Budget. It does not, from any point of view, encourage the publishing of detailed forecasts if one is tempted to adjust them from week to week or from month to month.

asked the Chancellor of the Exchequer if he will provide improved facilities for the public wishing to consult their local income tax inspector by instructing offices of the Inland Revenue to remain open for longer hours and on Saturday mornings.

No, sir. But interviews can be arranged by appointment outside the hours when offices are open to the public.

Does not the hon. Gentleman agree that Saturday morning closing in common with other public sectors places many people at a serious disadvantage, particularly when they have to take time off from work to attend interviews?

What the hon. Gentleman has failed to note is that I referred to interviews by appointment including on Saturday morning or other times when the office is closed. That is different from keeping the offices open in the hope that somebody might want to come in at those times.

Is the hon. Gentleman aware that if one rings up the Inland Revenue offices in London one does not get a reply after 4 p.m. and one can try for a long time before one realises that the calls are not being answered? Would it be possible for them to make arrangements for a recorded message so that people are told that no officer is available after 4 o'clock?

I shall inquire into that.

Will my hon. Friend note that many elderly people would like the facility of having a tax inspector visit them at home to discuss their tax affairs, as they are extremely perturbed at having to attend before a tax officer to go through their private affairs with him? Does my hon. Friend think that that might be the answer to the problem?

I am not sure how widespread the demand is for receiving tax officers in the homes of citizens, but I am afraid that the achievement of that must await a more Utopian form of society than we have at present.

asked the Chancellor of the Exchequer why the Treasury recommended that the dividend by Crosby Spring Interiors of 28½ per cent. for the year to 31st March, 1968, should be cut to 28·4625 per cent., thereby reducing the distribution to the shareholders from £61,479 to £61,398.

The company agreed to confine the increase proposed in its dividend to 3½ per cent. above the amount for the previous year.

For the sake of accuracy, the reduction is of £81 to the first named figure. Is this the best use of Treasury brain power?

This is a difficult problem. I realise that the adjustment here was a minor and, in many ways, an irritating one, but it would increase the difficulties enormously if one started arguments about how much above the permitted maximum a particular company was allowed.

asked the Chancellor of the Exchequer how many representations he has received regarding the working of the Inland Revenue administration in Scotland; if he is satisfied with the present administration; and if he will make a statement.

None, Sir. I think the present arrangements work satisfactorily.

Is my hon. Friend aware that this question is prompted by the fact that my mailbag at least contains a large increase of protests about the machinations of the Inland Revenue in relation to people's Income Tax? Does my hon. Friend not find that, in general, that is the position?

Enthusiasm for the activities of the Inland Revenue is not widespread either in England or in Scotland, but I believe that the present system is well understood and works efficiently. None the less, if my hon. Friend has any specific suggestions on how it might be improved, I shall be glad to consider them.

asked the Chancellor of the Exchequer how many co-operative societies and kindred organisations in Scotland have made written representations to him regarding the effect of the Selective Employment Tax.

Twenty-two.

Is my hon. and learned Friend aware that the kind of answer given to these organisations is not deemed very satisfactory? Can he give any idea of when the Reddaway Committee will give some report on S.E.T.?

I realise that this is not very satisfactory to co-operative societies, but, with the best will in the world, it is impossible to treat them differently from other distributors. It is expected that the Reddaway Committee, which was set up especially to look at this tax, will complete its inquiry in the early part of next year.

asked the Prime Minister if he will now make a statement on his proposals to introduce legislation to reform the House of Lords.

I would refer my hon. Friend to the statement which I made to the House on 20th June.—[Vol. 766, c. 1314–28.]

But is it not only fair that we treat their Lordships' views with all due respect, in particular their resilution of March, 1910, when they said that hereditary peers should no longer sit or vote in that Chamber? Can we, therefore, no longer frustrate their wishes but bring in legislation this Session?

All relevant considerations, including expressions of opinion as long ago as 1910, will be taken into account.

Can the right hon. Gentleman tell us when he expects to have this legislation on the Statute Book?

No, Sir. I am not in a position to add to what I said last week about the timing of the Bill.

In view of the wrecking activities in the other place yesterday, will my right hon. Friend consider the possibility of extending the current Session so that we can deal with this matter forthwith?

I do not think that it is appropriate for me to comment on a single day's activities on a Bill which has gone from this House to another place. No doubt we can consider all these questions in due course.

Has the right hon. Gentleman noted that his belligerent attitude to the House of Lords is almost universally regarded as irrelevant to our present national problems and as a deliberate attempt to divert attention from them?

I have heard that some hon. Gentlemen think this, but the hon. Member will recognise that the initiative in this matter last week was not taken on this side of the House.

Is my right hon. Friend aware that his statement last week on the House of Lords was pitched in a highly responsible tone which is out of keeping with the derisive treatment which should be accorded to it?

I always believe, on such occasions, in taking refuge in understatement.

While the need to reform the position of the Second Chamber is generally accepted, does not the Prime Minister realise that, by attempting to alter our Parliamentary constitution without all-party agreement and without referring his proposals to the electors, he is setting a very dangerous precedent?

No, Sir. This has already been before the electors twice. As for all-party agreement, there was every opportunity on this all-party committee which was wrecked by the tactical manoeuvre of right hon. Gentlemen opposite.

While recognising that the House of Lords is out-of-date, unrepresentative, undemocratic and—per- haps worst of all—Tory, and while reiterating our support for this reform, may I ask the Prime Minister at the same time to recognise that it would be unfortunate if the preoccupation with this reform, both here and outside, were to divert attention from the very real problems which are at present facing the nation?

I always feel that it is good when someone like the hon. Gentleman can approach the problem in such an objective way, as his choice of words showed. There is no question of this necessary reform interfering with what must be the first priority for any Government in the present circumstances, and that is the economic situation.

Is my right hon. Friend aware that, when we come to dealing with the House of Lords, the guillotine will be necessary? Will he see that it is ready and sharpened up for the occasion?

I will see that my hon. Friend is provided with suitable knitting.

What possible reason can the right hon. Gentleman have for saying that the inter-party discussions on the future of the House of Lords were wrecked by the constitutional action of the present Chamber?

For the reason I gave last week; that this was quite clearly a manoeuvre which began in this House.

asked the Prime Minister whether the public speech delivered by the Minister of Technology to the Welsh Council of Labour at Llandudno on 25th May about Parliamentary reform is in accordance with the policy of Her Majesty's Government.

I would refer the hon. and learned Gentleman to the Answers I gave to similar Questions on 29th and 30th May and on 11th June.— [Vol. 765, c. 241–2; Vol. 765, c. 259; Vol. 766, c. 29–30.]

Since the Minister of Technology is so keen on reform, as the Prime Minister appears to be about another place, will he widen his horizon to include the present Government, who have suffered more by-election defeats and who are the most distrusted and detested Government of this century?

The hon. Gentleman is, of course, entitled to his views, but they are not very widely shared— [HON. MEMBERS: "Oh."]

That's what you think.

Go home, foreigner. Go home. [Interruption.]

Order. The hon. Member for Smethwick (Mr. Faulds) must learn to behave properly.

I do not think that the hon. and learned Member for Antrim, South (Sir Knox Cunningham) expressed quite so fulsome a view when a whole series of by-election defeats faced his party when it was the Government; although he was, of course, speaking from his safe base in Northern Ireland.

asked the Prime Minister if he will now invite the President of France to visit this country.

I would refer the hon. Gentleman to the Answer I gave on 2nd April to a Question by my hon. Friend the Member for Lancaster (Mr. Henig).—[Vol. 762, c. 47.]

In the light of recent events in France, would it not be wise for the right hon. Gentleman to have direct talks with the President to learn straight from him how discontent in a country can quickly lead to rioting?

I do not think there is any need at the present time for me to have talks with the French Head of State. As to the question of rioting, student power, and so on, the hon. Gentleman will have noticed how a certain visitor from France to this country was cut down to size when he got to Britain.

Is the Prime Minister aware that this is the 800th year of the "Auld Alliance" between Scotland and France and that, by right of law, General de Gaulle can claim citizenship of Scotland. [An HON. MEMBER: "You can have him."] Will he therefore invite General de Gaulle to visit Scotland before the year is out in the hope that the good will engendered will overflow in the direction of the Prime Minister?

I note what the hon. Lady says, but I have no doubt that the President, whose sense of history is as least as great as hers, will have noted that this is the 800th anniversary.

asked the Prime Minister what is the policy of Her Majesty's Government on the extension of public ownership as a contribution towards their policy of import substitution.

Her Majesty's Government are prepared to support any measures, whether within public or private ownership, which contribute to this end, provided that they are fully consistent with our international obligations.

Would my right hon. Friend agree that the present level of imports shows that private enterprise has not responded to the policy of import substitution, despite all the incentives available? Will the Government redouble their effort in public enterprise to show private enterprise what can be done?

I think my hon. Friend will see from the evidence that a number of firms in private enterprise have taken rapid advantage of the new competitive situation as regards import saving. By far the most spectacular results have been achieved in export orders, but I would not underrate what a large number of firms, both in the private and public sphere, have done in the matter of import saving.

Is the right hon. Gentleman aware that since the nationalisation of the steel industry, imports of steel have gone up, have nearly doubled, and that exports have gone up by only a comparatively small, certainly a lesser, amount? Is not this a strange contribution towards import substitution?

The right hon. Gentleman will be aware that in the last few months, particularly since steel was nationalised, there has been a period of excess steel supplies throughout the Western world. There have been suggestions of dumping, and these will be looked into.

asked the Prime Minister if he will make a statement on his meetings with the King of Greece on his recent visit to this country.

My met ting with the King of Greece on 27th May was both private and informal, Sir.

Did my right hon. Friend discuss with the King of Greece the Labour Party conference resolution about Greece—[Interruption.]—why not? —which called for the expulsion of Greece from the Council of Europe and from N.A.T.O. in an effort to restore democracy? Did he give the King of Greece any indication that we would move in the near future for the expulsion of Greece if democracy is not restored?