asked the Chancellor of the Exchequer if he will seek statutory power to enforce his policy upon the joint stock banks with regard to overdraft levels.

No, Sir.

Would not it be better if the Chancellor took power before telling other people what to do? Would not it also be easier for the banks if there were not two or three separate Departments, as at present, telling them to do contradictory things, as the Ministry of Agriculture did the other day?

There are powers, but it is far better to act on voluntary cooperation. As to giving instructions, instructions are given only by the bank.

asked the Chancellor of the Exchequer if he will make a statement on the present policy of the Government on the supply of money.

I have nothing to add to what I said in my Budget speech and in the debate on the Letter of Intent.

Is my right hon. Friend aware that the article in Economic Trends is a very inadequate picture on which to base fundamental economic change, and that the D.C.E., as explained in that article, represents only one small part of the domestic credit expansion? Will he further recall that it was shown by the answer to a Question which I put to him that there are several hundred million pounds which ought to be part of domestic credit expansion and which are not part of it? Will he, therefore, consider reviewing the whole basis, because it seems to be tending towards an economic joke designed only to humour the I.M.F.?

I do not agree with that. I would not agree that any of these concepts is wholly satisfactory, but I think that the D.C.E. is probably the best measurement that we are able to get of domestic credit expansion, or of the money supply, without it being affected by the quirks of what happens in our overseas account.

As his target for aggregation of bank lending has now been achieved, and the total of hire-purchase debt is evidently stabilised, will the Chancellor now confirm that he has no further predatory intentions in regard to money supply?

The hon. Gentleman very much likes five-syllable words, and I do not quite understand what he means by "aggregation" in this context. Does he mean the level of bank lending?

The total.

If he means the total, it has not been achieved; it is at present about 1 per cent. over.

Has the Chancellor calculated the effect on unemployment, investment and growth of every £100 million which he takes out of domestic credit expansion, and how long it takes to become effective? If the answer is "Don't know", is not that all the more reason why he should be extremely cautious in his use of domestic credit expansion?

No, because I think that this moves in the right direction. I do not believe that absolute precision is given to any of these matters.

Does the Chancellor expect that the Government this year will be a net purchaser of gilt-edged from the non-bank private sector?

There would be no purpose in my making a forecast of that. I indicated our policy on gilt-edged in the debate on the Letter of Intent, and I have nothing to add to that.

Are there any studies which show that there is a direct relationship in this country, as opposed to America, between the growth of the money supply and the pattern of inflation, unemployment and the growth of the national product?

The article published in Economic Trends, which I am sure that the hon. Gentleman has read, stated that this gave us an up-to-date indication, nothing more than an indication, of what was happening in the economy on most of those fronts.

asked the Chancellor of the Exchequer what estimate he has now made of the out-turn of the balance of payments in 1969.

asked the Chancellor of the Exchequer on what date he estimates a balance of payments surplus of £500 million will have been achieved in the preceding 12 months.

I have nothing to add to what I told the House on 23rd and 25th June.—[Vol. 785, c. 1001–10 and 1521–34.]

While I understand that the Chancellor's reply was fairly recent and I do not wish to press him further on the precise levels expected this year, may I ask him to say something about the likely out-turn upon investment, and its effect as predicated from the figures that he has put forward on the balance of payments?

I would not wish to revise the view of the course of investment which I gave in my Budget Statement. This took account of the possibility of some revising downwards of very optimistic assumptions which had been put forward earlier. Since then there have been a number of indications. The latest one published in the Financial Times yesterday morning was a favourable one.

Would the Chancellor not agree that if he should fail to reach his target on the balance of payments, which could happen for reasons outside the Government's control as well as through their own responsibility, there would be no growth in the economy at all under the commitment into which he has entered in the Letter of Intent? Had he not better come clean and tell the House honestly that he has accepted a system of automatic deflation as rigid as the old gold standard?

The answer to all parts of that question is "No, Sir".

asked the Chancellor of the Exchequer when he now expects to be able to announce the results of the general review on the presentation of the balance of payments.

Alternative methods of presentation are still being considered, and I am not yet in a position to say when an announcement will be made.

Since the President of the Board of Trade has adopted the suggestion of isolating the United States aircraft, will the Chancellor consider adopting the other two suggestions that I made at the same time of publishing the quarterly figures for private investment and the quarterly figures for invisible trade? I understand that both those figures are available in the Treasury. Does he agree that this gives a better example of our trading position than the so-called estimated balance of visible trade monthly?

The last time I endeavoured to give a comprehensive answer to a very long supplementary question by the hon. Gentleman, the House thought that the answer was getting rather long. Therefore, I will merely say that I will consider his proposals together with other proposals.

Is there any precedent for a shadow Minister of Health asking over a long period such esoteric questions about very technical aspects of the balance of payments?

Accepting the error on the export side, about which the Chancellor told the House, does not the size of the balancing item over the last few years make it more than likely that there may be an error on the import side of the ledger? Will the Chancellor assure us that he will pursue what may be an unfavourable error with a zeal equal to that with which he pursued the favourable one?

I should most certainly pursue any error with equal zeal, but I am afraid that the results might disappoint the right hon. Gentleman in this respect. The size of the balancing item does not indicate anything of the kind. Indeed, it was the size of the balancing item which first led us to believe that there might be some error in the export figure. Anyone with experience of the attention which the Customs and Excise applies to incoming baggage compared with outgoing baggage will realise that imports are checked a good deal more carefully than exports.

asked the Chancellor of the Exchequer when he intends to restore the recent cut in the rate of interest paid to the London clearing banks on their special deposits with the Bank of England.

When they have collectively brought their restricted lending within the 98 per cent. ceiling.

Is not evidence accumulating that this latest form of squeeze has hit particularly hard small businesses which are unable to finance expansion from their own resources and which at the same time are not large enough to raise capital in the stock market? Will the Chancellor recognise that these small firms represent the lifeblood of our economy and that they are being very hard hit indeed by the recent measures?

The hon. Gentleman's supplementary question is not directed to his Question, which relates to the rate of interest paid to the banks on special deposits. Whether that rate were or were not restored, it would not affect the influence of the 98 per cent. ceiling on some firms. I do not entirely accept what he says. I recognise that any pressure on credit cannot be imposed without some hardship and cannot be done totally painlessly, but nor can any other measures to improve the balance of payments.

Does the Chancellor not realise that this is as ineffective as caning a whole class because one or two of the boys have done something one does not like?

It certainly does not look ineffective on the performance of last month's figures. Furthermore, the reason that we chose to proceed in this way is that the banks were asked whether they preferred a collective or an individual approach, and they in fact preferred a collective one.

asked the Chancellor of the Exchequer what was the total of company profits in 1964 and 1968, respectively.

The provisional estimates published in the White Paper "Preliminary Estimates of National Income and Balance of Payments 1963–1968" indicate that the gross trading profits of the company sector, before providing for stock appreciation and depreciation, amounted to £4,616 million in 1964, and £5,194 million in 1968.

Has my right hon. Friend seen a document entitled "The Incredible Saga of Labour Failure", written by a bunch of deadbeat businessmen, and does he know that when I challenged them on their views their main complaint was that company profits had gone down under a Labour Government? Does that not suggest that they are totally incompetent, totally prejudiced, or both?

Treasury Ministers are, I regret to say, too busy to read this irrelevant literature. The gross trading figures are the figures I have given. In terms of percentages of gross national product, in order to give the whole of the facts it is right to say that the figure in 1964 of gross trading profits of companies was 15·8 per cent. of total domestic income, and in 1968 it was 14·1 per cent.

Could the Chancellor tell the House how much extra the Government have collected in tax owing to the rise in profits?

If the hon. Gentleman will put down a Question, I shall be delighted to give him the answer.

asked the Chancellor of the Exchequer whether he is satisfied with the effects of Government policy on the present level of company profits; and if he will make a statement.

I am satisfied that the level of company profits is in general adequate to support a high rate of fixed investment and of economic activity.

Then could my right hon. Friend say what the Opposition are complaining about?

The only complaint I have heard from anybody opposite is that there was a Mowbray pie which was slightly indigestible.

Could the Minister confirm that over this period corporate profits in this country as a proportion of gross domestic product have been declining, whereas in the United States the corporate profits as a proportion of G.D.P. have been growing? Is this not an extremely disturbing factor? Does it not partially explain the growth of the tendency towards the colonisation of European and British firms by giant firms in the United States?

No, Sir. The hon. Gentleman is omitting the obvious explanation that in the United States they have not had the good fortune which we have enjoyed in this country of the transfer from the private to the public sector in the period in question.

Would my right hon. Friend bear in mind that, although I myself and others of my hon. Friends support the Government's policy on prices and incomes, we find it increasingly difficult to support such policies when company profits go up by this extent? In five years £500 million in profits were made. Could we be shown that there has been some action to keep down these profits?

I appreciate and welcome my hon. Friend's continuing wholehearted support. But it was because I thought this to be an issue on which the whole of the facts ought to be known that I felt it right to give them in terms not only of absolute sums of money, but also in terms of the proportion of G.D.P.

asked the Chancellor of the Exchequer what representations he has received from the Chairman of the Economic Development Corporation for the distributive trades about the recent increase in selective employment tax; and what reply he has sent.

The Chairman of the E.D.C. wrote to my right hon. Friend the Chancellor on 28th April expressing regret at his decision to increase S.E.T. before Professor Reddaway had reported on the economic effects of the tax and asking for an assurance that no time would be lost in correcting anomalies as soon as the results of the inquiry were available. In his reply, my right, hon. Friend explained that he had to take his decision on the best information available to him and he gave an assurance that he would consider Professor Reddaway's findings very carefully.

Either before or after receipt of these findings, would the Government now admit that their argument that distribution has paid too little tax and manufacturing too much tax has been exploded by the fact that retailers themselves pay purchase tax and now must pay the increased S.E.T. as well?

No, this is not correct. S.E.T. is paid specifically on retailing activities, not purchase tax.

Could my hon. Friend give the House an idea when he expects Professor Reddaway's views to be put forward?

There is a separate Question on this matter later on the Order Paper.

asked the Chancellor of the Exchequer if he will take steps to raise the test rate of discount for appraising investment in nationalised industries.

A review of the rate is now in progress; I must ask the Hon. Member to await its outcome.

The right hon. Gentleman is a little late. Has he not heard that the interest rates have gone up since the 8 per cent. discount rate was fixed, and that they are now nearly 50 per cent. above what they were at that time? Will he hurry up in order to avoid a wrong distribution of resources in companies in the private sector?

I agree that this matter has to be dealt with expeditiously, and it is so being dealt with.

asked the Chancellor of the Exchequer whether he will set up an inquiry into ways of insulating domestic interest rates from fluctuations in international interest rates.

No, Sir.

Would my right hon. Friend agree that rises in interest rates mean that the rich get richer and the poor get poorer and that most people who lend money at interest in this country have no intention of lending it ouside the country? It seems insane to them that changes in interest rates in New York should affect building society rates in this country. Will he look into the matter?

I think that the relationship between interest rates and the distribution of income is probably somewhat more complex than my hon. Friend suggests, but I do not think that it would be possible to insulate ourselves from interest rates outside in the way he suggests.

asked the Chancellor of the Exchequer if he will make a statement on the current level of interest rates.

The current level of interest rates in this country reflects the requirements of domestic economic and monetary policy as well as levels in financial centres overseas.

Is not the present level of interest rates alarming, particularly in view of the serious effect on investment decisions? Does not that stem from the United States monetary policy? Can my right hon. Friend say what discussions he is proposing to have with the United States with a view to seeing whether action can be taken to reduce the international level of interest rates?

I keep in fairly close touch with the United States on these matters, as I do with other monetary authorities. I am not entirely convinced. This is a factor which could have an effect on investment decisions, but the fact -remains that with interest rates at what I think is a historically high level at present, investment plans are also at a very high level.

Now that the Chancellor has gone on record as saying that the increase in interest rates is in part due to deliberate Government policy, will he take responsibility for the £2½ million extra which the G.L.C. is having to find, on account of which it has put up its rates today?

No, Sir. For one thing, when local authorities borrow it is the case that they get substantial help from the Government in terms of interest rates. I also indicated that while probably the dominant factor is the level of international interest rates, two reasons why I cannot ignore this are the basic facts of the situation and that I believe it right to pursue a policy of credit stringency in this country.

If the dominant factor is the international interest rates, how was it that in 1964 both the Leader and Deputy Leader of the Labour Party pretended that unilaterally they could bring down rates in this country?

No. I think that they indicated that they could introduce something very near to the option mortgage scheme.

In view of my right hon. Friend's estimates of investment and exports, are there indications that by the end of the year there will be spare capacity in the capital goods industries?

It does not look as if there will be anything like approaching spare capacity in the capital goods industries. The indications are both that export orders are strong in this sector and that, with a fairly strong home investment demand, demand is stronger, as I would wish, in the capital goods sector than it is in the consumer goods sector.

asked the Chancellor of the Exchequer if he will make a further statement on bank lending.

Yes, Sir. There was a fall, after seasonal adjustment, in lending by the main groups of banks, during the latest month for which information is available.

Because of the way that the bank facilities work is it not a fact that to an extent this is fortuitous? Does my right hon. Friend know to what extent the ceiling would have been exceeded if all the facilities had been used? Is he contemplating changing the system to something like the kind that they have in the United States where, instead of having facilities, there is fixed lending?

The question of a change in the system would not be a matter for me but for bank practice. I could not give a figure of the position if all facilities were taken up. But it is the case that British banks have operated under this system for a long time. It should be possible for them to adjust their various commitments and the extent to which they are taken up so as to move rapidly towards the ceiling, as they have in the past month, though not in preceding months.

As the right hon. Gentleman is penalising those banks which do not restrict their lending to 98 per cent., will he consider modifying the penalty and applying it only to banks which do not reach the 98 per cent.? To take one example, Lloyds has got its lending down to 98 per cent., yet it has to take the cut in interest on special deposits. Surely it should apply only to banks which have not reached the 98 per cent.

No. I dealt with that point in answer to a Question by the hon. Member for Cities of London and Westminster (Mr. John Smith). I would have been perfectly agreeable to have applied the cut in interest rates to special deposits selectively if that had been thought a reasonable procedure by the banks. The banks preferred that the procedure should be adopted across the board with an equal cut for all banks.

asked the Chancellor of the Exchequer what was the proportion of Government research devoted to military development, health, agriculture, housing and industry, respectively, in the latest available 12 months.

With permission, I will publish a table and notes in the OFFICIAL REPORT giving as much of the information requested as is available.

Does not my hon. Friend think that £236 million a year on military research is excessive in view of the state of our country's economic health and in contrast with Government expenditure on research in these other respects?

My right hon. Friend the Secretary of State for Defence has announced that the amount spent on research and development on defence will be decreasing. In fact, it has decreased since 1964, from something like 60 per cent. to a forecast of something like 45 per cent. in the current year, but if forces are to be effectively equipped there must be adequate research and development.

Is not the weakness of the Question that while it is clearly the duty of the Government to look after defence, in the matter of housing there is a growing proportion who like to look after their own problems?

The hon. Gentleman has raised a different question, but one has to have regard to the meaning of "research and development" in the Question. In matters of research and development defence necessarily takes much more. In the matter of housing and kindred subjects, it is almost entirely research.

asked the Chancellor of the Exchequer whether he is now satisfied that the Inland Revenue organisation in Scotland is coping with matters affecting income tax claims; and if he will make a statement.

I have no reason to believe that, given the volume of work, there has been any undue delay in handling income tax matters in Scotland.

Is my hon. and learned Friend aware that this is the second time that I have raised this question? Would he not agree that it must give the Department some concern that the East Kilbride centre in particular should be subjected to so much criticism? Does he not agree that a case has been made out for an investigation?

I am aware of letters which my hon. Friend has forwarded to the Treasury. It would be unfair to blame the Revenue in each of those cases, though there have been mistakes. But this is a tremendous operation in East Kilbride, with something like 1 million P.A.Y.E. payers being dealt with at one centre instead of 65 centres. It is inevitable that such a major reorganisation should have some troubles.

Will the hon. and learned Gentleman at least accept that the concentration of so many tax offices on the computer centre at East Kilbride makes it extremely inconvenient and expensive for the average person in West Scotland to call in at his tax office to discuss his affairs?

This relates to P.A.Y.E. When it comes to the kind of cases where people often have to discuss immediate affairs, such as Schedule D, it is not affected.

asked the Chancellor of the Exchequer whether he will give figures showing the private basic balance for the years 1958 to 1968, respectively.

No, Sir. The practical difficulties involved would be disproportionate to the value of the result.

Is it not more accurate to say that the practical difficulties involved would not be as great if the Chancellor attached the right importance to this factor? The current private balance and the capital private balance taken together over the years have given a massive surplus on private account, indicating that it is Government spending which causes our difficulties. Why does the right hon. Gentleman continue to under-value the great contribution of the private sector to our balance of payments?

I do not under-value it. But the practical difficulties are very real, particularly on the visible trade account where it would be extremely difficult to distinguish, as is not done at the moment, between imports on private and public account. Even on the invisible trade account, does the hon. Gentleman suggest, for example, that the earnings of the two air corporations should be on public or private account? If on public account, should payments the other way to air companies belonging to other companies be on private account while the other is on public account? There are great complications of this sort. On a more general point—[HON. MEMBERS: "Too long."] Very well. I will leave it to a later Question.

asked the Chancellor of the Exchequer whether he will seek powers to control the money management policies of large companies whose actions adversely affect the position of sterling.

I see no need for powers additiontal to those contained in the Exchange Control Act, 1947, and the Income Tax Act, 1952.

Is not my right hon. Friend aware that it is becoming realised more and more that international companies have facilities for moving money round the place—which may not be patriotic and is certainly derogatory to sterling but which none the less is an increasing practice? Will he look at the problem?

We have adequate powers to do so and naturally we are concerned to see that sterling does not suffer in any way.

Can my right hon. Friend specify the powers that he has? Did he see the recent article which alleged that international companies are manipulating funds and profits across the exchanges? Can he tell us what powers he has and what evidence he has of the truth of these allegations?

Yes. I saw the article. To answer my hon. Friend's question about the powers that we have, there are three main ones. The first is the control of the purchase and holding of foreign currency. The second is the control of investment both outward and inward. The third is the power to require proper and prompt payment for exports. As for the Income Tax Act, the Revenue has power to prevent a company resident for tax purposes from gaining any tax advantage by artificially pricing goods sold to associated companies overseas.

asked the Chancellor of the Exchequer why he has agreed to give a preferential foreign travel allowance to holders of tickets for the 1970 World Cup competition in Mexico.

asked the Chancellor of the Exchequer on what grounds sanction has been given for a £150 per head travel allowance to 8,000 persons intending to attend the Association Football World Cup Competition in Mexico in 1970.

This is a special occasion similar, in its popular importance and its duration, to the Olympic Games for which like arrangements have been made on previous occasions. The arrangement was agreed last year to enable bookings to be made.

Does it not tend to bring the regulations into disrepute when spectators of one particular sport are allowed a special privilege of this kind? Or could it be that, by the time the World Cup games are played in Mexico next year, these miserable and miserly restrictions will be swept away?

First, this does not apply to one particular sport. It applied to the Olympic Games as well. It was applied by the Conservative Government when they had these regulations in force as it has been applied by this Government.

How does this relate to the policy of the squeeze? Is it an aspect of the squeeze policy? Can my hon. Friend explain why the Treasury provides this preferential treatment? Am I not as much entitled to the allowance as anybody else, even though I am not interested in the World Cup?

If my right hon. Friend was interested in the Olympic Games he could get a special allowance. Without a special allowance it would be impossible for anyone to attend something which lasts as long as three weeks.

asked the Chancellor of the Exchequer why nonresidents working in the United Kingdom are allowed by regulation to remit to non-scheduled territories up to £1,000 per annum; and why residents may remit only £50 per annum.

The two types of payment are not comparable. It is reasonable, and in accordance with international practice, to allow non-residents who hold a permit to work here temporarily to remit home savings arising from their earnings after tax has been paid. The annual amount which a resident may remit as gifts will be reconsidered at the same time as the travel restrictions but amounts in excess of £50 are permitted in cases of hardship.

If foreign exchange is as short as we are told, why should there be this discrimination against our own people? Is it not a fact that many foreign workers in this country, when they are nearing the three-year period when they are liable to be treated as residents, go away for a month or two and come back and start another three years at the £1,000 a year rate?

This is a two-way process. These foreign workers can, after all, come here only if there are no British workers available in that particular area. If we prevent them sending home part of their earnings, the same would apply to our workers who go overseas.

asked the Chancellor of the Exchequer what is the result of his investigation into speculation by city banks in this country which covered the week in early May when speculation on a Deutsche mark revaluation reached its peak; and what steps he now proposes to take.

The investigation has not yet been completed.

Would my right hon. Friend agree that it is not enough that speculators should get their fingers burned, but that organisations and individuals should be named to let the British people know who really are stabbing them in the back?

First, we must find out whether there were any individuals before naming them.

asked the Chancellor of the Exchequer what is his latest estimate of the rate of economic expansion in the United Kingdom in 1969–70.

I would refer my hon. Friend to the "Financial Statement and Budget Report 1969–70" and to my speech in the debate on the Letter of Intent on 25th June.

May I ask my right hon. Friend to make it clear to the House and to the country that this in fact means that Britain will enjoy a lower level of economic expansion in 1969 than in 1968, and can he now say what the effect of this will be on the level of unemployment this coming winter?

It could also be said that it means that Britain will enjoy a higher level of growth in 1968 and 1969 combined than in any two successive years for some considerable time past.

In view of the Chancellor's extraordinary statement in answer to a previous question, that the article in Economic Trends on monetary policy suggested that it did no more than provide an early indication of the way that the economy is going, may I ask him to appreciate that a rapid change round in the quantity of money of the kind he is envisaging is likely to have a serious effect on economic growth and that this is consistent with the view of Professor Milton Friedman?

The hon. Gentleman has obviously been cogitating that answer for some time because it was given in reply to my first question. But he may have been cogitating it upon a false basis, because I did not say that this was the only effect of the squeeze on domestic credit expansion. I was discussing how far it was an indication of what was happening in the economy. A particular level also affects what is happening in the economy as well as telling us what is happening.

asked the Chancellor of the Exchequer what further steps he proposes to reduce the outflow from the United Kingdom of private investment abroad.

Exchange control measures and the voluntary programme are working well in minimising the burden imposed on the reserves by overseas investment, although a good deal of investment in the sterling area is designedly outside the scope of the voluntary programme. The Government have no proposals for modifying existing arrangements.

Is my right hon. Friend aware that last year—a year allegedly of economic crisis—the gross export of capital from this country at £621 million was the highest in any single year since the war and that the trend has continued in the first quarter of 1969? Does he not appreciate that the seed corn of this country is an industrial investment at home and that it makes sheer nonsense to build up Australia at the expense of economic expansion in Britain?

I have told my hon. Friend so many times—and I apologise for wearying the House with it again—that it is not valid to look at one side of the account and not to look at the other side or to believe that we can alter one side of the account without altering the other. The fact remains that in the four quarters from 1st April, 1968, to 31st March, 1969, we were in exact capital balance on private account.

Does the Chancellor realise that none of these persisting questions would be forthcoming if he attended to the obstinately continuing high level of our imports? Why, last week, did the right hon. Gentleman refuse the National Ecomonic Development Council's reasonable request for a successful import substitution committee?

I am sure that, whatever I did, supplementary questions totally irrelevant to the original Question would still be forthcoming from the hon. Gentleman.

asked the Chancellor of the Exchequer what plans he has to control gilt-edged prices in the light of current international interest rates.

None, Sir. I see no reason for departing from the policies followed by the authorities in the management of the gilt-edged market.

Has the attention of the right hon. Gentleman been drawn to the Bank of England Quarterly Review which suggests that for the first quarter of this year the Government Broker had ceased to be a buyer of last resort for gilt-edged? Is the right hon. Gentleman aware that this is a welcome reform which will recommend itself to Professor Friedman?

I am grateful for the information which the hon. Gentleman has given me.

Will my right hon. Friend consider, in respect of the gilt-edged market, using not one Government broker, but a number of Government brokers, to reduce the psychological impact, and will he say whether, in his reorganisation of the gilt-edged market, he will buy out the private owners of gilt-edged generously and make it more of a professional market, as it is in the United States?

I shall consider what my hon. Friend has put to me, as I always do.

asked the Chancellor of the Exchequer what plans he has to discuss with the Italian monetary authorities the present arrangements for settling international debts.

None, apart from the normal exchanges of views on monetary matters generally in bodies such as the I.M.F. and the Group of Ten.

Is the right hon. Gentleman aware that Dr. Carli, the Governor of the Bank of Italy, has now joined the growing throng of those who advocate more flexible exchange rates? Would not it be a happy occasion if the Treasury gave some indication of its intended conversion to this policy?

No, Sir. I am aware of Dr. Carli's views, which I study with close attention, but I do not think that this bears on the question of special bilateral discussions with the Italian Government about matters of international debt.

asked the Chancellor of the Exchequer whether he has completed consideration of the naturist magazines seized from Mr. Jack Gray, the publisher; why they were seized in view of the fact that they are on sale throughout London; and when he will return them.

These particular magazines were seized and condemned as being within the statutory prohibition on the importation of obscene articles, and they have now been destroyed.

Is my hon. and learned Friend aware that magazines of this sort are on sale all over London, and all over the country? Why pick on this importer? This matter has cost him several thousands of £s. Having seen the magazines, and similar ones, I cannot see that these harmless magazines do anyone any harm.

The reason they were seized and condemned was that they were of a kind similar to those which have been condemned by the courts as obscene. There may be similar magazines on sale which have escaped the Customs. If my hon. Friend would like to send them to me, I shall look at them.

asked the Chancellor of the Exchequer whether, in view of the scale of the continuing West German payments surplus on current account, he will initiate discussions with the Federal German Government with a view to international agreement on quantitative limitations on German exports to countries in payments deficit.

No, Sir.

Would the right hon. Gentleman agree that the German Government are as much in need of external encouragement and assistance in correcting a persistent surplus position as the British Government are in correcting a persistent deficit position? Would not the right hon. Gentleman agree that the suggestion in the Question would be infinitely preferable to a generalised slide into protectionism which might follow from failure to correct these underlying imbalances?

Whether or not I agree with the hon. Gentleman's premises, I do not think that a scheme of highly doubtful practicability, which would not commend anything approaching international agreement, would be the right way to deal with this problem.

asked the Chancellor of the Exchequer what studies he has made with a view to introducing self-assessment as the basis for personal tax collection.

The Inland Revenue keep under review the tax systems of other countries, including those where there is self-assessment; but my right hon. Friend has no present intention of introducing it here.

In that case, has the Chief Secretary noted that the United States tax authorities succeed in collecting tax from three times as many taxpayers as the British tax authority, but with roughly the same number of staff as the Inland Revenue? As this arises largely from their self-assessment system, will the right hon. Gentleman see that tax simplification in this country is pursued vigorously so that we can get the same sort of labour-saving and cost-effective system?

Of course one would welcome any increase in labour-saving and cost-effectiveness, but, as the hon. Gentleman who knows these matters well is fully aware, there are other arguments to be taken into account, including the very high level of penalties, publishing of figures, and things like that. I do not think, especially having regard to the amount of tax deducted at source that we have in this country, that there would be anything like the same labour saving.

Is my right hon. Friend aware that the introduction of a system of self-assessment would also involve the general introduction of P.A.Y.E. and the abolition of Schedule D? Would this be welcome on the benches opposite. If so, would he introduce it?

I am always anxious for tax simplification, but the difficulty about this is that every right hon. and hon. Member is against it as soon as the tax affairs of an individual constituent, and the egality of treatment of that constituent, are affected.