asked the Chancellor of the Exchequer if he has now received the initial findings of Professor Reddaway about the selective employment tax; and if he will make a statement.

Yes, Sir. My right hon. Friend received Professor Reddaway's initial report, which deals with the distributive trades, on 12th January. The report will be published as soon as possible. The Chancellor will review the tax and its working carefully in the light of the findings. My right hon. Friend and I should like to take this opportunity of thanking Professor Reddaway and his staff for the immense amount of work which has gone into the preparation of the report.

Is the right hon. Gentleman aware that his gratitude to Professor Reddaway is echoed on this side of the House? Can he give an assurance that the initial findings will be published before the Budget?

I am grateful for the hon. Gentleman's remarks. I assure him that there will be a sufficient number of copies placed in the Library so that all hon. Members may have access to the document.

Will my right hon. Friend bear in mind that this tax is affecting some areas of the country adversely and that particularly on Merseyside the unemployment figures are still well above the national average? Will the Government be prepared to adjust the tax in some areas until the unemployment figures are brought down to the national average?

Whether my hon. Friend's analysis is completely persuasive is a matter for consideration, but certainly he will not expect me to give any indication of what my right hon. Friend may care to do in his Budget.

asked the Chancellor of the Exchequer if he will list the employers and trade unions which have made representations to him for the abolition of selective employment tax, the nature of the representations, and the nature of his replies.

With permission, I will circulate in the OFFICIAL REPORT a list of employers' organisations and trade unions which have made representations to us since the last Budget asking for the abolition of the tax. Most of them were concerned about the position of small businesses. In our replies we emphasised the disadvantages of the practical alternatives to S.E.T.

If my right hon. Friend is given evidence that the S.E.T. has a bad affect upon wages in the distributive industry, will he consider it in relation to that industry?

I am prepared to con sider anything my hon. Friend cares to put before me.

asked the Chancellor of the Exchequer if he will now announce the result of the Government's review of the new over-the-counter duty-free export scheme for overseas visitors; and if he will estimate the value of goods sold under the new scheme since its introduction compared with those sold under the alternative scheme.

The review is not yet complete. The value of goods sold under the new scheme from its introduction on 1st July, 1969, until the end of December was over £¾ million, compared with rather less than £2 million under the alternative scheme during the same period.

Do not those figures suggest that the new scheme has not been very popular and do not they confirm some of the many criticisms that were made of the scheme? May we have an assurance that any modified scheme will be brought into effect as a result of the review in time for the forthcoming tourist season?

Many of the criticisms made of the scheme were based on misconceptions; and the evidence is that increasing use is being made of the scheme.

asked the Chancellor of the Exchequer whether he will make a statement on the discussions held in London on 4th and 5th December with the French Finance Minister.

M. Giscard d'Estaing visited London at my invitation on 4th December. We had most useful discussions on a wide range of topics within our respective responsibilities.

May I press the right hon. Gentleman to say a little more about what was actually discussed? For example, did the discussions include the subjects of the value-added tax, of agricultural support for the Common Market or of a European currency? Were the discussions a preliminary skirmish to the negotiations that will occur later this year?

No. The discussions were confidential, and the hon. Gentleman and the House will, on reflection, agree that it is desirable that they should have been confidential. That does not mean that they were highly secret or that matters of great sensitivity were dealt with. We ranged over a wide field of subjects, mainly of international monetary matters of mutual concern. We were certainly not concerned with negotiations or even with preliminaries to negotiations.

asked the Chancellor of the Exchequer what is now his estimate of the rate of growth of gross national product for the current financial year.

I see no reason to depart from the broad judgment that I made at the time of my last Budget about the likely course of the economy up to the middle of 1970.

Are we not now moving into the new year with a rate of growth of output which looks as though it may be less than 2 per cent.? Is not this a pitifully low figure by international standards? How can it be reconciled with the constant claim of Ministers, and particularly of the Prime Minister, that we would be combining rapid growth with a balance of payments surplus?

There are a number of ways, none of them wholly satisfactory, by which one can measure growth. There is the Index of Industrial Production, which is subject to a good deal of revision as time goes on, the National Income Statistics and other methods. I think that the rate of growth is not likely to be markedly different from the prediction I made in April of last year.

May I press my right hon. Friend to go further on this point? Is it not a fact that the rate of economic growth of this country last year and this year was well below the average obtained by every other comparable advanced industrial nation? Will he bear in mind that we are now in the fourth successive winter with 600,000 people out of work? Is it not about time that my right hon. Friend got his priorities rather differently arranged?

It is a fact, and there is no point in disputing it, that the rate of growth of this country over a period from 10 to 15 years past has been slower than that of most other advanced economies. However, the rate of growth in 1968 was one of the best during this period, and in 1969 it will have been a little less good, but the two combined rates will, on the whole, represent one of the better, rather than one of the worse, two-year periods.

asked the Chancellor of the Exchequer which of the following countries, from information available to him from international sources, namely Canada, the United States of America, Japan, Austria, Belgium, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Norway, Portugal, Switzerland, Sweden and Turkey have shown a faster rise in gross national product than the United Kingdom since 1964 and which have shown a smaller increase.

From 1964 to 1967, the latest year for which figures are available from O.E.C.D., all of the countries listed by the hon. Member showed a faster rise than the United Kingdom in gross national product at constant market prices. The same was true for the period 1958–64.

As the United Kingdom appears at the bottom of the list, 19th out of 19, what importance does the Chancellor of the Exchequer attach to the rise in the gross national product as a measure of good economic management?

My right hon. Friend attaches a great deal of importance to that and also to the level of income enjoyed in the various countries. The hon. Gentleman will be interested to know that the income per head of population in that year in the United Kingdom was greater than that in Japan, Austria, Greece, Ireland, Italy, the Netherlands, Portugal and Turkey, was broadly similar to that in Germany and Belgium, and was slightly below that in France.

Is my right hon. Friend aware, in spite of that, that if record unemployment, record interest rates and record bankruptcies, coupled with minimum expansion, are the symptoms of a healthy economy, some of us look back to a sick economy with some nostalgia?

The list which my hon. and learned Friend has given to me is an interesting one. Were I able to ask a question—I am entitled only to answer questions—I would ask him to what he was referring.

asked the Chancellor of the Exchequer what is now his estimate of the surplus of all revenues accruing to the public sector over total public spending for the current financial year.

I would refer the hon. Member to Table 1·2 in "Public Expenditure, 1968–69 to 1973–74" (Cmnd. 4234) which shows the latest estimate of the total balance for 1969–70, a surplus of £542 million.

I have seen that table. Is not part of the surplus arising from the practice of certain public bodies of borrowing abroad and not calling on the National Loans Fund? Is this a policy which the Treasury and the Minister condone and continue to approve?

I would be misleading the House if I did not draw attention to the fact that the main reason for the addition to the surplus arises from the extra import deposits, which indeed account for more than £200 million of the increase to which I have referred.

Is it the case that the effects of these borrowings abroad by nationalised industries appear easily in the accounts, particularly in Table 15 of the Financial Statement?

Yes, they do appear in Table 15.

asked the Chancellor of the Exchequer if he will make a further statement on the outcome of his discussions with the Swiss banks regarding evasion of United Kingdom exchange controls.

I assume that the hon. Member is referring to the discussions between the Governor of the Bank of England and the President of the Swiss National Bank, after which Dr. Stopper subsequently wrote to the Swiss banks on this matter. I hope this will prevent any recurrence of recent difficulties.

Was there not something a little unedifying about sending the Governor of the Bank of England to drum up support among the Swiss banks to enable the Chancellor to persevere with controls on capital movements intact which he and his predecessors promised the I.M.F. they would relax?

There was nothing about this as far as undertakings to the I.M.F. are concerned. What was concerned here was certain activities of the Swiss banks, about which Dr. Stopper had been approached, and he proved extremely helpful.

asked the Chancellor of the Exchequer what adjustment he has now made to the forecast of domestic credit expansion during the current financial year contained in his Letter of Intent to the International Monetary Fund.

asked the Chancellor of the Exchequer what estimate he has now made of the level of domestic credit expansion in the current financial year.

asked the Chancellor of the Exchequer what amendment he has made of his earlier forecast of domestic credit expansion this year.

I expect the expansion of domestic credit during the financial year to be well inside the £400 million ceiling mentioned in the Letter of Intent.

In that case is it not time that the Chancellor should remove the renewal of the import deposits scheme which he was not expecting to renew when he wrote the Letter of Intent?

No, I do not think so. The £400 million was a ceiling. I have always told the House that I thought it right to do at least as much as we told the I.M.F. we would do, perhaps more. While we are somewhat below the ceiling, the balance of payments out-turn looks like being a great deal more satisfactory than anyone anticipated.

Since events of the last few months seem to show that the relationship between domestic credit expansion and inflation is nothing like as certain as that which the I.M.F. predicted, is it not clear that the original Treasury view had something to commend it?

I am sure that the original Treasury view had a great deal to commend it.

In view of the country's greatly improved financial position, will the Chancellor now give priority to ending the credit squeeze in the house-building industry, which is crippling the small and medium-sized builder, and help to halt the critical decline, the highly serious decline, in the house-building industry in this way?

Order. The hon. Member should not anticipate his own later Question.

On the first part of the question, the part which I understood to be in order, it is not the case that because a policy has worked effectively it is right to abandon it. On the latter point, I will bear in mind, as I bear in mind other considerations, the particular problem mentioned by my hon. Friend.

Before the right hon. Gentleman allows the glow of self-satisfaction to overcome him, will he reflect that although there has been a very welcome improvement in the balance of payments—and we are, of course, all delighted about that—[HON. MEMBERS: "Oh!"]—nevertheless he and the Treasury have to answer for very high figures of unemployment, very steeply rising prices and grotesque taxes?

I think the hon. Member is endeavouring to take the question even wider than did my hon. Friend the Member for Salford, East (Mr. Frank Allaun).

asked the Chancellor of the Exchequer what is the latest assessment he has made of corporate liquidity; and what proposals he now has to ease current monetary restrictions.

On the whole, liquidity is significantly lower than in earlier years. I am keeping this and other aspects of the monetary situation under close review but I have no proposals to make at present.

Is the right hon. Gentleman aware that liquidity is not only considerably lower, to quote his own words, but for many sectors of business and commerce a matter of the most acute concern? Can he not take this afternoon as an opportunity, for example, to announce relaxation in hire-purchase restrictions?

No, Sir.

asked the Chancellor of the Exchequer what is the level of gross trading profits of companies expressed as a percentage of capital employed for the period so far available for 1969–70; and how this corresponds with the corresponding period for the preceding year.

In terms of the net capital stock of physical assets at current replacement cost plus the book value of stocks and work in progress held by the company sector at the end of the preceding calendar year, the figures are 12½ per cent. for the first half of 1969–70 and 12¾ per cent. for the corresponding period of the preceding financial year.

Is the right hon. Gentleman aware that those two figures show that industry for some time now has been operating on dangerously low levels of profitability which cannot but affect future levels of investment? Will he communicate to his right hon. Friend in the Department of Employment and Productivity that she should use certain discretion and economic judgment in dealing with price increases?

I would not necessarily accept the first part of what the hon. Member has said, but I will be only too glad to convey to any of my hon. Friends any message from any hon. Member.

Does the right hon. Gentleman agree that some major industries are operating a return on capital which is less than the amount they have to pay for new money and this is rather disastrous? Will he reconsider his answer to my hon. Friend?

I have already indicated the average level of the return on capital employed in the definition I have given. This, of course, is a very crude method of attempting to give the answer, but it is the best information one has.

Is not the failure of the Government's intentions to get higher investment particularly in manufacturing industry attributable to the difficulties the Chief Secretary has mentioned this afternoon rather than the millions of pounds they have been pumping into the industrial investment scheme?

There is no such failure.

Do not the figures perhaps give some indication of the level of management ability in this country?

I take account of what my hon. Friend has said.

asked the Chancellor of the Exchequer whether he will now make a study of the effects of introducing a value-added tax in the United Kingdom in view of the pending negotiations with the Common Market.

I have nothing to add to what I told the hon. Gentleman on 25th November.—[Vol. 792, c. 45.]

Does the Chief Secretary recall that his colleague the Chancellor last year made certain speeches in favour of the Common Market and on different days certain speeches attacking a value-added tax? These views are inconsistent. and if the Chancellor is to be consistent in 1970 is he to come out against the Common Market or in favour of a value-added tax?

All Treasury Ministers are wholly consistent. There is no inconsistency in what my right hon. Friend said and no inconsistency in the supplementary answer I now give, which is to refer the hon. Member to the very full statement made on this point by my right hon. Friends the Prime Minister and the Foreign Secretary.

Does my right hon. Friend accept that whatever the other effects of a value-added tax may be, it is likely to lead to very substantial increases in prices to the consumer?

I am bound to give my hon. Friend a serious answer and to draw his attention to the fact that questions relating to the effect of a tax depend on the rate and coverage of the tax.

asked the Chancellor of the Exchequer what estimate he has made of the revenue from taxation in the calendar year 1969; and what was the comparable figure in 1964.

The revenue from taxation in the calendar year 1964 was £7,110 million. The comparable figure for 1969 at constant prices is estimated at £10,590 million; and at current prices at £12,551 million. If account is also taken of the rise in average earnings the comparison shows an increase of 28·7 per cent. over the five years, or 5·2 per cent. per annum compound.

Is the Chief Secretary aware that the increase in tax rates alone has resulted in the average family in Britain having to pay about £3 10s. a week extra in tax? When do the Government hope to redeem their promise not to impose any general increase in taxation?

I am aware that the general economic policy followed by my right hon. Friend has resulted in an increase in the standard of living of the very people to whom the hon. Gentleman referred.

Do the Government impose taxes to punish people, or to provide services?

The Government have to collect taxes partly as a method of demand management and partly, as my right hon. Friend says, to provide the services which on all sides we are continually asked to provide and increase.

Will the right hon. Gentleman confirm that, leaving aside questions of price changes, and so on, the increase in tax rates between 1964 and 1969 is more than £3,000 million?

I want to be as helpful as I can. I did not follow the right hon. Gentleman's question. He specifically referred to tax rates alone—rates, as opposed to the amounts on which the rates are imposed?

Yes.

In that case, I will have to ask the right hon. Gentleman to be good enough to allow me to obtain the information and give it to him.

Is my right hon. Friend saving up to give us a little reduction in due course?

How do these figures, showing this vast increase in taxation, compare with the Socialist Party's promise at the last election that its whole programme could be carried out without any increase in taxation? Laugh that one off!

The short answer to the hon. and gallant Gentleman is that no such statement was made at the last General Election—certainly not by myself, nor by any of my colleagues that I am aware of.

asked the Chancellor of the Exchequer what estimate he has made of the cost to Great Britain of maintaining sanctions against Rhodesia in 1969 and in 1970.

The cost to the Exchequer was a little under £4 million in 1969, and, if the Rhodesian situation remains unchanged, is expected to continue at about this level in 1970. The cost to the United Kingdom balance of payments cannot be precisely estimated. In 1969 it was probably slightly less than the estimated cost of some £40 million in each of the preceding three years, and a further fall in the cost is expected in 1970.

Is the Minister aware that after four years of sanctions and blockading Beira, petrol in Salisbury is 1s. a gallon cheaper than it is in London and that the shops are full of goods from countries all over the world, including Eastern European countries? Precisely what is the purpose of sanctions now? How long must this nonsense continue?

If the hon. Gentleman is suggesting, as he clearly seems to be, that sanctions should be discontinued, first he is flouting the United Nations resolution and, secondly, we could not disregard possible other economic effects which would follow if we discontinued the policy.

Does my hon. and learned Friend agree that the vast majority of the inhabitants of Rhodesia cannot afford petrol or need it?

In view of the remarkable growth of the Rhodesian economy, which the Chancellor might well envy, and the lowering of both surtax and income tax in the last Rhodesian budget, may we be told when the sanctions will begin to bite?

The hon. Gentleman would do well not to take at face value everything that comes out of Rhodesia by way of official statements.

asked the Chancellor of the Exchequer what study he has given to the use of the income tax system to make positive allowances to people living on low earnings; and if he will make a statement.

Schemes of this kind are kept under review by the Departments concerned.

Is there not a need for an efficient system to provide a minimum income guarantee? Does the right hon. Gentleman agree that the income tax system could readily be adapted to provide this? Will he institute a serious departmental inquiry into the matter and publish its findings?

Of course we want an efficient system, and schemes of this kind are kept under review. I will consider, if the hon. Baronet thinks it would be helpful, whether some kind of report could be made.

Williams asked the Chancellor of the Exchequer what estimate he has made of the savings to be made by employers in the administration of Pay-As-You-Earn through the abolition of negative income-tax allowances.

Information on which to base an estimate is not available; it would depend, among other things, on what alternative arrangements were made to replace tax allowances.

Does the right hon. Gentleman agree with my estimate that the cost of running the Pay-As-You-Earn system to employers on behalf of the Inland Revenue is currently between £30 million and £50 million a year?

No, I cannot agree. I have heard figures quoted. One figure I have heard quoted—I think by the hon. Gentleman himself—was between £25 million and £50 million. It seems to have risen since the last occasion.

asked the Chancellor of the Exchequer what measures he now proposes to stimulate investment in plant and machinery.

asked the Chancellor of the Exchequer what steps he is now taking to promote investment in manufacturing and the construction industries.

Investment in manufacturing industry has risen steadily since devaluation, and is expected to increase by about 10 per cent. between 1969–1970. I am keeping a careful watch on the indicators for the future in all sectors. On the whole the recent evidence has been encouraging.

As my right hon. Friend is, quite rightly, turning his attention towards the improvement of manufacturing investment, will he say what consideration he has given to further shortening the period of repayment of the investment grants?

I have considered this with all other matters, though, as my hon. Friend will be aware, there has been no element in public expenditure which has increased more rapidly recently and which has gone more above estimate than investment grants, for which a Supplementary Estimates has already been laid, and for which another spring one will have to be laid.

Is it not a fact that, although our investment has increased by 10 per cent. recently, it is still only one-fifth above what it was 10 years ago and compares very badly with other similar industrialised countries?

I have always made it clear that I would like to see a higher rate of fixed investment in manufacturing industry. I do not believe that we could have achieved this in one go in 1969. I hope that we can achieve a steady rate of progress. As to comparison with the early 1960s, there was one good year which stood out, but it was one good year amongst a number of bad years.

The right hon. Gentleman will be aware that the White Paper Cmnd. 4234, which we are to discuss tomorrow, says that the Government are making a cost-benefit analysis of the value of investment grants. Will the result of that study be published in due course?

That is primarily but not exclusively a matter for my right bon. Friend the Minister of Technology. The study is proceeding. I will certainly consider with my right hon. Friend whether it would be suitable for publication when complete.

asked the Chancellor of the Exchequer if he will now publish the Report of the National Institute of Economic and Social Research on the Economic Effects of Immigration.

Publication of the report is the responsibility of the National Institute. I am informed that it has been with the printers for some weeks and will be published as soon as possible.

Is the Minister aware that it is more than two years since the National Institute was first asked to undertake the survey and that reports have been published from time to time over that period? Is it not time that this report was published, in view of the great importance of this subject?

I wholly agree that the report is of very great importance. It was therefore obviously desirable that it should be extremely thorough and wide-ranging and should make full use of the information available from the 1966 sample census.

asked the Chancellor of the Exchequer when he expects to reply to the Estimates Committee's Report on the Inland Revenue.

I have not yet completed my consideration of the Estimates Committee's Report, but I shall present a White Paper as soon as possible.

Can my right hon. Friend say whether the reply of the Treasury will be available before the Budget, so that we might have a debate on the report before the Budget? But meanwhile will he in any case give an assurance that he will not be inhibited by the terms of the report from initiating such tax changes as he thinks necessary in the presentation of his Budget?

I certainly hope to be able to present the White Paper as soon as possible, and I hope that that might be before the Budget. In any tax changes which I might wish to propose, I am bound to take account of the administrative consequences. I am a little bewildered that my hon. Friend, having presided over the Committee, appears for the moment to be asking me to take no notice of its recommendations.

Will not the Chancellor also take into account the fact that since the report was published the militant behaviour of Inland Revenue staff demonstrates their fear that any action he takes in the Budget in regard to taxation will cause additional complications in the Inland Revenue and additional tardiness in dealing with thousands of taxpayers' individual assessments?

I take all these matters into account, even without the hon. Gentleman's assistance.

Have not preliminary investigations indicated that the Estimates Committee was somewhat naïve in its simple acceptance of the Inland Revenue's staff federation's submissions?

I would never wish to accuse the Estimates Committee while under my hon. Friend of being naïve.

asked the Chancellor of the Exchequer what measures he has taken to improve the speed of service to taxpayers given by Centre 1, East Kilbride.

asked the Chancellor of the Exchequer what action he is taking to eliminate the delays now being experienced by taxpayers in Scotland as a result of the reorganisation involving Centre 1 at East Kilbride.

Internal procedures at the centre have been under constant review and a number of improvements have been made; the staff has also been increased with the growth in the number of taxpayers whose affairs are handled there.

Whilst M.P.s who have raised individual cases have had total co-operation—and we thank the staff for that—does my hon. and learned Friend see an end to these teething troubles? What has been learnt from them?

Inevitably we have learnt something about a change-over which must necessarily be somewhat complex. The centre will be fully set up by May of this year, and the teething troubles should then be at an end.

While the computer at Centre 1, which I was glad to visit recently, will in due course be helpful to the Inland Revenue, is the Minister aware that during the period of transition serious and exasperating delays are occurring in the cases of many Scottish taxpayers?

I am aware of that, and greatly regret them.

Is my hon. and learned Friend aware that there has been rapidly building up in Scotland a great deal of disenchantment with the East Kilbride computer? To restore complete confidence, will he consider conducting an inter-departmental inquiry into the whole matter, and let the taxpayers of Scotland see that something is being done to deal with their complaints, many of which I have received?

A great deal has been done, and some of this will appear in later Answers. It is inevitable that there should be difficulties when it takes two weeks to convert from the manual records to the computer and when a manual and A.D.P. system must be operated side by side.

Will the Minister give us more precise information so that we can pass it on to our disgruntled constituents? Can he say what is the backlog, the waiting period, and when he hopes that it will be finally over?

That is a separate question which I will answer separately if I am asked it. I can assure the hon. Lady that when the centre is finally in operation in May the difficulties should disappear to a very large extent, and, one hopes, almost entirely.

asked the Chancellor of the Exchequer whether he is satisfied that his policy of centralisation of taxation affairs does sufficient to retain personal methods of contact between his officials and taxpayers; and if he will make a statement.

My right hon. Friend is aware that there have been delays in particular cases at Centre 1, East Kilbride, in the period while work is being transferred from local offices, but we are confident that the centralisation programme when completed will give taxpayers a quicker and more efficient service than is possible at present.

Since personal interview is often not only more convenient for our constituents but saves a great deal of paperwork for the Inland Revenue, and therefore valuable time, is not there a case for making clear in each printed leaflet where an individual can go for personal advice, rather than dealing with the computer centre?

I entirely take my hon. Friend's point. Such a leaflet has been issued.

Will the Minister at least give us an assurance that he will not add to the burdens of the centre when the overworked staff are quite unable to cope with the burden they already have? Will he reconsider the proposition put by the hon. Member for Midlothian (Mr. Eadie) that there is every justification for a full-scale inquiry into the operation of the centre?

I do not think that this is a case for an inquiry. We have looked fully into these difficulties, and I think that they will decrease as the number of staff at the centre is increased.

asked the Chancellor of the Exchequer on what grounds payments by companies for private medical insurance on behalf of employees is allowable as a deduction for tax purposes; and if he will make a statement.

Because the expenditure is normally incurred wholly and exclusively for the purposes of the employer's business.

Are not there many items of expenditure, some "wholly and exclusively" incurred for business purposes, which are not so allowed? One could, for example, allow holidays for all members of the staff. Will my hon. and learned Friend at least reconsider the whole question of what is taxable and what is not in the way of benefits in kind?

In general one wants to stick to the position whereby it is for a company to decide how it is to make its profits. Expenditure incurred in making the profits is something which should be allowed.

If a company is allowed the charge as a deduction, why should not a self-employed individual—as the Chancellor as a member of the Society of Authors before he took office was self-employed—charge his B.U.P.A. subscription against his personal taxation?

The hon. Gentleman will realise that different tax rules apply to different categories.

On a point of order, Mr. Speaker. In view of that wholly unsatisfactory reply, I beg leave to give notice that I will seek to raise the matter on the Adjournment.

asked the Chancellor of the Exchequer what studies his Department has made about the relation between home sales and export performance in the motor manufacturing industry; and if he will publish such studies.

A confidential study was carried out by Government officials and representatives of the industry in 1966–67. The recent Report of the Motor Manufacturing E.D.C., which also considers this question, will be published shortly.

Is my right hon. Friend aware that many of us on this side of the House do not accept the proposition that one helps exports by squeezing the home market? Is he aware that much of the motor manufacturing industry in the West Midlands still works below capacity and could export even more if some stimulation were now given to a home market that has greatly declined?

I am aware of the whole balance of considerations here. As my hon. Friend will be aware, I have just as close a constituency interest in the matter as he does, if not closer. I very much doubt whether we should have achieved the substantial increase in motor exports achieved in 1968 and 1969 had we allowed the home market to run absolutely free during that time.

Will my right hon. Friend bear in mind that the decline in domestic output is leading to a decline in the earnings of workers, and that that is contributing to industrial unrest in the motor industry? Will he consult his right hon. Friend the Secretary of State for Employment and Productivity before coming to a conclusion about whether he should ease restrictions on the output of motor cars for the domestic market?

I will bear all these factors in mind.

asked the Chancellor of the Exchequer whether he will introduce legislation to permit employees' contributions to the Government's scheme of National Superannuation to be allowed in full against assessments for income tax.

No, Sir.

Does not the hon. and learned Gentleman appreciate that the administrative problems of doing this would be resolved by the proposed system of collecting National Insurance contributions through the Inland Revenue? Is it not very unfair that people should pay tax on earnings they do not receive?

The answer to the first part of the right hon. Gentleman's question is "No, Sir". There would be P.A.Y.E. difficulties not dissimilar to those which existed in 1959 when he him- self disallowed the graduated contribution for tax purposes. Second, any such concession would have to be paid for, and would be paid for at the expense of the lower-paid for the benefit of the higher-paid. In any event, there is the Exchequer contribution, which is a broad equivalent.

asked the Chancellor of the Exchequer whether he will now make a statement about the charges which he proposes to make in the taxation treatment of occupational pension schemes consequential upon the introduction of National Superannuation.

My right hon. Friend will make a statement as soon as he is in a position to do so.

Can the hon. and learned Gentleman at least tell us whether it is the Government's policy to make the taxation position of these schemes better or worse?

The right hon. Gentleman should await the statement.

asked the Chancellor of the Exchequer what was the level of British investment overseas and investment by overseas companies and investors in Great Britain, respectively, in 1969.

Estimates for 1969 of British investment overseas and investment in the United Kingdom from overseas are not yet available. Provisional estimates for the first three quarters of the year were published in Economic Trends for December, 1969.

What steps will the Chancellor take to reverse the trend of overseas liabilities, particularly of the private sector, which are increasing faster than overseas assets, as revealed in the quarterly bulletin of the Bank of England?

I do not know whether the hon. Gentleman is fully aware of what has been happening with overseas investment. It has been considerably higher not only in money terms but in real terms over the past four years than over the preceding four years.

asked the Chancellor of the Exchequer what has been the change in the balance of payments figures in 1969.

In 1969 there is likely to have been an improvement in the current account of the order of £600 million on the previous year. Full figures for the year, including the capital account, will be published in March.

Is the Chancellor aware that, contrary to the Prime Minister's indication at Swansea, I welcome this trend and the strong platform which the Prime Minister has for his visit to the United States? What steps will the Chancellor take to reduce taxation on invisibles, which have accounted for this trend? What will be the effect of wage inflation?

I was not aware that my right hon. Friend mentioned the hon. Gentleman at Swansea but perhaps I did not read the speech fully. As for taxation proposals on invisibles or anything else, the hon. Gentleman will not be surprised to be told that at this time of the year I have no statement to make on that matter. As far as the question of what he calls "wage inflation" is concerned, this is a matter which we must watch very carefully indeed.

asked the Chancellor of the Exchequer how many representations he has received from industrial organisations, professional organisations and individual traders about the inconvenience of the new 50p coin; and if he will make a statement.

We have received a total of 14 complaints from traders, most of them from retailers and written in the first four or five weeks after the coin was introduced.

No complaints have come to us from professional or industrial organisations.

Is the hon. Gentleman aware that, far from becoming accustomed to the new coin, most people still heartily detest it? Is there not a good case for putting public choice first and at least improving the size of the coin or, better still, reintroducing a paper note?

Everyone who complained about the coin did so on different grounds. My impression is that the public are growing used to it and that it is much more acceptable than it was at first.

asked the Chancellor of the Exchequer if, in view of the need for a sustained and enlarged output of local authority and private housing in the north-east he will take steps to authorise the banks to increase credit facilities to their builder customers in the northern planning region.

The banks have been asked, in carrying out the authorities' requests on lending, to have regard to the Government's policies on regional development.

Is my right hon. Friend aware that the placing of local authority housing contracts in the first nine months of last year was only half what it was in 1968 and that this is having a serious effect on housing policy generally and also on small builders? Something needs to be done to help small builders, otherwise the tap cannot be turned on again quickly.

I am aware of the situation but it does not necessarily follow that credit was the main cause or one of the main causes of what my hon. Friend has described.

asked the Chancellor of the Exchequer if, in view of the unemployment in the building industry in the north-east, he will take steps to allow the regional employment premium to operate in the building industry in the northern planning region.

I recognise the seriousness of the problem, but I consider that the cost of my hon. Friend's proposal would be out of all proportion to the benefit in terms of reduced unemployment in the region.

This is another one of the reasons which relate to Question No. 31. Would my right hon. Friend at least consider, and ask the Chancellor to consider when making Budget proposals, some easement on the building industry in the northern region so that it can achieve its task in that area?

I will convey to my right hon. Friend what my hon. Friend said.

asked the Prime Minister whether he will give consideration to the commissioning of another statue in the Members' Lobby of the late David Lloyd George which would symbolise historically his proper comparison with the late Winston Churchill.

I would prefer to wait until we have some clearer indication of the range and depth of feeling on this matter both in the House and elsewhere before reaching a conclusion.

Is my right hon. Friend aware that I did not put down this Question until several hon. Members on both sides of the House had spoken to me on the subject, so that he need not misunderstand the feeling? Is my right hon. Friend aware—in fact, I know that he is —that the last speech made in this House by Sir Winston Churchill was on the proposal to put up a statue to Lloyd George? Sir Winston said—

Order. It is not in order to quote on a supplementary question.

I am aware of that, Mr. Speaker, but as I am only referring to a sentence I hope that you will be indulgent.

Order. Even if the quotation is small, it is out of order.

"As a man of action, resource and creative energy, he stood, when at his zenith, without rival".

Those were the words of Sir Winston Churchill. Does my right hon. Friend accept that what has emerged now is a caricature? Indeed, the scene is like that of a man and boy in the Lobby. Will my right hon. Friend take the view of Lloyd George's—

Order. Supplementary questions must be reasonably brief.

I am aware of that, Mr. Speaker, but this is a curious Question. I ask for the indulgence that you have extended to hon. Members less experienced than I. Will my right hon. Friend bear in mind that there is considerable feeling here that the thing represents a caricature and historically is not a complete symbol of the respective places of these two great men in history?

All those right hon. and hon. Members present will recall that speech made by Sir Winston Churchill to which my right hon. Friend referred tangentially. I have heard a number of different views expressed about the feelings in the House, and I think that that is the general experience of right hon. and hon. Members. I think that a little more time is needed. Right hon. and hon. Members are not usually over-slow in becoming articulate on any matter on which they feel strongly regarding the House itself and its surroundings.

When there has been an opportunity for right hon. and hon. Members to consider this matter and discuss it, no doubt my right hon. Friend the Leader of the House will be prepared to find time for a short debate so that the views of right hon. and hon. Members can be expressed.

Is the Prime Minister aware that the House will be grateful to him for saying that he will give sympathetic consideration to the views which will be expressed on this matter? Is he further aware that certainly every surviving member of the Lloyd George family, particularly his one surviving child, believes that this statue is neither worthy of him nor worthy of the House of Commons? There would be widespread support for a statue which was a worthy companion to the very fine statue of Sir Winston Churchill, so that we could suitably commemorate both the war leaders of this century.

The right hon. Gentleman has put an individual point of view, and others will be expressed on the matter when it is considered further. My impression was that there was concern in the Lloyd George family about an original proposal to move the Lloyd George statue as part of the rearrangement, and when that did not occur I thought there was rather more acceptance of the position. If the right hon. Gentleman has more up-to-date information, no doubt he will express that at the appropriate time. Others may express different views.

Is my right hon. Friend aware that no one regards the Lloyd George statue as satisfactory and that there is no need for a debate at all? Surely he could collect the voices and decide whether it is worth proceeding with the suggestion? At the same time, would he consider removing some of those abominable marble statues in the Members Lobby that should never have been placed there?

The House knows how much my right hon. Friend has contributed in this matter as Chairman of the Committee which was responsible for producing—and I do not think anyone has contested this—a remarkable and memorable statue of Sir Winston Churchill. That is not at issue today. It is right that whatever views my right hon. Friend has, other hon. Members may have different views. We must leave time for these views to become articulate. Whether we collect voices, however that may be done, or have a debate must be a matter for the House and the strength of feeling of hon. Members.

May I ask the Prime Minister to resist the suggestion contained in the Question? I remember the late David Lloyd George in this House in the 1930's. The statue in the Lobby is an adequate representation of his splendid being. With regard to Sir Winston Churchill, the statue is familiar to all hon. Members in the aggressive significance of the head and shoulders. I invite the Prime Minister to leave well alone.

That is another view, and in view of the hon. Member's seniority in this House I think we must treat it with deep respect. All hon. Members should have the opportunity to express a view if there is strong feeling about it. Let us consider whether action is needed. In any case there ought to be no consideration of action before the House has had a chance to express itself as a whole.

asked the Prime Minister whether he will now invite the Dutch and French Prime Ministers to visit him to discuss matters of mutual interest.

asked the Prime Minister what further talks he is having with the heads of the European Economic Community Governments regarding Great Britain's application to join the Community.

asked the Prime Minister when he now expects to discuss European affairs with the Prime Minister of France.

It was announced from 10 Downing Street on 2nd January that the Federal German Chancellor would he visiting this country on 3rd and 4th March.

There are no firm plans at present for meetings with other Heads of Government of the Six.

In the meantime and in view of the remarks of the Dutch and the French Foreign Ministers on the question of supranationality, can the Prime Minister reaffirm to Parliament what he said in this House on 6th February, that we do not support any federal or supranational structure in our relations with Europe? Would he clarify this point once and for all?

I do not think that it needs clarification. On the question of federation, which is not contained within the Treaty of Rome and about which there is no obligation so far as the Treaty is concerned, I had something to say about this in a broadcast last week, a copy of which is in the Library. I hope that I was quite clear about that and reaffirmed what I have said in the past.

Is my right hon. Friend confident that negotiations will actually start by July on our application to join the Community? Can he now give any indication to the House when the estimate of costs of joining, and perhaps not joining, will be laid before the House?

I have no reason at all to doubt the decision of the Common Market Ministers at their meeting in Brussels, following the meeting at the Hague, which laid down the timetable; namely, the first half of this year. I have heard nothing to suggest that their thinking is in any way at variance there. With regard to the White Paper, I hope that this will be available to the House pretty early in February. As I have explained to the House, there has been one problem on top of all the others, and that is that certain decisions were taken in Brussels, and we have had to take account of those decisions in making calculations. I can also tell my hon. Friend, who referred to the calculations on the cost of not joining, that they will not be in the White Paper. That is even more difficult to quantify.

When there are discussions with the French Prime Minister, will my right hon. Friend encourage more Anglo-French technological collaboration and do so expressly as a foundation for wider industrial collaboration between the Six and the four applicant countries?

My right hon. Friend will be aware that the French Foreign Minister is visiting London this week and that my right hon. Friend the Foreign and Commonwealth Secretary and I will be having talks with him. We have made it clear to the French that we are only too anxious, as I know they are, to strengthen and improve Anglo-French relations, which have been at a pretty low ebb for a period of years, following particularly the two vetoes in 1963 and 1967. We are certainly anxious, as I made known to General de Gaulle on all occasions that I met him, to cooperate in technological projects, particularly those between our business firms, from which I think both sides would gain a great deal of mutual advantage.

Would the Prime Minister be very frank in his discussion with the Federal Chancellor and tell him of the opposition of the Scottish Nationalist Party—[HON. MEMBERS: "Oh."]—which is the largest party in Scotland, to the application in its present form in which Scotland will have no voice, no votes, no seat at the table and no one specifically bargaining for Scotland?

I think that the French Foreign Minister will be as well aware of the history of the old alliance as the hon. Lady, and will know that it finally passed out in the sixteenth centtury. He will also, unlike the hon. Lady, be aware of the advantages to Scotland, as well as to the rest of the United Kingdom—

What are they?

—and all of Europe, including France, of the trade and employment facilities which will result from a larger grouping in Europe.

Is my right hon. Friend aware that ever since the E.E.C. was initiated, the members have been doing nothing more than squabbling among themselves, on agriculture and financial policy and the like? Have we not got enough trouble on our plate without associating with these quarrelsome people?

I am sure that right hon and hon. Members in all parts of the House will have a full contribution to make in any further squabbling that may be necessary. That is the essence of parliamentary institutions and intergovernmental organisations. If the squabbles lead to the right answer, there is a lot to be said for them. It is far better than any dictatorship methods. My right hon. Friend will also be aware that during this period in which there has been very intense argument within E.E.C., which is still continuing, there has also been a very big increase in production, internal trade within E.E.C. and the standard of living within the Community. We have to learn the lessons from that.

In his original reply to my hon. Friend the Prime Minister referred to his broadcast, a copy of which was in the Library of the House. Is he aware that Foreign Office Ministers are refusing to place in the Library of the House transcripts of the speeches made by them in foreign capitals, thereby increasing the widely held suspicion that the Government are speaking with two voices on the matter of federation—one for home consumption and one for foreign consumption?

I am sure that all of my right hon. Friends are very happy, as I am, to place in the Library of the House any statements that have been made in public and on the record. It the right hon. and learned Gentleman has any such cases in mind where they have not been made available when they have been on the record and in public, would be happy to go into them myself. He would not, however, expect from this Government, any more than from the Government of which he was a member, that they should place in the Library or put on record things which are said confidentially in intergovernmental organisations, whatever accounts may have appeared in the Press, correct or incorrect, of such confidential statements.

asked the Prime Minister what recent consultations he has had with the National Economic Development Council with regard to improving exports; and if he will make a statement.

The National Economic Development Council gave particular attention to the balance of payments in its review of the outcome of the recent consultations with industry at its meeting on 16th December. Discussions in the council are continuing.

In view of the continuing excellent export figures and the part that they have played in helping us to achieve in 1969 the highest balance of payments surplus for the past 12 years, which I am sure the whole House would wish to acknowledge, could my right hon. Friend say whether he discussed with the N.E.D.C. ways of easing restrictions on certain key industries to stimulate home sales?