asked the Chancellor of the Exchequer what estimate he has made of the level of investment in plant and machinery for the first quarter of 1971.

No estimates are yet available.

As the Government have repeatedly stated that the change-over from investment grants to investment allowances has no disadvantageous effect upon investment, and as the Financial Statement forecast shows that only ½ per cent. increase in investment is expected next year, which will be two years after the Government came into office, will not the Chief Secretary accept that there is great disquiet about the effect of this time lag extending over two years?

One cannot extrapolate in the way that the hon. Gentleman has done. I merely said that the estimates are not available.

Is not the problem about industrial investment that the return on industrial assets fell over the last six years from 15 per cent. to 10 per cent. and that the cost of borrowing exceeds the return on industrial investment? Is it not rather a nerve on the part of a member of the Labour Party to table a Question such as this, because by raising corporation tax and by other measures the Labour Government were entirely responsible for this state of affairs?

Yes, Sir; my hon Friend is quite right. Although we are doing everything we can to encourage investment through incentives, the main incentive is the expectation of profit and the liquidity to invest, both of which were severely damaged by the efforts of right hon. and hon. Members opposite when they were in Government.

asked the Chancellor of the Exchequer what is now the highest rate of tax payable by a resident of the United Kingdom upon his marginal earnings and upon his marginal investment income.

75·4 per cent. and 88·75 per cent. respectively.

I welcome the reduction in the levels of tax on high incomes and the reduction in surtax, but may I ask the Government to consider an early reduction in the levels of taxation on the levels of income?

We fully understand the point which my hon. Friend is making. As my hon. Friend pointed out in his Budget, the changes which are being made in personal taxation will be such as to relieve taxation on a particular slice of investment income. We believe that this will be very important in its effect on encouraging savings.

Does the hon. Gentleman agree that, although the Government may have done something at the higher level—although apparently still not sufficient to satisfy some hon. Members opposite—the Chancellor and the Government generally have over a wide field increased the disincentive to over 100 per cent. for very much greater numbers of people at the lower end of the scale? Are the Government suggesting that it is not a disincentive to lower-paid workers?

I do not accept what the hon. Gentleman says. He should study carefully the speeches made by my hon. Friend the Financial Secretary in the Budget debate.

asked the Chancellor of the Exchequer what proportions of the expenditure of central Government on the welfare services in 1971–72, including health, education, family allowances and pensions, will be borne by contributions from employers, employees and from general taxation; and what were the corresponding figures in 1970–71.

In both 1970–71 and 1971–72, contributions from employers and insured persons are each expected to cover rather more than 20 per cent. of the expenditure on those social services which are provided by the central Government. The remainder will be financed by general taxation.

Is there any logical basis for these figures? Ought not the cash relationship between the individual and the State to be governed by a comprehensible social contract?

The whole House is aware of my hon. Friend's views, but that is the first time I have heard him use that phrase in connection with them. He has now asked a wider question. These percentages have been round about this level for some time.

asked the Chancellor of the Exchequer what is his latest forecast of the precentage increase in the money supply during the financial year 1970–71.

In the first three quarters of the financial year 1970–71 the money supply increased at an average rate of 3 per cent. a quarter. Figures for the last quarter of the financial year are not yet available.

May we then look forward to the current financial year? If, on the gloomiest possible hypothesis, the rate of inflation was such that the achievement of the 3 per cent. growth objective which my right hon. Friend laid down in his Budget speech were no longer compatible with the limitation in the rate of increase of the money supply to 3 per cent. per quarter or less, would it be the growth objective or the monetary guidelines which would have the priority?

The question refers specifically to the year 1970–71. There are a number of factors to be taken into account. The growth over the year is certainly one relevant factor, but another is bound to be the current rate of inflation, and another is the state of company liquidity and the Government's determination to reduce the current rate of inflation. All these factors have to be taken into account. This is why I said in the Budget speech that it was important that we should consider this matter flexibly.

Will the recent increases in personal loan schemes by the banks upset the Budget judgment on money supply?

The banks are still operating within the guidelines which are laid down.

asked the Chancellor of the Exchequer what proposals he has for redefining the elements that enter his calculations of the size of the country's money supply.

None, Sir.

I hope the hon. Gentleman will realise that that will come as a considerable disappointment to the House. But, going beyond that question, has he anything to add to his right hon. Friend's answer to the hon. Member for South Angus (Mr. Bruce-Gardyne)? All the considerations involved having been enunciated, could we have some indication—there is confusion even in the responsible newspapers about the Government's intentions here—whether the Government intend to use the control of money supply to damp down cost inflation, regardless of its effects on the gross national product?

I see no reason why the hon. Gentleman should be disappointed at my original answer. The question of the definition of the money supply was reviewed in the summer last year, and the new definitions have proved useful. The second question is a different question, and it previously received a different answer.

asked the Chancellor of the Exchequer if he will make a statement on the likely effect of his Budget proposals on the level of unemployment in 1971.

The Budget was designed, after a time, to slow down the rise in unemployment and then to halt it. Its success in achieving this will depend above all on the progress of de-escalation of pay settlements.

The Chancellor has conceded again today that he has the power to reduce the level of unemployment. Why will he not tell the House now that he is prepared to act further if it seems likely to reach 1 million? If he will not give that assurance, the House will be bound to conclude that he is prepared to reach that figure.

I can only tell the hon. Gentleman absolutely frankly that if wage inflation continues at present rates I can hold out no hope of an early halt in the rise of unemployment, much less a reduction.

Will the right hon. Gentleman agree that there are significant differences between the two sides of the House on an acceptable level of unemployment? Will he name a figure which he personally will find unacceptable?

No, Sir; but I believe that there is common ground between both sides of the House that the present level of unemployment is too high.

Would the right hon. Gentleman not admit that he and his hon. Friends, on this claim that so-called wage or cost inflation is responsible for inflation, are rather in their propaganda like Dr. Goebbels, in that if one continues to say a lie long enough, the people in the country will believe it? Is it not time that the Government stopped this nonsense of suggesting that high wages are responsible for unemployment, and got down to a policy of properly reflating the economy and dealing with the problem of unemployment, for which they are basically responsible?

No, Sir. The people in the country know that what I have been saying is true. It is right hon. and hon. Gentlemen opposite who are burying their heads in the sand.

asked the Chancellor of the Exchequer if, in view of the numbers now unemployed, he will relax the credit squeeze, in particular by allowing bank loans to builders to be placed in the priority category.

As my right hon. Friend indicated in his Budget Statement, we have already relaxed the credit squeeze to the extent of allowing some increase for the time being in the rate of growth of restricted lending. I do not think it would be advisable to make any change in the priority categories at the present time.

Yes, but, despite that, these building firms still cannot get loans. Is it not a fact that 1.300 building firms went bust in the last nine months, mainly for this reason? Would not this practical measure relieve both the colossal unemployment and also the tremendous housing need at the same time?

It would be wrong to single out the building industry, even in present circumstances, for priority for relaxation of restrictions in the face of claims which could be made by other industries for similar treatment.

Would my hon. Friend agree that 1,300 building firms went bust largely for the reasons of S.E.T. and a 7 per cent. Bank Rate? As both these factors have been alleviated, would he pay no attention to this kind of cackle?

Yes, of course it is true that, particularly among the smaller firms, it was pressure of selective employment tax and Bank Rate, both of which have been ameliorated by this Government, which caused a great deal of the trouble.

Would the hon. Gentleman not agree that, particularly in Scotland, the activity of the building and construction industry could be extended without any inflationary pressure, because a high proportion of those unemployed in Scotland are in this industry? Therefore, should not distinct administrative steps be taken immediately along these lines?

That is a different question. I still do not think it would be right in the circumstances to make any change in the priority categories for bank loans.

asked the Chancellor of the Exchequer what he estimates to be the annual loss to estate duty revenue through the use of discretionary trusts, gifts inter vivos and various life assurances.

I am not sure what the hon. Member has in mind.

Since the hon. Gentleman does not understand what I am at —that the use of these devices sheerly for the purposes of tax avoidance, flagrantly contrary to the clear word of Parliament, costs the Exchequer several hundred million pounds a year—will he not accept that it is the myopia of the politically one-eyed to set up a committee, as this Government have done, to investigate the abuse of the social service benefits without letting it also investigate the much greater and far more costly incidence of abuse through tax avoidance and tax evasion?

The hon. Gentleman is at times inclined to confuse evasion with avoidance, but I have carefully studied his recent writings on this subject and correspondence in some of the newspapers. I am bound to say that it is the hon. Gentleman who is seeking to make merely trivial party political points rather than serious contributions to analysis.

asked the Chancellor of the Exchequer what he estimates will be the level of invisible earnings during the financial year 1971–72; and how this compares with 1965 and 1967.

Net invisible earnings in 1970, excluding net Government expenditure on current account, were £1,108 million. After including Government receipts and payments overseas, the surplus amounted to £628 million. This compares with surpluses of £160 and £255 million in 1965 and 1967 respectively. As for the current year, I am looking forward to a continuing surplus on the invisible account of broadly the same magnitude as occurred in 1970.

Will not the Chancellor therefore further encourage investment overseas, which was thoroughly discouraged by the last Government? Have not our objections to that discouragement been proved correct by the remarkable achievement of invisible earnings in assisting our balance of payments?

I recognise the importance of overseas investment and the resulting earnings to the balance of payments. I agree that our invisible exporters have made splendid efforts over these years. This is one of the great success stories in recent years.

What proportion of these earnings are from tourism?

I cannot say offhand, but I should be glad to answer a Question on the subject if the hon. Gentleman will put one down.

asked the Chancellor of the Exchequer what was the total of unpaid income tax at the end of each financial year from 1965 to the present year; and what proposals he has for encouraging payment on the due dates by those who do not come within Pay as You Earn regulations.

As the answer to the first part of the Question contains a number of figures, I will, with permission, circulate them in the OFFICIAL REPORT. Figures for 1971 are not yet available. As regards the second part, this matter is kept under close review. I have no proposals for change at present.

Is this not a case of the hon. Gentleman closing a blind eye to those who can evade their income tax —businessmen, the self-employed, the buyers and sellers and the rest? In order to stop these abuses, would it not be a good idea to introduce a rebate for those who pay their tax on time and to charge those who do not the current rates of interest on the outstanding income tax payment which is due?

It most certainly is not the case that we are closing a blind eye or, indeed, an open eye. It is a matter which we keep under close review. Indeed, most of the sanctions—for example, the rate of interest—have been reviewed recently. We think that the present balance which we are striking is about right. If there is any change in the situation, we shall consider it.

asked the Chancellor of the Exchequer what are the latest estimates he has made of the cost to the balance of payments in the next five years if Great Britain should join the European Economic Community.

There are many factors involved. The Community has not yet replied to our proposals on the United Kingdom contribution to the Community budget. So I have at present nothing to add to what my right hon. and learned Friend the Chancellor of the Duchy told the House on 16th December.

Does my hon. Friend agree that the contribution to the Community budget is only one of a number of serious adverse effects if Britain signs the Treaty of Rome, totalling probably over £500 million a year? Does he also agree that if there were such a heavy balance of payments burden this country would be prevented from pursuing those policies of growth which would be necessary to obtain the so-called dynamic effects?

It is not possible to quantify the possible charges across the exchanges to the extent my hon. Friend has done. Certainly my right hon. and learned Friend the Chancellor of the Duchy of Lancaster gave a figure for the adverse effect on trade balances of £200 million to £300 million, but he warned that this was a very tentative estimate. I have no further information which would enable me to give a more precise figure or to comment on my hon. Friend's figure. Many factors are involved, including the benefits which we should get and the greater dynamism and expansion in the economy which joining the Common Market would bring.

Will the United Kingdom have to pay an increased contribution to the Community budget in the event of Norway and Denmark not joining at the same time as Britain?

The level of the contribution is one of the matters under negotiation. Since the Community has not yet replied to our proposals I cannot reply to that question.

asked the Chancellor of the Exchequer what facilities for random access will exist at his proposed computerised Pay As You Earn centres.

There are no plans for taxpayers' records at any of the proposed Schedule E Centres to be held normally in a form which would allow random access.

That is interesting. Will the Minister of State tell the House how various tax offices up and down the country are supposed to get at and find out individual details?

I understand that the records are held on a continuous tape and not in such a form that random access is readily available.

When Pay-AsYou-Earn is put on a weekly basis, will it be necessary to provide random access facilities at all?

I should like notice of that question.

asked the Chancellor of the Exchequer what is his estimate of the effect of the Budget on the cash flow of companies.

The cuts in corporation tax and S.E.T. and the reduction in Bank Rate will help the cash flow of companies; and company liquidity will be helped both by these changes and by the less severe limit on private sector bank borrowing. It is difficult, however, to quantify these effects precisely.

Does my hon. Friend agree that this additional cash flow will help companies, which have been starved of cash for so long, to invest in a way which will provide both more employment and profit?

This is certainly true, provided that this increase in cash flow is not used in meeting higher costs, including wage costs.

Is there not a danger of this country coming to rely too much on overseas investment and invisible exports while its productive capacity at home declines? Was not that the view of the Conservative Party at the beginning of the century?

My recollection does not extend as far back as the hon. Gentleman's. It is fair to say that a higher proportion of our total import bill is now being met, taking one year with another generally, by exports than at any previous time in our history. The effect of overseas investment and earnings producing foreign exchange was far greater in the last century than in the last decade.

Given this increase in companies' cash flow, is it not a fact that the forecast rate of industrial investment increase in still i per cent.? Are not the Government prepared to do anything to increase it?

That question has already been dealt with several times this afternoon. The Government have taken some measures in the Budget and these will have their effect. For the rest, it is the expectation of profit, and this cannot be achieved if companies are expecting to have to pay out the extra cash flow in higher and increasing wage levels.

asked the Chancellor of the Exchequer if it is the policy of the Government to phase out the sterling balances.

Early changes in the reserve role of sterling are not practicable. At an appropriate time the Government would be willing to explore possibilities for change with all those concerned, including the official holders of sterling.

Have there been any discussions with the Common Market countries on this issue? Has the right hon. Gentleman or his right hon. and learned Friend the Chancellor of the Duchy of Lancaster given the Common Market countries any undertakings about the future of the sterling balances?

I have certainly had no formal talks with the Six. Sterling and other international monetary matters are the subject of discussion whenever I meet my opposite numbers from the European countries. There are interchanges at official level, but these are, and must remain, confidential if they are to be of any value.

Is it true, as was reported recently, that a decision in principle was taken to renew the Basle Agreement without any consultation or discussion with the French Government? If so, was this not a little ham-fisted in view of the parallel negotiations which are continuing in Brussels?

I said publicly quite a long time ago that I thought it was in the interests of this country and the sterling area generally that the Agreement should be renewed.

The right hon. Gentleman has not answered the question put to him by his hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). Will he bear in mind that while it is reasonable that we should envisage a substantial change in the phasing out of the reserve role of sterling, it is necessary to put something in its place, and that it will not be desirable merely to put the whole weight on the dollar, which is itself staggering a little under the excessive reserve burdens which it is carrying?

To phase out sterling's reserve réle implies, as the right hon. Gentleman suggested, replacement of the sterling balances by some alternative asset. This would require international co-operation. The point I was making was that the Government would be ready to consider such a move provided that means could be found which avoided an unacceptable burden on the United Kingdom, promoted the healthy development of the international monetary system, and protected the interests of the sterling holders.

asked the Chancellor of the Exchequer what is the effect of his recent Budget on a married man with two children under the age of 11, if his income is either £1,000 per annum earned or £5,000 earned and £5,000 unearned.

On the assumption that the incomes given include family allowance, the increases in child allowances give a benefit of £31 in the first case and, coupled with the increased earned income relief, a benefit of £72 in the second case.

Does the Minister agree that most wage and salary earners now receive remarkably little benefit from his right hon. Friend's Budget, unlike the well-placed who are now likely to create a large increase in the demand for luxury goods and services? Does he, therefore, agree that the Budget is not only socially divisive but is likely to greatly increase inflationary pressures?

I do not agree that the Budget is socially divisive, nor that it is likely to create inflationary pressures. If the hon. Member looks at the measures taken by the Government since last June and the measures which have been announced and are now in the pipeline, he will find that groups of the kind which he described gain very considerably.

asked the Chancellor of the Exchequer how many income-taxpayers have had the fixed allowance, as it affects working expenses for clothing, &c. adjusted during the past five years.

I regret that this information is not available.

Is the hon. Gentleman aware that many thousands of weekly-paid manual workers, including many miners, have seen the fixed allowance depreciate by up to 50 per cent. over the past few years? Will he give instructions to the Inland Revenue to take a little time off from adjusting surtax rates downwards and move the workers' fixed allowance upwards?

I do not think that to look at it in that sort of way is helpful, but I will bear in mind what the hon. Gentleman says.

asked the Chancellor of the Exchequer what estimate he has made of the amount by which public expenditure will be reduced in the current financial year as a result of decisions announced since 18th June, 1970.

Policy decisions announced up to the time of the White Paper on Public Expenditure 1969–70 to 1974–75 (Cmnd. 4578) reduced the previous programmes by £315 million, but diverted £50 million of this to enlarge the Contingency Reserve. I cannot yet estimate the net effect of decisions announced after this, which represents in the first place a charge on the Contingency Reserve.

Whilst I congratulate my right hon. Friend the Chancellor and the Treasury Ministers upon making a start, may I press them to ensure that there is a constant Ministerial review of all public expenditure to ensure that the figures in the White Paper are kept to and that public expenditure in any event will not in 1971 exceed the growth in our productive potential?

My hon. Friend has rather neatly stated practically the sole reason for my existence—to ensure as far as possible that this does happen.

Will the hon. Gentleman go if it does not?

Bearing in mind the grave need to increase the rate of slum clearance and new housing construction by local authorities throughout the country to solve our housing problems, does the Minister agree that there should be an increase in the allocation of public expenditure for local authority housing in the coming year?

One of the main objects of rearranging public expenditure as we are doing is to ensure that the Government do not spend money on projects which can well be handled by the private sector, partly to ensure that a greater degree of care and attention can be devoted to those things, which only the Government can do.

Does the hon. Gentleman's answer to his hon. Friend's supplementary question mean that in the event of the increase in public expenditure exceeding the increase in the gross national product this year he will regard himself as having failed in his job, and feel it necessary to resign?

The right hon. Gentleman should not allow his natural optimism and wishful thinking to lead him to read too much into my statements in that way.

asked the Chancellor of the Exchequer (1) what is the cost to the Revenue of the concession allowed to self-employed craftsmen to sell up to £500 worth of their goods without incurring purchase tax; and how many individuals are in receipt of this concession;

There is no purchase tax concession for self-employed craftsmen as such; but there is a general exemption limit of £500. This is designed to reduce collection costs. No information is available as to the cost to the Revenue of the exemption or the number of individuals who benefit from it. But, taking the two factors together, the Revenue probably gains from the arrangement. An increase in the exemption level would, however, lead to objections from those competing with small traders.

Does not my hon. Friend agree that it would help the Revenue to gain a bit more if it increased that exemption, which has helped many hundreds of craftsmen to remain in self-employment after they have retired from other jobs? Will he consider doubling it, as the exemption limit in annuities for self-employed has been doubled?

I fully understand my hon. Friend's point. I have received representations from a number of hon. Members on the subject since last June. But if we were to raise the limit just for reasons of reducing administrative costs rather than helping small traders as such it would lead to very considerable problems with regard to competition with other normal commercial organisations.

Does my hon. Friend realise that an increase in the limit would be of great assistance in the remoter areas and for the tourist industry?

I am not quite clear how it would affect the tourist industry. It certainly is the case that in a number of remote areas there are small traders of this kind. For the reasons I have mentioned—and I have looked into the matter very closely—I do not think a change would be justified.

The level of £500 was set many years ago. If it was right at the prices then, surely it should be increased now?

It was indeed a considerable time ago. But I have tried to hit a balance, given the number of complaints that we have had from both sides as to the eflect on competition if we raised the limit.

May I explain to the hon. Gentleman very briefly how the concession benefits the tourist industry in the remoter parts of the country? Many craftsmen operate in those areas, and their produce helps to boost the tourist contribution to the local economies.

I fully appreciate the indirect effect. I thought that my hon. Friend had something more direct in mind. I have received representations, and I have examined some of the products of the kind which the hon. Gentleman mentioned, which undoubtedly have a tourist attraction.

asked the Chancellor of the Exchequer whether, following the indication in the Green Paper on Value-Added Tax that newspapers will be exempt, this exemption is intended to apply to the revenue they receive from advertisers as well as the revenue they receive from sales.

The form of relief for sales of newspapers has not yet been decided. Advertising revenue is a different matter, but final decisions on coverage will not be taken until nearer the introduction of the tax.

Will the Government bear in mind when further considering the matter that certain sections of the Press depend far more heavily on advertising than on sales as a form of revenue, and that if V.A.T. were put on advertising revenue certain sections of the Press would be put in great difficulties?

My hon. Friend's point is fully understood. If V.A.T. were charged on newspaper advertising the ultimate cost would be in the price of the goods advertised rather than the price of the paper concerned.

Is the Minister aware that if the tax is placed on advertising it will undoubtedly be passed on to the consumer and will be just one more incentive for trade unions to seek further wage increases? Is not this against his policy, or does he expect trade unions to bear the brunt of price increases inflicted by the Government?

Value-added tax, like purchase tax, selective employment tax and other indirect taxation, is normally part of the cost of the goods concerned. What I was saying was that in this case a value-added tax on advertising would affect not the newspaper in which the advertisement was placed but the goods which were being advertised in that paper.

While this may be what the Government want now, if we should go into the Common Market will not the tax be harmonised in Brussels, with a decision taken by the Common Market countries and not by us?

No decision has yet been taken on the coverage or rates to which the Common Market countries are harmonising the value-added tax. The Green Paper is a purely United Kingdom proposal.

If the exemption system is used rather than the zero rate, does the hon. Gentleman concede that in the case of both newspapers and food it would in effect mean that tax would be payable in exactly the same way as by non-registered purchase tax payers?

The question of coverage and the form of relief to newspapers has not yet been decided. Food is another matter, and another question.

Will the hon. Gentleman answer the question, just on this one occasion?

I cannot say what form of relief will be granted to newspapers, which the Question is about. Food is another matter altogether, and not the subject of this Question.

The hon. Gentleman was not asked to say what form of relief was granted. He was asked to look at what followed from whether the exemption system or the zero rate was used. Surely he can follow this argument and answer my hon. Friend.

It is precisely because the Government have not made up their mind and are looking, and will continue to look, at these matters that we published the Green Paper. We are perfectly prepared to consider different methods of relief for the sales of newspapers, in conjunction with the trade. We are firmly committed to consulting the newspaper trade in general, as we are to consulting other people affected by V.A.T. That is precisely the point of publishing a Green Paper—to give time for reasonable consultations.

asked the Chancellor of the Exchequer what proposals he has for applying the value-added tax to the entertainment industry and to artistic enterprises in general.

Value-added tax is essentially a comprehensive tax, but decisions on the details of its application to particular sectors will not be taken until nearer the time of introduction of the tax.

If the value-added tax is put on the entertainments industry, will not this amount to reintroducing entertainments tax, as it were, by the back door? Will the hon. Gentleman give a positive assurance that the V.A.T. will not be exerted on the entertainments industry, or, if it is levied, that some form of exemption will be provided to relieve the industry of the main consequences of the burden?

The form of the tax would be very different from the entertainrnents tax. Exemptions and coverage and so forth are for discussion. That is why the Green Paper has been issued. If there are particular points which the hon. Gentleman wants to bring to our attention, then that is the purpose of the Green Paper.

asked the Chancellor of the Exchequer what is the purchasing power of the £ sterling now, taking it as 100p on 18th June, 1970.

I would refer the hon. Member to the answer I gave to the hon. Member for Newcastle-under-Lyme (Mr. Golding) on 23rd April.—[Vol. 815, c. 480.]

Is the hon. Gentleman aware that the furtiveness of that reply conceals the fact that since the Government came to power and pursued the inflationary policies for which they are responsible a man on average earnings has lost £1·68 from his pay packet and that by the time the old-age pensioners finally get their long-delayed increase next September the value of that £1 increase will be only 23½p? Will he convey this to the Prime Minister so that the Prime Minister does not issue another peevish statement saying that no one ever told him?

I am surprised that the hon. Gentleman has the nerve to refer to the pound in the pocket, since the last Government undertook the inflationary policies which we are determined to control.

asked the Chancellor of the Exchequer what is the Government's policy towards the level of interest rates still being charged by the building societies for house mortgages despite two reductions in the Bank Rate.

asked the Chancellor of the Exchequer what steps he intends to take to facilitate the reduction of the cost of house mortgages to owner occupiers.

The abolition of the stamp duty on mortgages from 1st August, announced in the Budget, will reduce the initial cost of house mortgages. Charges by building societies, including mortgage interest rates, are a matter for the societies concerned.

Is the hon. Gentleman aware that house purchasers feel cheated by the building societies? When Bank Rate goes up, interest rates also go up within a matter of weeks, but when Bank Rate comes down, all sorts of phoney excuses are put up by the building societies for not bringing their interest rates down. Will the Government not act in this matter?

The position is as I have described it. There is no direct connection between Bank Rate, which is essentially a short-term rate at which the Bank of England re-discounts bills, and mortgage rates. Mortgage rates are a matter for the building societies. We do not believe that there is a case for Government intervention.

Does the hon. Gentleman appreciate that his answer will bring cold comfort to those who already have mortgages on which they have very high repayments indeed? Will he appreciate that they feel cheated by the Government because they were led to believe that interest rates would fall under this Administration?

One must take into account the fact that the rates which building societies charge necessarily reflect the rate at which they can borrow. This is an important matter because otherwise, of course, the supply of funds for mortgages would dry up. I do not believe that this is a matter in which the Government should intervene.

Since the law relating to monopolies and restrictive practices now includes services of this sort, would not my hon. Friend consider possibly referring this matter to the Monopolies Commission, if only to allay public anxiety?

This is a matter for my right hon. Friend the Secretary of State for Trade and Industry, who will no doubt take note of what my hon. and learned Friend has said.

The hon. Gentleman has said that these matters are solely for the building societies and not for the Government. Is he really telling us that the Treasury has had no consultations jointly with the Department of the Environment and representatives of the building societies about future policy towards house ownership? If he is, will he reconsider and undertake consultations with the Department of the Environment and the Building Societies Association?

That is a much broader question. The Question on the Order Paper related specifically to the interest rates which are charged.

Will my hon. Friend accept that not all house owners feel in the same position as hon. Members opposite suggest, and that many of them felt much more cheated by the failure of Lord George-Brown to give them the 3 per cent. mortgages he promised?

That may well be so. The memories of hon. Members opposite are conveniently short in this respect.

asked the Prime Minister when he next intends to take the chair at a meeting of the National Economic Development Council.

asked the Prime Minister when he next intends to take the chair at a meeting of the National Economic Development Council.

I have nothing to add to the reply which I gave on 20th April to a similar Question from the hon. Member for Heywood and Royton (Mr. Barnett). —[Vol. 815, c. 943–4.]

While at the next meeting of the N.E.D.C. the right hon. Gentleman will doubtless be discussing cost inflation, can he identify for the House any element at all of demand inflation in the present economic situation? If not, can he tell us how far unemployment should be safely reduced before he thinks any such element might appear?

The next meeting of the N.E.D.C. will discuss inflation in other countries and various methods being used to combat it there. It is hoped that the members of the N.E.D.C. will have a greater understanding from that discussion of inflation and the methods of dealing with it. What is obviously important is that increased demand should not combine with cost inflation to produce a still greater inflationary situation. That, from the discussions at the last N.E.D.C. meeting, was apparent to all.

Since the right hon. Gentleman has repeatedly stated that the escalation of wage demands is the main cause of high unemployment, and since he has also specifically stated that escalation of wage demands has been brought to a halt, will he now explain why it is that unemployment is still rising?

Because employers are still under pressure of trying to find the liquidity with which to deal with high wage increases already granted. This liquidity has been increased as a result of the Budget, and one is, therefore, hopeful that firms will now be able to use these resources for greater investment, which is a prime demand of the Opposition.

Does not my right hon. Friend agree that the sole contribution made by the Leader of the Opposition and the Labour Party to controlling inflation has been to support every wage claim so far advanced? Would not he also agree that the Leader of the Opposition would be much better employed in eating steak at the St. Ermin's Hotel for a 15-year transitional period?

I am not sure that I would want to sentence even the Leader of the Opposition to that. My hon. Friend makes the point that the Opposition have abandoned a compulsory wages policy and a voluntary wages policy and are inciting workers to higher wage increases. It is perfectly true that they are bankrupt in all ideas.

Without following the Prime Minister in his attack on the culinary standards of the St. Ermin's Hotel, may I ask him whether he does not think that the N.E.D.C. might usefully concentrate its efforts next time it meets on discussing unemployment? Is he aware that some of us find it difficult to comprehend how it was that, as Leader of the Opposition, the right hon. Gentleman, without benefit of Treasury statistics, had no difficulty in prophesying what the levels of unemployment were likely to be—albeit that he was usually wrong—whereas now that he has the benefit of all these statistics it is impossible for us to find out whether he expects the unemployment level to rise, whether he expects the Government to maintain it or whether it is Government policy to reduce it? Can we have a frank answer?

It was the thought of putting the right hon. Gentleman the Leader of the Opposition through a 15-year transitional stage which I did not wish to threaten him with. The agenda of the N.E.D.C. meeting has been settled jointly between the employers, the trade unions and the Government, and two subjects are monetary control and inflation in other countries.

If the right hon. Gentleman does not attend the next meeting, will he at least draw the attention of the N.E.D.C. to the fact that the rise in unemployment in the East Midlands was greater last month than in any other region in Great Britain? This is a very serious new development.

The N.E.D.C. is supplied at every monthly meeting with an index of statistics, giving economic indicators.

asked the Prime Minister what recent representations he has received from the Disablement Income Group; and what reply he has sent.

I received last Friday a letter from the Director of the Disablement Income Group about the incomes of certain categories of severely disabled people. I shall be replying to it shortly.

Is the right hon. Gentleman aware that the Government's recent provision for disabled people, especially disabled fathers, is warmly welcomed as a first, but significant, step forward? Will he consult his colleagues about the provision for a group of people who work hard, who never complain, who do not go on strike and who never put in a wage claim, namely, disabled housewives?

Yes, Sir. The letter I received on Friday from the Director expressed the Group's appreciation of the action which had been taken by the Government and the announcement made by my right hon. Friend the Secretary of State for Social Services. The letter went on to raise the particular case of severely disabled housewives, as well as of the congenitally disabled and the disabled who are at work. After considering these three points, we will reply to the letter.

asked the Prime Minister if he is satisfied that the present level of Government intervention is sufficient for the achievement of his social and economic policies; and if he will make a statement.

Yes, Sir.

Is the right hon. Gentleman aware that when the Government have intervened there has simply resulted a decrease in living standards for a great many people, notably because of their policy of deliberately increasing the cost of food, rents, prescription charges and school meals? Is it not time for the Government to intervene to reduce the staggering level of unemployment?

The question of the level of unemployment was dealt with by my right hon. Friend the Chancellor of the Exchequer in the debate on the Budget. In any event, the House will have an opportunity to discuss this matter on an Opposition Supply Day. The hon. Gentleman is wrong in the first part of his supplementary question because poorer families, through the family income supplement—

How many of them? Two hundred thousand.

I do not regard 200,000 as a negligible number of families. They have benefited net from the measures which the Government have taken and which the Labour Administration completely neglected.

asked the Prime Minister if he will make a statement on his official talks with Mr. Leonard Woodcock of the United States Automobile Workers, Mr. Jack Jones and Mr. Hugh Scanlon on 23rd March, 1971.

I would refer the hon. Member to the reply I gave to a similar Question from the hon. Member for Midlothian (Mr. Eadie) on 20th April, 1971.—[Vol. 815, c. 380.]

Did not Mr. Woodcock explain to the right hon. Gentleman that high wages in the United States were not causing unemployment? Does the Prime Minister still insist that they are doing so in Britain?

Mr. Leonard Woodcock explained to me and to the members of the T.U.C. who were present that they were able to get high wages because they had three-year contracts which they observed, with the result that there was very little industrial unrest. [Interruption.] If hon. Gentlemen opposite care to look at the figures for Ford in the United States, which I had available and about which Mr. Woodcock knew, they will find that this is the case, simply because the firm is able to get additional production. If, in this country, the trade unions were able to give three-year contracts with no industrial disturbance, they, too, would get higher wages and there would be higher production.

Is the right hon. Gentleman really unaware of the fact that, despite those three-year contracts, in many American industries the strikes are longer? Is he also unaware that Ford's strike record in America is far worse than the record in this country?

I contest the hon. Gentleman's figures. The point which Mr. Woodcock made was that during these three-year agreements there was a minimum of industrial unrest, and this meant that the company was able to achieve higher production and ensure deliveries on time to its agents.

Did Mr. Woodcock discuss with the right hon. Gentleman, as he did with me, the case of the G.E.C. strike in America in 1970, in which more man-days were lost in that 11-week strike than in the whole of Great Britain in the whole of 1969?

We did not discuss G.E.C. because Mr. Woodcock was out to show me what had been achieved at Ford in Detroit.

asked the Prime Minister when he next intends to have an official meeting with representatives of the Scottish Trades Union Congress.

My right hon. Friends the Secretaries of State for Trade and Industry and for Scotland and I met a delegation from the Scottish T.U.C. on 22nd February. I also met representatives of the Scottish T.U.C. when I lunched with the Scottish Economic Council on 26th March. The Government are always willing to consider representations from the Scottish T.U.C., but there are at present no plans for further meetings.

Is the right hon. Gentleman aware that, since those meetings took place, and since the Scottish T.U.C. apparently expressed satisfaction with them, unemployment in Scotland has continued to rise, notwithstanding the Government's promise to improve the infrastructure as a contribution to reducing unemployment? Is he aware that the Glasgow Tory Corporation completed not one house in January of this year and only 72 in February? What pressures are the Government bringing to bear on the Tory-controlled Glasgow Corporation to ensure that it improves its house-building record? What do the Government intend to do about the shocking unemployment figures in Scotland?

Since the first meeting with the S.T.U.C. we have made the additional arrangements for special development areas in Scotland. The answer to that part of the hon. Gentleman's supplementary question dealing with housing is that I myself announced in Glasgow that an additional 17,000 houses would be built.

When my right hon. Friend next meets the leaders of the S.T.U.C., will he discuss with them the way in which many capital goods producers in Scotland are being obliged to declare men redundant because their industrial customers in England have had to cut back on their investment programmes owing to the disappearance of profits through industrial unrest?

The S.T.U.C. has already told me that it fully recognises this aspect of the problem.

Is the right hon. Gentleman aware that the S.T.U.C. has firmly declared itself against the Government's policy of restraint, which is causing heavy unemployment throughout the country? Is he further aware that the S.T.U.C. is on record as saying that the Government's policy will result in the highest post-war unemployment figure in Scotland, of 136,000 in 1963, being surpassed? What does the right hon. Gentleman intend to do about this, considering that if he continues with his present policy we shall be driven back to the hungry 'thirties?

It is difficult to prove intellectually that a policy of wage restraint will create unemployment. I have never heard any commentator or economist try to do it. If the S.T.U.C. has laid that down in the way the hon. Gentleman describes, I would like to read it before commenting on it.

asked the Prime Minister, following the most recent contacts between the British Embassy in Pretoria and the illegal Smith regime, what arrangements he has now made to visit Salisbury, Rhodesia; and whether he will make a statement.

I have made no arrangements to visit Salisbury.

Is there not a growing gap between the pernicious racism of the Smith régime and the five principles to which the right hon. Gentleman and his hon. Friends claim to be committed? If so, will he take an early opportunity to dispel completely the rumours of a cloak and dagger settlement with the régime in Rhodesia? Will he also recommend the Foreign Secretary to make it abundantly plain to the Portuguese Government when he next visits Portugal that we in Britain deprecate their deliberate thwarting of international intention in giving sustenance to an illegal régime which is in treasonable revolt against the Crown?

I do not propose to comment on any of the hon. Gentleman's remarks because we are carrying out preliminary exchanges and, as promised, when there is anything of substance to report, it will be reported to the House.

asked the Prime Minister whether he will now review the procedure for custody and publication of Cabinet Papers, and revise the classification of such papers.

asked the Prime Minister whether he will now review the procedure for custody and publication of Cabinet papers, and revise the classification of such papers.

asked the Prime Minister whether he will now review the procedure for custody and publication of Cabinet papers, and revise the classification of such papers.

I am not aware of a need for such a review.

Does my right hon. Friend agree that recent references in both memoirs and speeches would seem to indicate a lack of understanding of the present procedure or else that the present procedure does not work? In these circumstances, is not this procedure due for review?

As far as my responsibilities go, the arrangements for the custody and publication of Cabinet papers and their classification are satisfactory. It is for the Prime Minister of the day to deal with classification during his period of office.

rose—

On a point of order. I am reluctant to intervene, but may I draw your attention, Mr. Speaker, to the fact that Questions Nos. Q8, Q9, 010 and 017 are identical and that Questions Nos. Q14, 015, 016 and 011 are identical? This is clearly a ploy originated in the Smoke Room and is a gross abuse and complete waste of Question Time. Is it right that the Table Office should have accepted these identical Questions? If the rules provide for the Table Office to accept them, may I ask you, Sir, to consider this gross abuse of Parliamentary privilege and to give a Ruling tomorrow that it should not happen?

That point had already occurred to me in relation to Questions Nos. Q1 and Q2. However, it is a serious point and I will consider it.

Further to that point of order, Mr. Speaker. Will you, Sir, look up the precedent of Mr. Speaker Morrison concerning equal pay for women, when he took a very stern line against an attempted conspiracy which appeared on the Order Paper? As I was one of those affected, I speak with some feeling. What was good enough in that case is good enough today.

Further to the point of order. The Questions to which I referred originated in the Smoke Room. The two Questions to which you, Mr. Speaker, referred, originated in the Tea Room.

I will consider all these important matters.

rose—

Order. We have very important business to do today. I have promised to consider the matter.

Further to the point of order. I hope that you are not suggesting, Mr. Speaker, that there has been any collusion in the setting down of Questions Nos. Q1 and Q2?

I have not suggested anything.

rose—

Oh.

You bloody well listen.

I did not quite hear what the hon. Gentleman said, but technically he was addressing me and I am listening.

I am very relieved to know that you are slightly deaf, Mr. Speaker. May I raise a point of order with you? With great respect, there seemed to me some indecent haste to get to Question No. Q8 and the block of Questions following it when there was not a supplementary question allowed on Question No. Q7, which deals with a rather important matter, apart from that put by the hon. Member who originated the Question.

I have received advice recently from the House about calling hon. Members to ask supplementary questions. My view of the Prime Minister's reply to Question No. Q7 was that no profitable supplementary question could be asked at this stage because he said that we would inform the House when there was anything to tell the House. I then went on to Questions Nos. Q8, Q9 and Q10, not attributing motives or realising where they originated.

Further to the point of order. How can you, Mr. Speaker, say whether a supplementary question will be profitable until you have heard it? I happened to have a profitable supplementary question to ask.

If that rule applied, everybody would ask innumerable supplementary questions. It is for the Chair to decide these matters.

May I ask my right hon. Friend the Prime Minister whether the right hon. Member for Leeds, East (Mr. Healey) will be given the same facilities as the right hon. Member for Coventry, East (Mr. Crossman) to consult Cabinet papers so that when he in his turn comes to write his memoirs he can explain his advocacy, with Lord George-Brown, of the sale of arms to South Africa?