asked the Chancellor of the Exchequer if, at the next meeting of the National Economic Development Council at which he takes the chair, he will submit a paper dealing with a voluntary incomes policy.

Arrangements have been made for the Council to have a general discussion of economic affairs at its meeting on 7th July. I expect the discussions to cover a wide range of economic topics including prices and incomes. The T.U.C. has offered to prepare a paper for discussion at the meeting.

Would the Chancellor accept that there is a growing feeling in the country that the Government are callously attempting to get an incomes policy on the backs of the unemployed and that this is particularly so after the tragic events at Upper Clyde Shipbuilders? Is he aware that if the Government continue with this foolhardy policy there will be little hope of their receiving co-operation from the trade unions?

I do not propose to anticipate the discussions which we shall be having on 7th July. To do so would only prejudice those discussions.

Would my right hon. Friend not agree that it would be pointless to discuss the voluntary incomes policy without some discussion of the attitude so recently expressed by such trade union leaders as Mr. Jones and Mr. Scanlon towards any such policy?

Again I can only say that I do not want to prejudice the outcome of these discussions. I have made it clear in the House before that I have never ruled out a voluntary incomes policy. I repeat that it would have to be a real and genuine policy, not a make-believe one.

How does the right hon. Gentleman make sense of his present incomes policy, bearing in mind his willingness to give 11½ per cent. to his own Civil Service employees and his wish to give considerably less elsewhere?

Because the circumstances in respect of each claim are different.

asked the Chancellor of the Exchequer if he will make a statement on the prospects for investment for the remainder of the current financial year.

The hon. Member will be aware of the forecasts for investment up to the first half of 1972 in the Financial Statement and Budget Report for 1971–72. It would be wrong to revise the Budget forecast month by month on the basis of partial indicators.

In view of the latest figures, which show a deterioration in the situation, when do the Government intend to introduce measures to induce growth in the economy? Is the hon. Gentleman aware that an increasing number of people regard the Government as an unmitigated disaster in the last 12 months?

What about the last six years?

There were 13 years before the six. When do the Government intend to take steps to remedy this disastrous situation?

I do not accept that the present situation is disastrous. The investment position in the last quarter has certainly been disappointing. We are most certainly not complacent about it. This was clearly reflected in my right hon. Friend's Budget Statement, which provided for an expansion of output in line with productive potential. That is our intention, and we believe that the Budget contained a number of proposals for encouraging investment which will take effect.

Do not all the signs show that the outlook is more pessimistic after the Budget than it was before the Budget, and does not this call for a revision of the Budget judgment, which is now shown to be wrong?

I most certainly do not believe that is so. The Budget had a considerable effect on general expectations. The important point, which I am sure will be accepted on both sides of the House, is that these measures will take I time to become effective. Some have not yet become operative, but as they do, we shall find a general improvement in our economic life.

asked the Chancellor of the Exchequer what are the latest figures for the United Kingdom overseas investments, and what proportions are invested in the United States of America, Commonwealth countries and the European Economic Community, respectively.

United Kingdom private overseas investments at the end of 1970 are estimated at £14,400 million (about half direct and half oil and portfolio). The proportions invested in the areas mentioned are approximately 20, 40, and 10 per cent. respectively.

I thank my hon. Friend for his helpful reply, but does he not agree that the figures of company direct investment show that two-thirds of the direct investments are in the Commonwealth and sterling area countries, and that in Australia alone companies have more funds invested than in all the Common Market countries? Does he not agree that this is an indication of the present and future strength of the Commonwealth and sterling area territories?

I am happy to agree with my hon. Friend that investment in, for example, Australia is rising, but investment from the United Kingdom in Australia is not rising as fast as investment either from the United States and Canada or from the rest of the world. United Kingdom investment for the period from 1947–48 to 1951–52 was 68 per cent. of the total, and it has now dropped to 40 per cent. Investment in that period from the rest of the world was 8 per cent. and has now risen to 17 per cent. Equally, the last few years have shown a great increase in the proportionate investment of the United Kingdom in the E.E.C. countries compared with the Commonwealth countries.

Bearing in mind the tendency of the United States to buy up the industry of Western Europe with dollars borrowed from the Eurodollar market financed by its own balance of payments deficit, what is the hon. Gentleman prepared to do as a quid pro quo to persuade the United States authorities to permit companies in the United States to issue dividend gross equities to non-United States resident companies so that we can buy up American industry?

That is an extremely interesting question, but I do not think it arises out of this one.

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

Taking the value of the £ to be 100p in mid-June, 1970, its purchasing power in mid-April, 1971, the latest date for which information is available, is estimated to be 92p. This comparison is based on the movement in the General Index of Retail Prices.

Is the Minister aware that he gives the House this melancholy information on the day before the anniversary of the Prime Minister's dishonoured "at a stroke" pledge? Is he further aware that if the Conservative Government go on devaluing the currency at this rate, and if this Parliament lasts its full term of five years, the country will be saddled with "Ted Heath's ten-bob £"?

That is a situation which we are absolutely determined to prevent. We are absolutely determined that we shall control inflation. The measures that we are taking are designed to do that, and we believe that they will achieve their objective.

Would it not help to boost the economy and increase turnover if the Government were to instruct the Bank of England forthwith to sell £ notes for 92p?

The important thing is that we should mobilise public opinion against inflationary wage claims, and I hope that we have the support of the the hon. Gentleman in that objective.

Will my hon. Friend tell the House what was the fall in purchasing power of the £ during the first 12 months after the Socialist Government left office in 1951? Is history not repeating itself?

I certainly do not feel that the record of inflation of the previous Government was one to be proud of.

asked the Chancellor of the Exchequer what is his latest estimate of Great Britain's growth rate for 1972.

The estimate contained in the Financial Statement and Budget Report was for an increase in gross domestic product of about 3 per cent. between the first halves of 1971 and 1972. Estimates for the second half of 1972 are not available.

On the assumption that the Government hope that it will rise even further, and bearing in mind that the tendency has been for the growth rate of the E.E.C. to flatten out and go down, will my right hon. Friend give an assessment of the effect of the flattening out or decline in the E.E.C. growth rate on our own growth rate?

If my hon. Friend will put down a Question asking for these specific figures, I shall be happy to supply them. If one looks at the figures for the annual trend rate of growth of G.N.P. between 1959 and 1969 of the E.E.C, the average was 5·3 per cent., which is much better than we did in this country.

Without wishing to follow the hon. Member for Banbury (Mr. Marten) on this point—[HON. MEMBERS: "Why not?"]—I do not agree with him—is it not clear that the British growth rate, for which the Chancellor has direct responsibility, shows that the forecast of the position on which he based his Budget was over-optimistic and that its objectives are not being achieved? Does he endorse the view of his hon. Friend the Minister of State that there is no question of the Budget judgment being wrong, and will he, therefore, stick to it for some time to come?

The estimate which was given in the Financial Statement and Budget Report, to which I referred in my answer to the main Question, was an estimate of the growth rate of G.D.P. between the first half of 1971 and the first half of 1972. Our estimate is still the same as the one in the Financial Statement and Budget Report. This, as the right hon. Gentleman will know, is the growth rate that was forecast by the National Institute.

The right hon. Gentleman has not answered the second and more important part of my question, which is: does he still regard the Budget judgment as right for the remainder of this financial year?

If and when I consider it necessary to take any further action I shall take it, and I shall not anticipate any such action at any time during the course of the year. This Question was put down as a specific one by my hon. Friend, and I have answered it. I have told the right hon. Gentleman that I stand by the forecast of the increase in G.D.P. which was made in the Financial Statement and Budget Report.

Arising out of the first supplementary question, is it not the overwhelming view of economists and industrialists that, given fair terms of entry into the Common Market, our growth rate during the 1970s is likely to be much faster if we are able to take advantage of the enlarged market than if we are left outside an increasingly prosperous and influential area?

That is certainly a view to which I subscribe.

Since the National Institute's forecast for 1971 shows a reduction in the G.D.P. this year compared with last year, and since even the Financial Times is calling for the use of the regulator, is the right hon. Gentleman considering using the regulator?

There was a fall in domestic output in the first quarter from the level of the second half of last year, but this was expected, and I mentioned this.

asked the Chancellor of the Exchequer (1) what estimate he has made of the amount of the excise duty on hydrocarbon oils which is borne ultimately by the paper and board industry;

The total amount of duty paid in 1970 on hydrocarbon oil purchased by the paper and board industry was probably of the order of £3½ million. The duty on most fuel oil used by the horticultural industry is repaid; I regret that no information is available about the duty paid on road fuel by this industry.

I am grateful for that information. While I appreciate that both these industries enjoy the benefit of a generous rebate on heavy oils, will my hon. Friend have regard to their plight and the fact that their foreign competitors enjoy the benefit of lower fuel costs, and consider rebating in full the duty on these oils?

No, I cannot undertake to do that. There is a clear distinction between the two industries. The horticultural industry was regarded as an exceptional case when relief was first granted in 1971. Broader questions on relative fuel costs are a matter for my right hon. Friend.

asked the Chancellor of the Exchequer what is the estimated cost in the current financial year to the road haulage industry of the excise duty on hydrocarbon oils.

The total amount of duty paid on hydrocarbon oil purchased by road hauliers who transport other people's goods will probably be of the order of £75 million in the current financial year.

Does my right hon. Friend not think that this would be an appropriate time to reduce this crippling burden of taxation on fuel oil and petrol? Would this not make a major contribution to controlling the cost of living and inflation which was stoked up by the previous Government?

My right hon. Friend in his Budget decided that the concessions on indirect taxation should be concentrated on S.E.T. I do not think he can contemplate making any changes at this stage by reducing the taxation on hydrocarbon oils.

Does the Treasury accept that it is right to use fiscal means to encourage the use of those hydrocarbon oils which are non-polluting?

That is another question, and if the hon. Gentleman puts it down we will answer it.

asked the Chancellor of the Exchequer how many low-paid workers will be taken out of the income tax bracket as a result of the Budget; and how many he estimates will enter it in the current financial year as a result of upward wage movements.

It is estimated that there will be about ¾ million more taxpayers in 1971–72 than in 1970–71 and that this figure would have been about 200,000 greater without the Budget changes. It is not possible to say how much the increase is attributable to rising wages.

In the light of those figures, will the Minister acknowledge that the Government's policy of refusing to raise the tax threshold across the board in the recent Budget and of de-escalating low wages in the public sector is the main cause of poverty among low-paid workers?

The level of the tax threshold was raised to unprecedented heights by the action of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). I accept that there is much more for us to do. We have embarked on tax reform and simplification.

asked the Chancellor of the Exchequer what recent representations he has received from the Trades Union Congress about further stimulating economic growth; and what replies he has sent.

The answer to the first part of the Question is none; the second part therefore does not arise.

Is the Minister aware of the T.U.C contention that unless steps are taken further to stimulate economic growth beyond the level calculated in the Budget judgment, unemployment in the coming winter will be even higher than the present disastrous figure?

I do not propose to put forward a specific forecast of unemployment. This has never been done. On the general strategy, which we have already discussed during Question Time today, I believe that we are striking the right balance and that a further programme of expansion, which has been debated on the Floor of the House and in Committee on various Amendments, would not be justified at this stage.

Does not the hon. Gentleman agree that we are now in this hopeless situation because the Government have not accepted the advice of the T.U.C? Will he further agree that if we do not take measures now, we shall most certainly have 1 million unemployed?

I do not accept the second point, which is something the hon. Gentleman must take responsibility for. My right hon. Friend a few moments ago expressed his views on this very clearly.

asked the Chancellor of the Exchequer whether the United Kingdom's terms of trade will, in his latest estimation, show a net favourable movement or a net adverse change in 1971.

I see no reason to alter the view expressed on page 11 of the Budget Report, that there should be some further improvement in the terms of trade in 1971.

Does the Minister feel that further reflation is now necessary to get an even bigger improvement?

That point has been amply covered by what my right hon. Friend has said this afternoon, with which, of course, I entirely agree.

Will the Chief Secretary say whether or not he welcomes this development?

There are certain obvious advantages in the improvement of the terms of trade. Reaching behind what I think the right hon. Gentleman is getting at, any improvement in the terms of trade is a result of continuing cost inflation.

asked the Chancellor of the Exchequer what recent trend in cost inflation is indicated by increases notified to him in manufacturers' costs during the past four weeks.

I regret that this recent information is not available, but it is clear that in recent months the main factor driving up manufacturers' costs has been the excessive increases in wages.

Since earlier this year average earnings were about 13 per cent. or 14 per cent. higher than they were 12 months before, and now they appear to be 10 per cent. or 11 per cent. higher than they were 12 months before, does not this demonstrate that my right hon. Friend's policy of de-escalation is beginning to work quite well?

I believe that the policy is working well. The figures quoted by my hon. Friend are, from my recollection, about right. As I have pointed out in the past, it is dangerous to read too much into figures for particular months, and special factors have been operating, such as lower overtime.

Does the right hon. Gentleman agree that the figures in his Financial Statement show that if de-escalation worked it would mean that consumer expenditure would rise at a slower rate than forecast, that this would mean that the rate of growth of the economy would be even slower than was forecast, and that this in turn would mean that unemployment would rise even more rapidly than it has already risen?

Presumably, the implication of what the hon. Gentleman is saying is that he believes it would be unfortunate if the rate of increase in earnings were slowed down. Whatever views people may have about our policies, I have met nobody yet who takes that particular view.

asked the Chancellor of the Exchequer whether the 75 per cent. Treasury guarantee on borrowings abroad by public authorities is still in force.

If my hon. Friend is referring to the special arrangements for forward exchange cover established in 1969 (which apply to 100 per cent. of such borrowing), the answer is yes.

Does my hon. Friend appreciate that if the figure is 100 per cent. and not 75 per cent., it simply underlines the importance of this Question? Does he further appreciate that to borrow abroad in order to invest abroad is one thing, but to borrow abroad in order to spend at home is quite another? The former does not increase money supply; the latter inevitably must.

I agree with the first part of my hon. Friend's supplementary question. Clearly, a 100 per cent. scheme is more comprehensive than one involving a figure of only 75 per cent. There is certainly a difference between borrowing abroad to finance overseas investment and borrowing abroad to finance investment in this country. Nonetheless, the scheme gives a useful incentive to borrow abroad; this produces a useful inflow of medium and long-term foreign exchange because the borrowing is for five years. This is consistent with general exchange control policy for domestic use which has operated since last January.

I hope that my hon. Friend will carefully consider the implications of the last part of his supplementary answer. Surely today the circumstances are totally different from the circumstances which prevailed when the last Government introduced these methods to stimulate overseas borrowing. The last thing we want at the moment is to add to the inflow of funds, which is already causing sufficient embarrassment.

That raises much broader questions of monetary policy, but, obviously, we keep the situation under review as circumstances change and would take fully into account the significance of recent events.

asked the Chancellor of the Exchequer what estimate has now been made of dynamic effects of Great Britain's entry to the European Economic Community.

Assuming that satisfactory terms are negotiated, we believe that membership of the enlarged European Economic Community will provide a greatly enhanced opportunity for improvements in our industrial structure, our productivity, and our industrial investment.

I accept the practical difficulties of making such assumptions, but would the Chancellor not agree that it would be a good idea to try to carry out this exercise in advance of our entry? Are the difficulties not likely more than to offset the costs of entry? Does he not think that making such estimates now might help to dispel some of the doubts among anti-Marketeers?

I will consider what my hon. Friend has said, but there are great difficulties in making absolutely firm quantitative assessments. This has always been recognised.

Does the right hon. Gentleman consider the Common Market agricultural policy, which is bound to lead to increased food prices, the effect on the inshore fishermen, and the affect on regional policy to be beneficial dynamic benefits of entry into the Community?

Obviously, when negotiating in a matter of this kind, some aspects are favourable and some are unfavourable. I take the view—and I respect the hon. Gentleman's view—that on balance without doubt, provided we can get reasonable terms, entry will be to the advantage of this country and will improve the prosperity of our people.

asked the Chancellor of the Exchequer what was the rise in industrial output in the last two quarters of 1970 and the first quarter of 1971, respectively.

Industrial output as measured by the index of industrial production rose by about ¼ per cent. in the third and about ½ per cent. in the fourth quarter of 1970. In the first quarter of 1971, when both the level of activity and the recording of statistics were adversely affected by strikes, the index showed a fall of over 1 per cent.

I am grateful for that reply. Does not the minor image of the figures, particularly the figures for the last quarter, show that there is ample scope and pressing need for further re-flationary measures?

These are matters which my right hon. Friend keeps under constant review. When his judgment deems that this is so, no doubt he will deal with them accordingly.

Why does the hon. Gentleman not admit, like most honest outside commentators, that at the time of the Budget the figures were different from what they have turned out to be? In these circumstances, why are the Government still sticking to the position of refusing to reflate?

Since my right hon. Friend has already said that he is unwilling to anticipate his decisions, I am unwilling to anticipate those decisions for him.

asked the Chancellor of the Exchequer if the Government have agreed with France any limitations on their freedom of action with regard to the sterling balances.

I have nothing to add to the very full statements made by my right hon. Friend the Prime Minister on 24th May and 10th June.

Is the right hon. Gentleman aware that, in view of the tremendous strains to be expected on our balance of payments during and beyond the transitional period before entry into the Community, the Government should make clear to the Six that no rundown of sterling balances can begin until we have solved our balance of payments problems associated with entry, even if by 1980 monetary and economic union has been achieved?

The hon. Gentleman will recall that on the previous occasion when I dealt with this Question, before the Prime Minister's statements, I made it clear that if one is considering phasing out sterling's reserve rôle, one factor to be taken into account is that we would have to find a means to avoid an unacceptable burden being borne by the United Kingdom. That remains the position.

Has the right hon. Gentleman not contemplated a means which would be beneficial and in relation to which there is no burden, unacceptable or intolerable, by which these balances, which were a form of world liquidity, perhaps to a greater extent than today, can be taken over, though with a debit balance to us, by some other organisation?

It is true that the rundown of sterling's reserve rôle—and I agree with the right hon. Gentleman on this—implies the replacement of sterling balances, or the greater part of them, by some alternative assets. Clearly, arrangements would have to be made for sterling holders to acquire these assets and for the United Kingdom to undertake some alternative liability, but all this would require international discussion and co-operation with those concerned.

asked the Chancellor of the Exchequer what was the proportion of dollars held in the United Kingdom gold and foreign currency reserves at the end of each of the last five calendar years, and at the latest date for which figures are available.

The amount of dollars, or of any other convertible currency held in the United Kingdom reserves, is not published separately.

But is it not a fact that dollars and other foreign currencies now exceed gold holdings by about 75 per cent., and is this not a totally unprecedented situation? Is it not evident that the Bank of England is positively awash with dollars, and is it not inevitable that this will complicate greatly the problem of controlling the domestic money supply?

As I have said, it is not usual to give figures for the amount of specific currencies held in the exchange equalisation account, which it is generally recognised, as my hon. Friend knows, is kept confidential.

asked the Chancellor of the Exchequer whether he is satisfied with the rate of increase in savings; and if he will make a statement.

I doubt if I shall ever be entirely satisfied with the rate of increase in savings; but certainly there has been a considerable improvement. National Savings have been doing better than at any time since 1964–65, and total personal savings are rising substantially.

Would my right hon. Friend not agree that, although his answer is encouraging, there is still a need for even more savings? Would he give more thought to giving tax incentives to savings geared to equities and similar growth stocks, rather than gearing the whole of our fiscal incentives to Government stocks?

I will consider any reasonable proposals for encouraging savings, which all successive Chancellors have recognised are of immense importance and advantage to our country.

asked the Chancellor of the Exchequer to what extent the estimates of the level of demand in the economy this winter which he used when framing his Budget have had to be revised in the light of subsequent information on the state of the economy.

The partial information which has come in since the Budget suggests that the level of demand in the early months of this year may have been somewhat lower than the out-turn which was expected at the time of framing the Budget forecasts, However, no full assessment will be possible until the information is more complete.

Is the present level of unemployment in line with what the Chancellor envisaged for the economy when he made his Budget Statement?

As I said at the time, I thought it was possible that the level of unemployment would increase somewhat for a time, but that the objective of the Budget was to ensure that it then levelled out.

Is the right hon. Gentleman aware that his hon. Friend the Minister of State, whose views on this matter we all respect, has been rather more forthcoming on this matter? I do not ask the Chancellor to predict the future, since he cannot do that, but will he say whether at the present moment, on 15th June, he regards the position on investment, employment and the rate of growth as satisfactory in relation to his Budget judgment?

I have already at an earlier stage, in answer to another Question, dealt with the principal Budget forecast for the gross domestic product. Obviously, I do not consider that the level of unemployment or the prospects for investment are in any way satisfactory, but I believe, as I have said previously—and the right hon. Gentleman took the same view when he was Chancellor of the Exchequer—that one cannot chop and change from month to month. I have always taken the view that if it should be desirable—this is the only sensible view for any Chancellor to take—that there should be changes during the course of the year, they should be made. This is not an admission of weakness but a sensible view to take depending on circumstances. At this stage I do not propose to say any more, for the simple reason that I believe it is right that if and when changes are to be made they should be announced at the time.

I am sorry to come back to this matter again, but it is of central importance. I accept that the Chancellor of the Exchequer must maintain his freedom of judgment for the rest of the year, but in present circumstances the House is entitled to know from him whether as of this day he still regards his Budget judgment as right.

I have already said what I have to say on that central forecast of the Budget Statement. The right hon. Gentleman referred to what my hon. Friend the Minister of State said in answer to an earlier Question. What he pointed out, which is highly relevant, is that already at this particular time the halving of S.E.T. has not yet taken place but will take place as from 5th July and involves some £300 million; that the improvement in child allowances, amounting to some £200 million, also will not become fully effective in pay packets until July, and that in September there will be an increase in retirement pensions and associated benefits.

asked the Chancellor of the Exchequer what study has been made of the likely effects on revenue from liquor of any extension of licensing hours.

No quantitative estimates have been made.

Is the Minister aware that if the Home Secretary gets his way and inflicts on this country continental licensing hours, meeting the substantial overheads involved in running public houses until three o'clock in the morning will involve a substantial increase in the cost of beer and spirits, people will be forced to drink a great deal less, and the loser will be the Exchequer by tens of millions of pounds a year?

I am aware that this has been alleged, but it has also been suggested that longer licensing hours might lead to an increase in consumption.

asked the Chancellor of the Exchequer what is the annual cost to the Exchequer of tax relief or concessions to employers for the provision of canteen meals and luncheon vouchers.

Expenditure by employers on canteen meals is not known separately from other business costs. The extra tax that would accrue if the expenditure on luncheon vouchers were disallowed and no other expenditure was substituted is estimated at £7 million.

I suggest that the Minister has rather dodged the Question by giving that answer. Has the hon. Gentleman seen column 48 of HANDARD yesterday where the Secretary of State for Education said that the subsidy on school dinners is only £5 million a year? Does he agree that subsidy for dinners in industry is costing the Exchequer more than that amount? If industry can have this subsidy for meals, surely it should be given to schoolchildren as well.

I think I gave a very clear answer to the hon. Gentleman's Question. I sought to give him the fullest possible answer that I could. The other point raises a different question.

asked the Chancellor of the Exchequer if the clearing banks are now free to compete for deposit or savings accounts.

The new proposals recently put forward by the Bank of England are designed to replace the ceilings on bank lending that have discouraged competition in the past by more flexible methods of control, and it is part of these proposals that the clearing banks' collective agreements on interest rates should be ended.

The hon. Gentleman has not answered the Question. Will he tell us whether the clearing banks will be free to compete for deposit or savings accounts? Does he accept that any failure to allow them to do so will be a serious flaw in what is otherwise an excellent document which has come from the Bank of England? Can he give us any idea when the Bank of England's proposals are likely to take effect?

The cartel is likely to be ended when the new proposals have been discussed and brought into action. The banks will then be completely free to compete.

asked the Chancellor of the Exchequer whether he is satisfied that the present method of influencing hire-purchase transactions through controlling deposits and time for repayment is appropriate; and if he will make a statement.

The use of hire-purchase terms control as an economic regulator has been causing increasing concern over the years, but it does continue to make an important contribution to demand management, and must remain until general methods of control can be developed more effectively.

If my right hon. Friend accepts the Crowther Committee's recommendations, can he say when he thinks he will be able to carry them out?

I cannot say that, but terms control will need to be reviewed in the light of the operation of the new techniques of credit control.

asked the Chancellor of the Exchequer what is the total amount of post-war credits still due to be repaid; and by what date he expects the outstanding repayments to be made.

The amount of post-war credits outstanding at 30th April, 1971, is estimated to be £192 million, including £47½ million accrued interest. I cannot forecast when repayment will be completed.

Does the Minister agree that since these credits were deducted the purchasing power of the pound has fallen enormously and that if they are not repaid now they will continue to erode? Is it not time there was some morality in the Government's mind to repay to the rightful owners moneys compulsorily taken at that time?

Successive Governments have decided to do their best to repay post-war credits as soon as possible. At the moment they are being repaid at the rate of £12 million to £13 million a year, plus interest of £4 million.

Will my hon. Friend bear in mind that if at any time in future it seems right to put more purchasing power into the economy, the early repayment of post-war credits would be a good way of doing it, because a large proportion of holders are elderly people who are not very well off and a large proportion of the sums involved would then be spent?

I am sure that my right hon. Friend heard my hon. Friend's remarks and will bear them in mind.

asked the Chancellor of the Exchequer if he will initiate discussions with a view to the setting up of a European Monetary Fund.

Such ideas may well have a place in the economic and monetary future of the European Economic Community. As members of an enlarged Community, we would look forward to playing a full part in the consideration of such developments.

I welcome that reply. May I ask whether the rather comical clandestine monthly tittup to Basle by nameless notables, and their meetings there, could have a little less authority in future?

I am not sure about the point of my hon. Friend's supplementary question. I can only say that I have not recently been to Basle.

Would not the creation of such a European fund detract from the value of the work being undertaken by the International Monetary Fund?

I do not think so. Obviously, the International Monetary Fund is, and must remain, the proper international forum for discussions on the world monetary system. In looking at my hon. Friend's Question, I assumed that he was thinking of something on the lines of the European Monetary Co-operation Fund, which was discussed in the Werner Report as a possible future development in European monetary integration.