asked the Chancellor of the Exchequer what representations about the exchange level of the £ sterling he intends to make to Mr. Connally at the meeting of the Group of Ten in Rome.

asked the Chancellor of the Exchequer what action he is proposing to take with the other members of the Group of Ten to find a satisfactory solution to the current international parity instability, following the recent actions of the United States of America; and if he will make a statement.

asked the Chancellor of the Exchequer if he will make a statement on the progress being made by the countries of the Group of Ten and the United States of America in resolving the monetary crisis, following the measures introduced by President Nixon in August this year.

The Group of Ten will meet in Rome on 30th November and 1st December. The aim of a realignment of parities which will bring an end to recent trade restrictions is, I believe, generally shared. The Government's policy is to work for a realignment which is realistic and sustainable, both generally and in relation to the sterling parity.

Has the Chancellor seen the recent statement by Mr. Connally that it is in the interests of America for the present uncertainty to continue? That is not in the interests of Western Europe. So, at the meeting in Rome, will he take a personal initiative and perhaps concentrate on persuading the Americans, as this seems to be the chink in the armour, to revalue the dollar price of gold?

I hope and believe that the United States Administration would like to have a settlement of the variety of problems which now confront us following upon the announcement by the President of the United States on 15th August.

Does my right hon. Friend believe that we should support the American attempt to demonetise gold? Does he agree that if we do not get a speedy solution to this parity crisis we may end up with a protectionist trade war throughout the West?

If we do not get a reasonably early settlement of the problems which now confront us, I believe that there is a real danger that some countries will consider taking action which could result in a trade war of one kind or another.

Will the right hon. Gentleman point out to the United States Administration in simple terms that their unsupportable arrogance in refusing to devalue the dollar endangers not only world monetary stability but their own financial interests?

I have my own views on this matter. I do not wish to say anything before the meeting in Rome which would prejudice a happy outcome.

Before my right hon. Friend abandons the regulatory advantages of a floating £, will he pause to reflect whether the Bretton Woods system of fixed parities has not been as great a disaster to the world as was the return to gold at pre-war parity in the 1920s?

I should point out to my right hon. Friend that what is happening now in foreign exchange markets is not free floating or, indeed, anything like it. I do not believe that completely clean floating is practicable. Indeed, I am not sure that it is being practised anywhere. I think that my right hon. Friend will agree that it would expose any economy to sudden and severe shocks as changes in the price of foreign exchange affected the domestic price level. Also, large speculative capital flows could result in exchange rates entirely unwarranted by the domestic economic situation. I believe, with most, if not all, in the Group of Ten, that a return to a realistic pattern of parities is in the best interests of ourselves and the world.

Is the right hon. Gentleman aware that floating the £ is about the only sensible policy in the economic field which the Government have so far pursued, and that to ditch it at this stage would be a total disaster? Is the right hon. Gentleman further aware that fear of going back to fixed parity is undermining investment confidence in this country?

I disagree entirely with the hon. Gentleman. If one discusses this matter with business men and with others who take decisions, one learns that the uncertainty created by the present situation is one reason for the lack of investment which we are experiencing.

Would not my right hon. Friend agree that the only realignment of currencies which can be lasting and satisfactory is one which is continuously worked out by a free market, and that what is impeding a free market now is the attempt of countries, in expectation of a refixing of parities, to jockey for a favourable position?

If we lived in a completely pure and theoretical world I should be somewhat inclined to agree with my right hon. Friend, but I can only tell him that in my honest judgment, having discussed this matter with other Ministers of Finance, I do not believe that completely clean or pure floating is practicable.

asked the Chancellor of the Exchequer what will be the effect on the wages and salaries level of British industry of entry into the Common Market; and what assessment he has made of the impact of this on industrial costs.

In the short run no significant change that I can foresee. In the long run I am confident that real wages will be substantially increased. Industrial costs should remain competitive.

Is the hon. Gentleman saying that if prices increase, as everybody imagines they will, if we go into the Common Market, there will be no wage and salary increases to meet the increase, which is what is said in the White Paper? Is the hon. Gentleman further aware that womens' wages are far from reaching equality with mens' wages, and is he therefore saying that men and women in industry will have to bear the full brunt of entry into the Common Market with no help from the Government?

I am saying nothing of the sort. The White Paper made it quite clear that the increase in food prices following entry would be marginal. There will also be a decrease in the price of some manufactures. I should not expect such marginal changes to have any significant effect on wage claims. The whole experience of the Community over a period is that real wages there have been rising faster than in the United Kingdom.

asked the Chancellor of the Exchequer what is his latest estimate of the number of additional civil servants necessary to administer the proposed value-added tax.

I have nothing to add to the answer given to my hon. Friend, the Member for Worcestershire, South (Sir G. Nabarro) on 10th November.—[Vol. 825, c. 189.]

But as that reply was singularly uninformative, will the hon. Gentleman now state whether the Government have come to any kind of estimate on this, in view of the fact that about two years ago the N.E.D.C. gave an estimate of 6,000? Can the hon. Gentleman say whether there will be a net increase at all in the number of civil servants, and whether the Daily Telegraph this morning was right in its estimate of about 7,000?

It is not possible to give any meaningful estimate of numbers until decisions are made on the scope and coverage of V.A.T. As the hon. Gentleman knows, there will be offsets from not having to administer various other measures which are being abolished, such as S.E.T., purchase tax, and so on.

While endorsing what my hon. Friend said about the scope of the tax, may I ask him to bear in mind that the long period which will elapse between now and next April, when final decisions are taken on this form of tax and its scope, is likely to cause all wholesalers and retailers to run down their stocks, all of which is aggravating the unemployment situation by the diminution of demand for manufactures? Will my hon. Friend therefore make his statement about the scope of the tax much earlier than next April?

That is an entirely different matter from that of the number of civil servants required to administer the tax, but I have noted what my hon. Friend said.

asked the Chancellor of the Exchequer whether he will make a statement on the liability to value-added tax of goods held in stock at the time it comes into force.

I have nothing to add to the Answer I gave to the hon. Member for Birmingham, Ladywood (Mrs. Doris Fisher) and my hon. Friend, the Member for Worcestershire, South (Sir G. Nabarro) on 26th October.—[Vol. 823, c. 281.]

Before people begin running down stocks and therefore creating unemployment, may we take it that there is an assurance that such goods will not be subject to both purchase tax and V.A.T.?

A large number of representations have been made both to the Customs and Excise and to Treasury Ministers on this subject. I would prefer to say no more at this stage. It would be wrong to anticipate my right hon. Friend's decision.

asked the Chancellor of the Exchequer if he will, when purchase tax is ended, make arrangements to ensure that foodstuffs are zero rated for value-added tax, especially including potato crisps and chocolate-coated biscuits.

I would refer my hon. Friend to my hon. Friend's reply to the hon. Member for Swindon (Mr. David Stoddart) on 16th November.—[Vol. 826, c. 81–2.]

Is my hon. Friend aware that only a very few food products attract purchase tax and that they are mostly consumed either by the very young or by the very old? When purchase tax comes to an end, will the Minister look at this matter again with a view to having a zero rate on food products?

I have noted my hon. Friend's suggestion, but I am unable to add to what my right hon. Friend has said several times, namely, that food will be relieved of value-added tax except perhaps some items which are subject to purchase tax. We are not yet ready to announce the method or scope of the relief.

But surely there is no earthly reason at all why the Government should not state now whether food will be zero rated or exempted?

It would be very bad practice to start giving the scope and method of coverage of value-added tax item by item. My right hon. Friend will announce the whole lot in due course.

asked the Chancellor of the Exchequer whether he will make a further statement on the use of computers in the administration of a value-added tax.

The Answer given to the hon. Member on 27th July referred to the installation of the I.C.L. system 4/72 computer, in preparation for this an I.C.L. system 4/50 computer has been installed in Southend for Customs and Excise to carry out programming tests and trials.—[Vol. 822, c. 199–200.]

Is not the hon. Gentleman aware that unless he gives more information about computer developments than this there is serious risk that the computer software will not be available? Is he further aware that this will have the direct consequence that V.A.T., in addition to being socially regressive, administratively could be a total fiasco?

Customs and Excise are carrying out their programming tests and trials, and they have to decide not only on the hardware but on the software required.

asked the Chancellor of the Exchequer how many persons are currently receiving tax allowance in respect of mortgages of their own residences, where such mortgages are of an amount over £10,000 and below, £25,000, or over £25,000, respectively.

The statistics on which to base estimates are not available, but the number in each category is small.

Is it not disgraceful that this currently relevant information is not available? Is it not true to say that the purchasers of some of the expensive houses now changing hands will receive more in a week by way of tax relief on their mortgage interest than the tenant of the most heavily subsidised council house receives in a year? Will the Treasury reconsider this matter to make sure that while a mortgage of up to £5,000 may be properly allowed for against tax, this massive contribution to the well-heeled is reduced?

I disagree with almost every word of the hon. Gentleman's supplementary question. I think that when he bears in mind that only about 5 per cent. of the total sum involved in reliefs for mortgage interest goes to surtax payers he will realise that his remarks are extravagant.

Is there not total disparity of treatment between the majority of council house tenants who do not have the advantage of acquiring a capital asset, and from whom subsidies are being withdrawn, and those who are buying their homes on a mortgage, acquiring a capital asset and being subsidised by other taxpayers?

It is a complete abuse of the English language to describe relief from taxation as a subsidy. Relief for any form of loan interest is justified on the ground that a man pays tax on the income from his assets, with relief for the payment in respect of his liabilities.

asked the Chancellor of the Exchequer approximately what income tax and surtax relief is secured weekly by a single house purchaser with a total income of £10,000 per annum, wholly unearned, taking out a £30,000 mortgage on a house at 8 per cent. interest; how this compares with the average weekly subsidy on council houses; and if he will seek to introduce a ceiling on the size of mortgages ranking for such a subsidy.

The figure for which the hon. Gentleman asks depends on the term of the mortgage, and on the lapse of time since it was granted. In any case there would be no valid comparison between such a figure and the average subsidy on council houses. I have no statement to make on the last part of the Question.

Since the Minister is reluctant to give this figure, may I give it to him? It is approximately—[HON. MEMBERS: "Question."] Is it not a tax handout of approximately £1,600 a year at the marginal rate, or £32 a week, and does not this compare rather favourably with the council tenant, who gets 90p a week on average, including the rate subsidy? Therefore, while I do not want to hit the ordinary house purchaser, should there not at least be a ceiling on the amount of his mortgage for tax relief purposes? If there is not a ceiling, or in any case, is it not utterly unfair to slash the subsidy on the council tenant and yet to allow subsidies at this level?

There is no question of this allowance being a subsidy. Considered at the level to which the Question is directed, it is more comparable with relief on interest payments on debt rather than with a mortgage. The figure which the hon. Gentleman quoted, of some £30-odd a week, is totally meaningless without giving any term for the mortgage. In certain circumstances, that figure could be as low as £3 a week.

rose—

Order. This appears to be a matter for debate rather than for question and answer. Sir Derek Walker-Smith, next Question.

Oh!

asked the Chancellor of the Exchequer by how much, in percentage terms, the £ sterling declined in value during 1970.

Between December, 1969, and December, 1970, the purchasing power of the £ sterling fell by 7·3 per cent., on the basis of the change in the General Index of Retail Prices.

Is the hon. Gentleman aware that a funny thing appears to have happened to that Question on its way to the printers' room, and that I have ended up with the wrong year? Is he nevertheless aware that, as a result of deliberate Government policy, millions of people are facing the worst Christmas in their lifetime? Does he not understand that most of them have given up any hope of any improvement under this Government, and that the best present he could give them this Christmas is the departure of the whole shower opposite?

I think it will be true to say that a funny thing happened to that supplementary, too. On the basis of the alternative form of the retail price index, excluding the effects of the seasonal food movement, and that accounts for only about 5 per cent. in the retail price index, I think that the hon. Gentleman may be interested in the following figures: percentage changes on six months earlier at an annual rate were—May, 1971, 11·3; June, 1971, 11·1; July, 10·8; August, 10·1; September, 9·4; and October, 6·7. That is a record of success.

Would it not be true to say that since the present Government returned to power the people of this country have never been had so good?

asked the Chancellor of the Exchequer if he will review the revenue rules for occupational pension schemes so as to enable increased pension provision to be made for older employees declared redundant.

The Revenue rules for occupational pension schemes already permit proportionate pension benefits to be paid to an employee who retires for any reason up to 10 years before the normal retirement date. Additional payments to an employee by way of compensation for redundancy ought to be kept separate from schemes designed to provide retirement benefits.

But does my hon. Friend realise that it is not possible to give an older man who is declared redundant a full two-thirds pension unless he has 40 years' service, whereas a man retiring on the normal retirement date, under the rules of the schemes, can be given a two-thirds pension after 20 years' service and under the welcome new code after 10 years' service, even though he may be younger than the man declared redundant?

I thank my hon. Friend for what he said. I will look into the matter and get in touch with him.

asked the Chancellor of the Exchequer whether he will consider granting tax relief to individuals who purchase works of art with the intention of giving or bequeathing them to the nation.

I cannot anticipate my right hon. Friend's Budget statement.

I thank my hon. Friend for that very unimaginative and disappointing reply. Would he look very carefully at the American system to see whether we can learn some lessons from across the Atlantic?

I assure my hon. Friend that we are studying a number of ways of fulfilling the pledge in our election manifesto to encourage the flow of funds to charities.

asked the Chancellor of the Exchequer whether he will now take steps substantially to reduce the level of taxation on brass band instruments.

No, Sir. I reduced all the rates of purchase tax by two-elevenths this summer.

Well, that is a pity. I thought that the right hon. Gentleman was going to blow his trumpet again. Is he aware that these bandsmen have been having a pretty rough time recently, leading all these working-class demonstrations against the Government's policies, resulting in all these expensive replacements? More seriously, if it is right for the Arts Council to hand over £30,000 to the National Youth Orchestra, why cannot a little recompense be given in the form of reduced taxation for working-class music?

I entirely agree with the hon. Gentleman that those who blow these brass instruments have had a very rough time indeed. In 1964, the tax on their instruments was 25 per cent., in July, 1966 it was increased to 27 ½ per cent., in March, 1968 to 33 ⅓ per cent. and in November, 1968 to 36 ⅔ per cent. At least we have made a start by reducing it to 30 per cent.

asked the Chancellor of the Exchequer if he will take further steps to augment his July measures for reflation of the economy and reduction of unemployment.

asked the Chancellor of the Exchequer if he is satisfied with the increase in demand following the fiscal measures announced in July; and if he will make a statement.

I would ask the House to await the debate which is to follow, when I shall be dealing with the general state of the economy, and in particular dealing with the problem of unemployment and the effect on demand of the measures which I announced in July and previously.

Would the right hon. Gentleman accept that the effect of his July measures, added to previous Budgetary statement, has been a massive level of unemployment—141,000 in Scotland—which has resulted today in representatives from local authorities from all over Scotland coming to the House to protest at the dastardly state of the Scottish economy? We shall not be satisfied unless he redresses the balance and in particular restores investment grants and does something about the regional employment premium.

I hope that the hon. Gentleman will follow the very sensible example of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) and await the debate, when I shall be able to deal with these questions more fully.

While of course we shall await my right hon. Friend's statement with great interest, would he not agree, as a general philosophical proposition, that our experience in recent years has suggested that attempts to fine tune the economy, whether in one direction or the other, have almost invariably been disastrous or at least unfortunate in their medium-term results? Would he therefore resist the blandishments on this subject, whether from my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) or the other side, from Clackmannan?

I note what my hon. Friend said, but my own inclination would be to await the debate.

asked the Chancellor of the Exchequer whether he will consider a substantial increase in the age exemption limits, to help pensioners and those living on small fixed incomes when the new system of personal taxation is introduced.

I am very conscious of the difficulties which elderly people face as a result of the inflation of the past few years. The age exemption limit has been increased in respect of this year, 1971–72, and will be increased further in respect of next year, 1972–73. These increases were provided for in this year's Finance Act. I have noted my hon. Friend's suggestion.

I thank my right hon. Friend for that reply. Will he accept the principle that elderly people living on private pensions or savings deserve special tax concessions, whatever the system?

It will be of some assurance to my hon. Friend when I say that the new system of personal taxation to which he refers has no particular relevance to the age exemption limits.

Will my right hon. Friend give special consideration to those people who have been on sickness benefit, which is tax free, and who, on reaching retirement age, pass to a retirement pension which is taxable and therefore face a reduction in their already low standards of life?

I will consider what my right hon. Friend said.

To save the right hon. Gentleman the trouble of answering Question 25, which we may not reach, may I ask him to bear in mind that pensioners regard the retirement pension—and always have regarded it—as sacred, something upon which the Inland Revenue should not get its hands? I am not blaming him for this: I am indicating all successive Chancellors. Would he bear in mind the suggestion that, when the pension is thrown in with other income and is taxable, it should be taxed at a much lower rate than any other form of income?

That is a point of view, but it goes very much wider than this Question, which is concerned with age exemption limits and the new system of personal taxation.

asked the Chancellor of the Exchequer if he will consider, in the context of the old age tax relief, that widows and single women retirement pensioners have to wait five years before becoming eligible for a higher basic tax-free income; and, in view of the substantial rise in prices, if he will take steps to make age relief available at 60 years for all, in order to assist the low income groups of all ages.

I have noted my hon. Friend's suggestion.

Noting my suggestion is not any use at all—

Order. The hon. Lady must ask a question and not make an observation.

Will my hon. Friend please bear in mind, arising out of all the sympathetic answers with no action that have emanated from the Exchequer, that he can have a Green Paper from those of us who are interested in these groups? May we please have a meaningful discussion with all the Treasury Ministers to see whether we can remedy more of the injustices that need remedying?

I am certain that my hon. Friend would dislike me the more if I were to ignore the points she makes, and I have no intention of doing that. We are examining, and will always keep under continuous examination, the personal allowances. My hon. Friend is now asking for the age of 60 to be the qualifying age for everyone, men and women. We have taken note of her suggestion and I assure her that if she wishes to discuss the matter with either myself or my colleagues, we shall be only too pleased to meet her.

asked Mr. Chancellor of the Exchequer whether he is aware that the practice of the Inland Revenue of sending, only one month after receipt of initial demand, a final demand, containing a threat of distraint or proceedings in court, causes embarrassment and apprehension to persons who, due to absence, illness or other reason, have not been able to comply with the initial demand; and if he will review the situation.

It must be very much the exception where neither the taxpayer nor someone acting on his behalf is able to contact the collector before a final demand is sent. If my hon. Friend has a particular case in mind, I should be happy to look into it.

Having regard to the possibility that in many cases this final demand is in fact the first notification actually received, not only because of illness or absence but possibly due to failures in postal delivery, will not my hon. Friend turn his undoubted ingenuity to trying to devise a form of words less peremptory and minatory?

I take the point made by my right hon. and learned Friend. The wording of the final notice has certainly been subject to several complaints. We are considering whether it can be modified without weakening its impact on that inevitable fraternity who always delay paying their tax until the bailiffs are at the door.

asked Mr. Chancellor of the Exchequer whether he will consider reducing purchase tax on filter devices which are available for cigarettes in order to reduce the nicotine and tar content.

All the rates of purchase tax were reduced by a little over 18 per cent. in July; the state of medical knowledge does not suggest that a further special reduction for these articles would be justified.

Is it not rather odd that the Government should place health warnings on cigarette packets yet retain a tax which makes more expensive a safeguard against the smoking danger? If it can be proved medically that these are safeguards and useful, will my hon. Friend consider reducing this tax?

The second part of my hon. Friend's supplementary question is hypothetical. However, I remind him that earlier this year the Royal College of Physicians reported in its publication "Smoking and Health Now":

"Too little is known at present about the medical significance of the many individual chemical components of the 'tar' and of the numerous compounds in the gaseous fraction of cigarette smoke to warrant publication of detailed analyses or advocating the use of special filters designed to eliminate particular gaseous fractions."

A very good answer.

asked the Chancellor of the Exchequer what consideration he is giving to the introduction of a negative form of income tax assessment.

We are continuing further studies.

Does the right hon. Gentleman agree that in view of the large number of individuals and families who are failing to take advantage of benefits of one kind or another, a negative form of income tax would go a long way not only to relieve poverty but to remove the stigma of the means test, which has been greatly increased under Conservative rule?

What the hon. Gentleman says only goes to show that this is an important and difficult problem. It is certainly not easy to find the right solution. Neither I nor my colleagues in the Treasury have ever pretended that it would be easy to find a solution quickly. Many people have been trying to evolve a form of negative income tax for many years, and I assure the hon. Gentleman that we are continuing with further studies.

When are these studies likely to be completed? When they are, will my right hon. Friend consider publishing a Green Paper containing the various alternatives that the studies will show? Will he then set up a Select Committee to examine the specific proposals contained in that Green Paper, the procedure used so successfully with corporation tax?

My hon. Friend will agree that I have always argued the merit of the Green Paper system. But I would not wish to anticipate the outcome of these studies, and I regret that I am unable to give him a meaningful idea of the time they are likely to take.

asked the Chancellor of the Exchequer if he will estimate, from information available to him, the proportion of their gross income, excluding cash benefits, paid in all kinds of direct and indirect taxes and rates by an average family of husband and wife and two children, living on an income of £5,000 per year, on an average income for such a family, and on an income of £1,000 per year, respectively.

The 1969 Family Expenditure Survey showed that in that year rates and taxes took 33 per cent. of family income exclusive of benefits at £1,000 a year, and 35 per cent. at £1,760 a year, the average income for such families. The Survey did not give enough data about £5,000-a-year families for the comparable percentage to be calculated. Information for later years is not available.

While thanking the hon. Gentleman for those figures, may I ask him to accept that if the other figures were available to his Department they would show that far from being a progressive tax system ours is a regressive system? Is he aware that it has singularly failed to redistribute income in the ways that radicals would wish and that those with the lower incomes are paying a higher proportion in taxation than those in the middle and upper income brackets?

I would not accept that. It is totally unrealistic to leave out of the calculations the cash benefits and benefits in kind that are received. If the hon. Gentleman would like some other figures, he may care to know that for the family of the size mentioned in the Question with an original income of £600 a year, this would represent an increase of 56 per cent. At about £1,000 the combined effect would be to decrease such a family's income by 4 per cent. and on £1,760 the effect would be to reduce it by 16 per cent. That seems to be a fair degree of redistribution.

asked Mr. Chancellor of the Exchequer what action he is taking to prevent any flow of Exchequer revenue into political party funds, through tax allowances in respect of advertisements placed by business companies in any publication whose profits go to a political party.

The general rule is that expenditure is allowable only if it is incurred wholly and exclusively for the purposes of the business. If the hon. Member has particular cases in mind, I will look at them.

While thanking the Minister for that reply, may I ask him to examine a particular case which has been brought to my notice recently—namely, that of the "Mid-Yorkshire Businessmen's Diary", the profits of which go to the Conservative Party?

If there are profits, they are themselves taxed; but I will certainly look into the case mentioned by the hon. Gentleman.

Will the hon. Gentleman now answer the Question and not evade the issue? Is it not a fact that advertisements are placed in brochures at a price clearly out of line with the readership of those brochures? Will he look at the whole question of these expenses and advertisements to see whether they are wholly and exclusively incurred?

I am not sure that the hon. Gentleman is on a good point. It would be extremely difficult for local inspectors of taxes to weigh up the prices paid for all advertisements in all journals—[Interruption]—and I cannot believe that hon. Gentlemen opposite think that such an exercise would be easy. However, I will look into any particular cases that are brought to my attention.

asked the Chancellor of the Exchequer if he will take steps to tax the retirement pension at a lower rate, when it is assessed for tax purposes, than other earnings.

I am afraid that I could not entertain the hon. Member's suggestion.

rose—

Order. The hon. Member, in a supplementary question to Question No. 12, announced that he was anticipating his supplementary question on this Question. However, I will allow him to ask it.

I am grateful, Mr. Speaker: I did not think that you would allow me to do so. I cannot recall in detail the Financial Secretary's earlier reply, but will he bear in mind that pensioners very much resent their retirement pension being taxed at all; and that if he would at least go halfway by taxing the pension at a lower rate he would give some recognition to these natural and well-founded resentments?

My right hon. Friend has already referred to the age exemption relief, but perhaps I can tell the hon. Gentleman that for a married couple under 65 the threshold for tax is £598; for a couple over 65 it is £786, with marginal relief that goes right up to £1,112. These are the figures for 1971–72. They will be higher still next year.

Is it not the case that if the retirement pension were made tax free it would be entirely regressive and would benefit most those with the largest gross incomes?

It would certainly help those below the tax threshold not at all.

asked the Chancellor of the Exchequer what consideration he is giving to the reduction of income tax liability for retirement pensions.

The aim of this Government is to reduce taxation on incomes generally.

I welcome that reply. Has my hon. Friend had time to study some of the letters he has received from me and some of my pensioner constituents giving examples of relatively high taxation on reasonably small incomes? Does he not agree that the present Government promote an incentive to self-provision, and should we not now do more to provide incentives to self-provision following six years of the reverse?

It is certainly true, as I say in reply to many letters received from my hon. Friend and from other hon. and right hon. Members, that the rates of taxation in this country are high, and we aim to reduce them. We made a start—many people would say a very satisfactory start—in the Budget earlier this year.

Is the Financial Secretary aware that those who contribute to National Insurance pensions and who will contribute under the Government's new reserve scheme will pay tax on their pensions but will get no tax relief on their contributions? Is that not grossly unfair?

I would not necessarily accept that it is grossly unfair, but it does not lie in the mouths of hon. Members opposite to make those accusations because theirs was the Government who removed tax relief on National Insurance contributions. As for the reserve scheme, the weighting on the contributions as between employer and employee is towards the employer in order, at any rate in part, to make up for the fact that the employee's contribution will not qualify for tax relief.

Does not the Financial Secretary agree that, apart from the general principle of taxation on retirement pensions, one of the problems is that every time there is a slight increase in their income, pensioners are not re-coded quickly enough and on many occasions find themselves on Code 1, which means that they have to pay higher taxation for a longer period than they ought to pay it? Will not the hon. Gentleman promise that this aspect will be looked into at the earliest possible moment?

I am certainly prepared to look into any case, and hon. Members are swift, and rightly swift, in sending such cases to me when they come to their attention. In the overwhelming majority of cases if the changed circumstance is notified to the tax office, any necessary steps are taken within a matter of weeks and any repayment due is made forthwith. But I will certainly look into this matter to see whether we can improve and speed up the process.