asked the Chancellor of the Exchequer whether he will raise at an early date the tax threshold for the earned income of students in full-time education.

The tax threshold for students is the same as for other taxpayers and my right hon. Friend has no proposals to give them more favourable treatment.

While thanking my hon. Friend for that rather predictable answer, may I urge him to accept this desirable way of encouraging full-time students to be less financially dependent on their parents? Will he seriously consider reviewing this tax threshold to meet rising costs and at the same time to give recognition to the important contribution which parents make at this time in the training of young persons?

I appreciate the points made by my hon. Friend and I remind him that two considerations must be borne in mind. On the one hand we have the child income limit which affects a parent's entitlement to child allowance. On the other hand we have the student's own tax threshold. The view of my right hon. Friend is that the present arrangements are equitable, taking account of the various factors involved.

asked the Chancellor of the Exchequer whether the base used for calculating the United Kingdom's contribution in value-added tax to the European budget will be the same as in other countries of the Common Market.

Any contribution to the EEC budget derived from the value-added tax would be related to a uniform tax base. Such a base does not yet exist. The United Kingdom's contribution to the EEC budget up to 1980 is in any case the subject of transitional arrangements set out in Articles 129 to 132 of the Treaty of Accession.

Does it follow from that answer that although we in this country will be able to decide the rate of VAT, we shall not, in effect, be able to decide the base of VAT?

This matter will of course be discussed in the Community. I do not anticipate that a decision on the harmonised base will be taken immediately and I cannot forecast a timetable on the subject. However, as I say, there will be full consultation on this point.

Will my hon. Friend bear in mind that all the countries of the EEC levy VAT on food whereas it is the intention of Her Majesty's Government so far to exclude food? How can we have a common and uniform base for VAT if the basis of calculation is manifestly different between the EEC and this country?

As I have sought to make clear, it will be a question of reaching agreement on what the harmonised base should be.

asked the Chancellor of the Exchequer when he expects to have completed his study of the implications of the European Economic Community decision to raise farm prices for 1972–73.

I have nothing to add to the very full answer which my right hon. Friend the Minister for Agriculture gave on 11th April to the hon. Member for West Ham, North (Mr. Arthur Lewis).—[Vol. 834, c. 166–9.]

Will the study, if and when it takes place—that is not certain—include an assessment of the effect on our balance of payments following the increase in the size of Community budget and our share of it consequent upon these price rises?

As my right hon. Friend said, we must take the interaction of the relative movements of world and Community prices. As he told the House on 11th April, the combined effect will be to reduce the estimates of the cost of food importants that were given in last year's White Paper.

asked the Chancellor of the Exchequer if he will make a statement on the latest balance of payments situation.

The underlying balance of payments situation remains sound and I have little to add to what my right hon. Friend said in his Budget Statement about future prospects. The March trade figures were distorted by the effects of the coal strike and certain other special factors.

Have the effects of the coal strike been quantified?

It is too soon to make a quantitative estimate, but there is no doubt that the strike had a considerable distorting effect.

Does my hon. Friend agree that one aspect of the balance of payments situation which might cause concern is the question of repayment of the Labour Government's debts due to the IMF this summer? May we have an assurance that the Government will not yield to American pressure further to dilute the reserves with unconvertible dollars and that, if need be, we will prefer to defer payment than to yield to such pressure?

I appreciate the point which my hon. Friend makes but I do not think I can go further than my right hon. Friend in his Budget Statement.

Is the hon. Gentleman aware that there will be a serious deterioration in the balance of payments position this year as a consequence of our pricing ourselves out of the market because the Government are stupidly insisting on adopting policies which are causing prices to rise—policies on rents and rates, the premature introduction of VAT, and so on?

The hon. Gentleman is absolutely right—[Interruption.]—in that there has been some rise in our price competitiveness over the last two years. If this goes on at a rapid rate it must, of course, have an effect on our export performance. However, I am entitled to point out that we have had considerable success in slowing down the rate of internal price rises. They are now rising at half the rate they were a year ago. Furthermore, we have made substantial cuts in taxation and these have helped to hold down prices. We now look for some response from the trade unions.

asked the Chancellor of the Exchequer whether he will now consider a further relaxation in restrictions on overseas investment, particularly portfolio investment in the non-sterling area, in view of the strength of sterling, the reduction of overseas debt, the rebuilding of gold and dollar reserves and the balance of payments surplus.

I have nothing to add to what was said on these subjects by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement on 21st March.—[Vol. 833, c. 1350–1.]

Does my hon. Friend agree that now is the time to consider relaxing further the restrictions on overseas investment, particularly the 25 per cent. surrender rule on investment in dollar stocks? Invisible earnings could be substantially increased by encouraging more portfolio investment in the dollar area and so cashing in on the profits that are to be made in overseas investment. If we are to prepare—[Hon. Members: "Too long".]—for Britain to give the financial leadership to the Common Market in London we should surely be considering this move now.

The invisibles have of course an enormously important part to play in the current balance and their contribution this year, as in the past, will be of great significance. On the question of the relaxation of the rules on overseas investment, my right hon. Friend had to have regard to the priorities and his first priority was to make changes in the direct investment field. I think that was the right answer.

Before the Chief Secretary too enthusiastically accepts what his hon. Friend has put to him, will he bear in mind that given the present state of British industry we could do with a considerable degree of that investment here at home?

I think it is also equally true to point out that there are areas of investment for which there is no parallel in this country. It is important, in order to secure raw materials in export markets, that some investment should take place overseas.

asked the Chancellor of the Exchequer what is the current purchasing power of the £ sterling as compared with June, 1970.

Taking the internal purchasing power of the £ as100p in mid-June, 1970, its value in mid-March, 1972, based on changes in the Consumer Price Index and adjusted by the General Retail Price Index, is estimated at 88½p. This does not include any cut in prices between mid-March and the present time resulting from the Budget.

Order. Is the Minister also answering the following Questions?

I am sorry, Mr. Speaker. I meant to say that with permission I would answer Questions Nos. 5, 11 and 12 together.

Mr. Skinner.

I think the Minister has given a wrong answer. Before we get on, should he not reconsider his answer and give the correct statistic?

What about that then? Butch Cassidy and the Sundance Kid. Can we take it that the Chancellor had these figures, whatever they may be, in the forefront of his mind when he spoke to the Conservative Political Centre last week, and does the Minister of State realise, even if the Chancellor does not, that all that the railwaymen are guilty of is an attempt to try to restore their purchasing power to what it was at June, 1970, because it has been denuded as a result of the Government's actions?

The railway claim is not a matter for me, and while there is a prospect of negotiations being resumed I do not think it would be helpful for me to comment on this point.

Does the Minister accept that Britain's wage rates last year rose at a lower rate than in any other country in Europe except France? This demonstrates the extreme moderation of contemporary wage claims when set against the enormous rate of inflation which the hon. Gentleman's answer indicates.

It is also true that real personal disposable incomes have risen at an annual rate of about 3 per cent. since the Government came to power compared to 2 per cent. during the whole period when the Labour Government where in office.

Would my hon. Friend agree that we had considerable inflation for the period immediately following the term of office of the last Labour Government? Did not precisely the same thing happen in 1951 when they ran from office. Does not inflation follow a period of Socialist Government as sure as night follows day, and do not the Tories always get it right?

I thank my hon. Friend for that. Prices are now rising at about 5½ per cent. a year. In the three months leading up to the last General Election when the Labour Party was in office they were rising at the rate of 8 per cent., so we are making very great progress.

On a point of order, Mr. Speaker. I had a Question down——

The hon. Member rose and made an intervention, and it is fully within my discretion whether I call him or not.

rose——

Surely, Mr. Speaker, my hon. Friend rose to a point of order and not to ask a supplementary question.

The hon. Member made an intervention, and if he makes an intervention it is for me to decide whether I call him again.

On a point of order, Mr. Speaker. I wish to draw your attention to the fact, because I thought it was important for the House since the Minister was answering a number of linked Questions—[Interruption.]—that it was not possible for hon. Members, including myself, to put valid supplementary questions when the Minister had given an inaccurate answer to a Question. Therefore, I was in no way seeking to give up my possible right to ask a supplementary question. I was trying to point out that it was not possible for hon. Members to put valid supplementary questions if the Minister was giving an inaccurate answer which did not bear any relation to previous answers to this series of Questions. I respectfully submit, therefore, that the right of an hon. Member to ask a supplementary question is being abrogated if he rises to put a point of order.

Order. The House must try to help the Chair in this instance.

The Chair must try to help us.

I did not hear the hon. Member say anything about a point of order when he originally rose. [Hon. Members: "Yes, he did."] I did not hear him say so, but it is for me to decide. I am under constant pressure to get on with Question Time and it was getting very much like a debate. I therefore exercised my discretion. I now call Mr. David Mitchell to ask Question No. 6.

rose——

On a point of order. I am sorry, Mr. Speaker, but I very clearly said—and if you did not hear it I regret it—that I was rising to a point of order. All my hon. Friends will bear me out. [Hon. Members: "Hear, hear."] I shall seek to raise this whole matter on a point of order at the end of Questions.

I am grateful for that. Mr. David Mitchell.

asked the Chancellor of the Exchequer whether he will consider publishing a Green Paper on alternative forms of capital gains tax.

I have noted my hon. Friend's suggestion.

Would not my hon. Friend agree—[Interruption.]

Order. I cannot have that said. I ask the hon. Member for Manchester, Ardwick (Mr. Kaufman) to withdraw from the Chamber. [Hon. Members: "Shame."] I cannot have an hon. Member describing a decision of the Chair as intolerable.

rose——

On a point of order, Mr. Speaker. I well understand that in disallowing a supplementary question by my hon. Friend to a Question which he had put on the Order Paper it may have been your intention to accelerate the pace at which questions were taken. I think you will accept, however, that your action on this occasion has led to the loss of five minutes of Question Time. I wonder whether on reflection, you will not accept that, my hon. Friend having risen to a point of order, he would in normal circumstances have been allowed to put a supplementary question on the Question he had on the Order Paper, which you yourself pointed out that the Minister, without referring to it, was answering.

I quite realise that whenever the Chair tries to accelerate the rate of answering Questions the usual result is that it takes longer, because the House will not accept the discipline of being short. What I usually try to do if I have to curtail a question is to work in the hon. Gentleman concerned on a similar Question later, which I would try to do on this occasion. What I cannot allow, and I do not think any occupant of the Chair could allow, is the Chair's conduct to be described as intolerable.

I am grateful for what you have said, Mr. Speaker. But I think if you have read the Order Paper, you will accept there is no similar later Question on which you could call my hon. Friend. If the HANSARD reporter can confirm that my hon. Friend rose on a point of order, would not you accept that it was most unusual for Mr. Speaker not to call him for a supplementary question to a Question he has on the Order Paper, and the presence of which on the Order Paper and its relevance to the Minister's answer was pointed out by yourself?

The Chair is very ready to admit that it may have made a mistake. It would be impossible for even the Chair to command perfection. I thought that in all the circumstances the Question had been sufficiently discussed. It was developing into a debate, and no hon. Member has a prescriptive right to ask a supplementary question. In making that statement I am speaking in accordance with the Report of the Select Committee on Procedure which was accepted by the House. If we are to have more Questions asked and answered, it must be accepted that an hon. Member does not have any prescriptive or other right automatically to be called for a supplementary question.

On another point of order. When this incident happened, Mr. Speaker, you told the House that you never heard my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) rise to a point of order. May I point out, with great respect, that you could not have heard that he was saying to a Conservative Member on the benches opposite "Intolerable. I am going to put down a Motion of censure", for which you have now made him withdraw. That remark was not addressed to the Chair. Had you heard the first comment and what followed, with respect, perhaps you would not have asked my hon. Friend to withdraw. He was making the comment with regard to hon. Members opposite that he would put down a Motion of censure.

I am prepared to disregard the incident and allow the hon. Member for Manchester, Ardwick (Mr. Kaufman) to come back, provided we can get on. Mr. Mitchell, to ask his supplementary question.

Would not my hon. Friend agree that capital gains tax has also become a tax on inflation and paper gains and as such has fulfilled the fears expressed in 1965 by not only my right hon. Friend the Prime Minister but also my hon. Friend the Financial Secretary to the Treasury when he proposed an Amendment regarding tapering the tax?

I can assure my hon. Friend that we shall continue our examination of the problem, but I remind him that the pernicious effects of inflation are not confined to capital gains tax: I have my hon. Friend's point in mind, and we are continuing to consider it.

asked the Chancellor of the Exchequer to what extent value-added tax added to fees received by solicitors and barristers will be passed on to the litigants; what he estimates to receive from such a tax; and how much he estimates this will increase the annual costs of the Legal Aid Fund.

As to the first part of the Question, this is a matter for the solicitors and barristers concerned. No estimate of receipts is available. As to the final part of the Question, about £1·75 million a year.

Mr. Speaker, may I say "Thank you" and ask the Minister whether he is aware that it is pretty obvious to all, including barristers, that the tax will be passed on? Even the Lord Chancellor and the barristers, who get very high fees and high returns—which the Government never condemn though they condemn the railwaymen—admit that it will be passed on. Does not that shove up costs, which the Government are supposed to be trying to keep down? The Lord Chancellor said that the cost of the judiciary is getting very high. Will not the Minister do something to reduce rather than increase costs?

I am grateful for the hon. Gentleman's thanks. I do not wish to poach on the preserve of my right hon. and noble Friend. It does not necessarily follow that the cost of litigation will be increased by the full amount of VAT. There will be some saving of SET, at least in solicitors' offices. Legal aid charges will continue to be related to means, any additional cost through VAT being borne by the Legal Aid Fund.

asked the Chancellor of the Exchequer what effect he expects the introduction of value-added tax to have on Exchequer revenue from the sale of beer.

This will depend on the extent to which the revenue duty on beer may be altered when VAT is introduced, which in turn will depend on the total revenue required from beer in 1973–74.

Does not the hon. Gentleman agree that the licensed trade already carries a formidable level of taxation and that there must be a limit to what even beer will stand? Will he give an assurance that the introduction of value-added tax will not mean yet another burden on a very long-suffering section of the public?

As my right hon. Friend made clear in his Budget speech, in deciding the extent to which he can make any reduction to avoid an increase in the total level of taxation on the item concerned he must take account of the economic circumstances of the time. I cannot anticipate his Budget Statement next year in this respect.

Would not my hon. Friend consider that a suitable solution would be the reclassification of beer as food, notably the reclassification of Guiness as food, which indubitably it is?

I regret to say that I could not go along with my hon. Friend's suggestion. As to the definition problem, there are revenue questions that must be taken into account.

As the Chancellor's stated object is to bring about simplification of the tax system, why does he insist on taxing beer twice? Why not tax it through the VAT system and forget about Excise duties. Why create extra administrative costs which are bound to raise the cost and eventually the price of beer?

I do not think that would be a more advantageous solution. No doubt we can discuss the matter in detail on the Finance Bill.

asked the Chancellor of the Exchequer whether he will propose that educational aids and equipment be exempt from payment of value-added tax.

asked the Chancellor of the Exchequer if he will exempt from the proposed value-added tax all education materials and equipment used in any educational establishment both in the maintained and private sectors.

My right hon. Friend's proposals for exemption from value-added tax are contained in the Finance Bill and there will be opportunity to discuss them during the debates on the Bill.

Is the hon. Gentleman aware that because of shortage of money many local education authorities are already cutting back very severely on the amount of equipment supplied to schools? Does not the imposition of VAT make the position a jolly sight worse?

It does no such thing. If the hon. Gentleman looks at Clause 15 of the Finance Bill, he will see that there are proposals for local authorities to be refunded VAT paid on purchases relating to their non-business activities, including education.

Does my hon. Friend agree that it would be very wrong for private schools to be penalised in any way, and that students in full-time education without a grant could also be hit very badly by the tax? Will he give an assurance that these items will not be taxed under VAT?

No, Sir. The specific proposals are set out in the Bill. The private sector of education will benefit from the general reliefs for such items as fuel, books and new construction, which are to be zero-rated, and rents and insurance, which are to be exempt. Those schools which are charities will be able to benefit from the concessions on estate duty and capital gains tax which are being proposed.

asked the Chancellor of the Exchequer if he will now reconsider the abolition of the 25 per cent. surrender in force for transactions in the premium dollar currency pool.

I have nothing to add to the answer given to my hon. Friend's Question on this subject on 25th January, 1972.—[Vol. 829, c. 360.]

I appreciate that it is still close to the Budget, but does not my hon. Friend agree that that is a very disappointing reply and that many people had hoped that by now what is really an anachronistic hangover from the Labour Government's financial crises could now be scrapped? Voluntary restraint restrictions have already been eased, and Continental investors in all the member countries of the EEC can invest in this country without exchange control impediments. Will my hon. Friend look at the matter again?

My hon. Friend keeps this and other matters under regular review. While the balance of payments is strong, he felt it right to take account of the prospects over the next couple of years. The priorities in relaxing the controls on overseas investment must be direct investment.

asked the Chancellor of the Exchequer what representations he has received from retailers since making his proposal to reduce purchase tax on some goods.

A very few representations have been received about losses incurred by retailers on stocks which have borne tax at the higher pre-Budget rates. In general the reductions have been welcomed as a stimulus to trade which should enable retailers to recoup any immediate losses through increased business in future.

Is the hon. Gentleman aware that many small retailers, particularly pharmacists and electrical supply retailers, have suffered considerable loss as a result of the method chosen to reimburse them following the last reduction of purchase tax? Is he further aware that some of these losses have amounted to £1,500 to £2,000? Will he consider an alternative method—for instance, reimbursement based on invoices over the six or seven weeks previous to the Budget? Would this not have been a better method of reimbursing the tax?

I must confess that I am not clear as to what the hon. Gentleman means by reimbursing retailers for the tax. There is always a problem with purchase tax when there is a cut in the rate although, as my right hon. Friend pointed out in his Budget Statement, it is not a difficulty which arose very much under the last Government. The problem was examined in great depth by the Hutton Committee in 1952 and it concluded that there should not be any special arrangements in circumstances of this kind.

asked the Chancellor of the Exchequer what was the annual revenue in purchase tax from the sale of children's shoes in 1971.

Young children's shoes are not subject to purchase tax. Older children may wear a size of shoe which bears tax but it is not possible to estimate how much of the annual purchase tax revenue this represents.

Would my hon. Friend agree that it appears that this country's finances have struggled along without taxing babies, and children's shoes in the past? Would he further agree that this tax would add 50p to the price of a pair of shoes for an eight-year-old which would encourage mothers to by second hand shoes, cheaper shoes or ill-fitting shoes, thereby hazarding the health of their children? Would he agree that this tax will bring into disrepute the VAT system because it would be a prescription charge on the health of children's feet? [Hon. Members: "Hear, hear."]

With respect, some of my hon. Friend's comments are a little exaggerated. [Hon. Members: "No."] I cannot comment on his estimates of the amount this would add to the price of children's shoes. These points were borne in mind when VAT was designed and we have to look at the tax as a whole. Bearing in mind the abolition of SET and purchase tax there are no grounds for suggesting that value-added tax will be regressive when looked at as a whole.

Would the hon. Gentleman perhaps take some medical advice—[Hon. Members: "Hear, hear."]—and would he not look so amused at the fact that ill-fitting shoes can cause lifelong deformity? Would he not agree that the days should have gone when the Government turn back the clock and encourage the wearing of ill-fitting shoes? In the long run, if we cannot appeal to him on humanitarian grounds, will he recognise that economically it will be a long-term burden on the National Health Service to cope with these deformities?

I would be happy to take medical advice from the hon. Lady at any time but these matters can be fully debated when we come to the relevant Clauses of the Bill and I suggest that we wait until then.

When my hon. Friend described the remarks of the hon. Member for Norwich, South (Dr. Stuttaford) as exaggerated, had he read the report called "Crippling the Young" relating to the deformities caused to children's feet by ill-fitting footwear?

I have not read that report but I would be delighted to do so if my hon. Friend would send it to me.

The hon. Gentleman has said frequently that these matters can be discussed when we come to consider the Finance Bill. Does he recall that the Chancellor of the Exchequer made a statement during the debate last week suggesting that the Government would not be prepared to consider any further zero-rating because they regard the composition of the value-added tax as at present devised to be unchangeable? Can he assure the House that the Government will listen to arguments put by Members on both sides on this and other matters and will be prepared, if the weight of the argument lies in that direction, to consider zero rates for commodities such as children's shoes and clothes which at present the Government propose to tax at 10 per cent.?

I heard my right hon. Friend's remarks in the debate and I do not think he put them in the way the right hon. Gentleman suggests. When we come to this matter on the Finance Bill there will be full opportunities for debating it and we will certainly listen to all the arguments.

asked the Chancellor of the Exchequer what proposals he has for removing purchase tax or value-added tax from safety equipment.

While the position has been carefully reviewed from time to time, it has proved impossible to remove purchase tax from all articles which contribute to safety. There will, of course, be an opportunity to discuss details of the application of value-added tax during the debates on the Finance Bill.

Does the hon. Gentleman realise that most pieces of safety equipment were carrying no purchase tax advantages, despite the pleadings of the British Safety Council and the Royal Society for the Prevention of Accidents? Will he take the opportunity, when introducing the new tax, to give positive encouragement through the fiscal system to increased industrial safety?

I am aware of the hon. Gentleman's deep interest in this subject. When a purchase tax order on this subject came up for consideration after I joined the Treasury, I looked into the matter very carefully but tremendous difficulty has been found in acting on the lines suggested by the hon. Gentleman. However, trade and industry generally will be in a better position under the value-added tax than under purchase tax as regards items of safety equipment they buy in the course of business. Under purchase tax any charge had to be borne by the firm whereas, under the value-added tax, the items will be eligible for credit under the normal credit mechanism.

Without giving any undertaking will my hon. Friend consider, during the passage of the Finance Bill, proposals to exempt the equipment and boats of the Royal National Lifeboat Institution?

I would not wish to anticipate debates on the value-added tax during the Finance Bill.

Nevertheless there are pieces of safety equipment which are free of purchase tax and which will now incur taxation for the first time. Since Governments in the past have always been under pressure to subsidise them, is it not a retrograde step now to tax them? Will the hon. Gentleman refer to his previous answers on this matter and say that we can expect some sensible concessions during the Finance Bill?

The lesson is really to be drawn from the time when purchase tax was introduced. Then, a number of piecemeal exemptions were made which resulted in a great many anomalies. As I have constantly stressed, the value-added tax is intended to be a comprehensive tax, but a high percentage of the items to which the hon. Gentleman refers which are subject to purchase tax will be in a better position under the value-added tax because of the credit mechanism.

asked the Chancellor of the Exchequer if he remains satisfied with the working of the decimal coinage system since its introduction; and whether he has reached any conclusions in his consideration of possible changes in the numbers, sizes, values and metal contents of the coins.

Yes. As already announced, the future of the 2½p coin will come under consideration early next year and we shall keep under review the demand for an intermediate denomination between the 10 and 50 new pence coins.

As it costs twice as much to mint £1 worth of 2 new pence pieces as compared with £1 worth of old sixpences, and there is public demand to keep the old sixpenny coin, will my hon. Friend consider keeping the old sixpence as the new 2½ new pence piece and phasing out the 2 new pence piece rather than vice versa, which is the intention?

My hon. Friend knows from the answer given to him on 18th April that it is cheaper to mint the 2½p coin than the 2p coin, but the paramount factor is public demand for various denominations. At present there are almost twice as many 2p coins in circulation as 2½p coins.

Will my hon. Friend celebrate his appointment to the Treasury by reintroducing a 50p note, which would lighten our pockets?

My hon. Friend knows from previous answers that the note only has a life of a few months and that one of the principal reasons for introducing the 50p coin is that it has a life of many years. I do not think, therefore, that his suggestion is acceptable.

asked the Chancellor of the Exchequer if he will seek powers to ensure that small hotels which are compelled to undertake structural work under the Fire Precautions Act are enabled to offset the cost of this work against tax, rather than have to consider the work as capital improvement.

No, Sir. I do not think I should be justified in singling out this particular form of expenditure for special treatment.

Is my hon. Friend aware that this will cause not only concern but anxiety to many small hotel keepers, particularly those who run their own hotels, very often with their wives, working long hours, and who find it difficult to borrow money in the first place and will now be faced with enormous burdens under the Fire Precautions Act, which, of course, we all support? In the context of employment in the regions, will my hon. Friend bear in mind that this situation could have a serious effect and that many small hotels could be forced to close unless he gives them some form of assistance?

I have listened carefully to what my hon. Friend has said and have read the letter he wrote earlier this month on the matter. He may be exaggerating the problem. He may be leaving out of account the great difficulties there would be if there were any departure from the basic rule that if people invite members of the public on to their premises they are responsible for making them safe. There is no difference here between these cases and the problem of making food shops safe, with proper levels of hygiene, and so on, for example.

Will the hon. Gentleman accept that there really is a problem here, particularly in relation to the tourist industry? Will he consult the Secretary of State for Scotland and the Secretary of State for the Environment to ensure that when hotels and boarding houses are registering, the fullest information is available about financing facilities in order to speed up these very desirable improvements?

I undertake to get in touch with my right hon. Friends, as the hon. Gentleman suggests, but of course the question of safety and fire precautions is a matter for my right hon. Friend the Home Secretary.

Surely the hon. Gentleman would agree that whilst it is the responsibility of the hotel owner to make his hotel safe for his customers, it is part of his "wholly, exclusively and necessarily incurred" expenditure. For this purpose it should be allowed for tax. It would encourage safety. Will the hon. Gentleman reconsider his answer?

The hon. Gentleman is perhaps confusing two matters—the question of whether expenditure is an allowable revenue expense on the ruling he mentioned, and the question of whether it is entitled to capital allowance. There is no question that it is allowable as revenue expenses. Capital expenditure such as expenditure on plant, sprinklers, fire alarm systems and fire-fighting equipment will probably qualify for the new 100 per cent. first year allowance. As far as the expenditure represents capital improvement to non-industrial premises, there are at present no allowances under the tax system.

asked the Chancellor of the Exchequer how much revenue he has estimated receiving in 1972–73 from purchase tax on foodstuffs and soft drinks; and how much selective employment tax revenue from the same foodstuffs and soft drinks in 1972–73, both including all distributive processes thereon.

The 1972–73 revenue from purchase tax on those foodstuffs and soft drinks which a reliable to purchase tax is estimated to be of the order of £150 million. No corresponding estimate can be made for SET.

Is it not a fact that the transposition from purchase tax and SET on the items referred to value-added tax will undoubtedly result in a greater revenue being derived from these items and therefore an increase in retail prices? Is that a desirable policy?

I am somewhat puzzled by my hon. Friend's statement. As for those items which are charged at the 18 per cent. rate of purchase tax as against the 10 per cent. VAT rate, allowing as far as one can for SET, the situations is not that which he has described, so that the situation of which he complains would not arise.

asked the Chancellor of the Exchequer what is his estimate of the additional purchasing power available in Wales as a result of his Budget measures.

Wales will gain a full share of the additional purchasing power injected into the economy in 1972–73 as a result of the £1,200 million tax cuts in the Budget. Most of the 900,000 Welsh wage and salary earners will find their income increased by £1 per week as a result of the increase in the personal allowances; and the cuts in purchase tax will further raise real purchasing power by reducing prices.

Would my hon. Friend agree that this is a factor which, coupled with the extensive pool of unused capacity in Wales, means that there is now a unique opportunity for industrialists to expand profitably?

I agree entirely with what my hon. Friend says.

How does the hon. Gentleman reconcile the target growth rate set by the Chancellor in the Budget when he made available extra purchasing power with the 6 per cent. growth rate spoken of by the Welsh Council in its report some six weeks ago as being imperative if unemployment in Wales was to be reduced to a satisfactory figure within a reasonable period of time?

I am aware of the view put forward by the Welsh Council which is still being studied by members of the Government.