asked the Secretary of State for the Environment when he now intends to make a further statement about the lead content in petrol.

As soon as possible.

Is the Minister aware that there is evidence from the United States that young children are more at risk from airborne lead than adults because of their higher metabolic rates? His Department has said that there is no evidence of danger to health at the present level of lead emissions, but with petrol consumption rising as fast as it is will he not agree that it is very urgent that action should be taken as soon as possible?

My answer was not intended in any way to suggest that we do not take this matter very seriously indeed. It is, however, a complicated problem as I am sure the hon. Member will recognise and there is a good deal of evidence on it. There are, however, a good many interests concerned on the economic side, the health side and the medical side. We must be certain that we give the right answer but we will give it as soon as possible.

asked the Secretary of State for the Environment how many new trees are being planted by his Department alongside the M3 motorway between Lightwater and Sunbury.

None at the moment, Sir. Detailed planting plans will not be prepared until the major earthworks are nearing completion.

I thank my hon. Friend for that reply but will he bear in mind the urgent need to restore to their former natural beauty places that have been ravished by motorway works, albeit essential, such as in Chobham and Windlesham in my constituency? Perhaps an increase in the tree and shrub planting programme would help in restoring these areas to their proper state.

We take this problem very seriously and I can give my hon. Friend the assurance he seeks. He may be interested to know that my Department is currently planting over a million trees and shrubs each year on motorways and trunk roads.

asked the Secretary of State for the Environment what proposals he has received for the redevelopment of Leadenhall Market.

None, Sir.

Will my right hon. Friend consider, if he should receive such prosals, the preservation of these unique buildings of Leadenhall Market? Would he bear in mind that the site of the Roman Basilica lies to the north of these buildings and in any redevelopment that takes place will he see that proper facilities are afforded for excavation and preservation of this unique Roman site in London?

The last part of my hon. Friend's question is a matter for consideration between my Department and the City of London authorities. Certainly we will keep all his other points in mind if and when proposals for development are received.

asked the Secretary of State for the Environment when he expects the new Domesday Book for the South-East to be ready for publication.

I will shortly be meeting representatives of county councils in the South-East to discuss what information can be provided about land availability, and when. I will be looking to local planning authorities to publish as soon as possible detailed information about land on which house building can start within the next five years. 1 then intend publishing a collation of all this information.

I welcome that answer and I acknowledge that the vigorous action taken by my right hon. Friend the Secretary of State is already having a discernible effect on house prices. Will he undertake, however, that if, when the Domesday Book is published, it reveals that large areas of housing land in the South-East are being hoarded for speculative reasons, he will consider the imposition of a levy on such unused land which would help to flush it on to the market?

I do not believe this would be a good way of flushing such land on to the market. Certainly, we have considered various proposals including the levy system but I have made it clear that if land is being hoarded against development we will consider compulsory purchase orders if local authorities consider them sensible and wise within the South-East planning strategy.

asked the Secretary of State for the Environment if he will make a statement on estimates which his Department has made of the size of vessel capable of using the proposed tanker terminal at Maplin.

The PLA proposes to provide initially for tankers up to 250,000 tons deadweight and later 500,000 tons if required. These proposals will be considered in more detail before any issue of authorisation under Section 9 of the Harbours Act, 1964.

Is the right hon. Gentleman apprised of the enormous cost of dredging to facilitate tankers, even of the smaller tonnage, getting up to the port facilities? Does he agree that if there were no airport at Foulness there would be no tanker terminal?

The PLA will have to put up a sound financial case based on commercial demand before any authorisation can be considered. We are building an airport there and we have made it clear that we shall allow port facilities only if they will not endanger regional policy. This is such a facility.

As my hon. Friend has said, it is only because of the airport that the question arises. Is the right hon. Gentleman aware that there is still acute anxiety in the whole area, partly because of lack of knowledge of what is proposed? Will he at the very least extend the time he has given for representations on the Foulness consultation document? He has given only a small number of weeks, which straddled the local elections, and authorities in the area are finding it very difficult to make representations in time.

I do not believe this is a problem. We have issued a consultation document and the local authorities are informing us of their views in great detail The authorities that ask for an extension of time tend also to be some of those which have given us their views on the topic. There has been enough time. We have consulted fully and will continue to consult fully in all these matters.

asked the Secretary of State for the Environment whether, in view of the result of the England and West Germany match on 29th April, he will initiate discussions with the appropriate football authorities in England, Scotland, Wales and Northern Ireland with the object of entering a single United Kingdom national team in future international competitions.

No, Sir.

Will my hon. Friend give a positive lead in this matter? Does he agree that we owe it to the British people, the originators of this sport, to provide the best available soccer team to compete in international competitions rather than dissipate our national effort into four separate channels? Would not an all-Britain team, including Best, Bremner and Banks, be a world-beater?

I am not sure that Scottish or Welsh football supporters would rejoice to see their national teams losing their identity in order to rescue England from its difficulties, which I am sure are purely temporary.

Will the Minister also bear in mind that if Welsh football players were released by the League to play in international matches for Wales, Wales would be a match for England, West Germany or any other country?

The right hon. Gentleman is entitled to engage in a little propaganda for Wales. I hope he recognises that due to the efforts of the football authorities and my own Department the release of Welsh players is now much easier than it has been.

Just as the total integration of Ulster within the United Kingdom would be best for the country in the long run, does my hon. Friend agree that what England needs is the stamina and skill of Scottish and Ulster players? Does he agree that with the magic of George Best in the game against Germany, England would not have lost?

I shall put that matter with the utmost seriousness to my right hon. Friend the Secretary of State for Northern Ireland.

Is the Minister aware that although sports bodies welcome the interest of Members of Parliament we should be very careful before abusing the Order Paper of the House to discuss the sporting performances of any of our British sports teams and that this would be resented by sports bodies, which want our interest but not a political interference in purely sporting matters?

I agree with the hon. Gentleman that this is not a matter for Government, but he has a great deal more experience than my hon. Friend in abusing the Order Paper.

Since I was Minister for six years and have been Opposition spokesman in the two years since that, for eight years I have never put down a Question on the Order Paper about these matters. Is the hon. Gentleman's remark in order, Mr. Speaker, or is it simply a cheap and disgraceful comment by a Minister who should know better?

It was not the hon. Gentleman's Questions on the Order Paper I was complaining about; I was complaining about the answers he used to give.

These are not matters of order, but I think they are matters of taste.

asked the Secretary of State for the Environment what representations he has received from the Child Poverty Action Group concerning the Housing Finance Bill: and what reply he has sent.

No representations have been received but copies of the group's pamphlet and discussion papers on the Bill were sent to my right hon. Friend for information. The rent rebates and allowances introduced by the Bill will do much to help children in poorer families, including single-parent families.

Is not the hon. Gentleman aware that the Child Poverty Action Group, Shelter and many other organisations have castigated these proposals, quite justifiably? Is he not aware that these organisations have unitedly condemned the Bill as a calculated attempt by the Government to force up the price of housing and that notwithstanding rebates this will cause extreme difficulty for very many poor people?

I cannot accept much of the reasoning advanced in support of those arguments, because of the way the new scheme will give special help to the very poor.

Instead of causing several million families to undergo a means test to apply for a rent rebate, would it not be preferable to withdraw this new compulsion on local authorities to make a profit out of their rents and instead to allow them merely to cover the cost of their housing?

Of the tenants not receiving supplementary benefit, we estimate that 600,000 to 800,000 might be entitled to a rebate in the first four years. This compares with about 350,000 recipients under existing discretionary schemes.

asked the Secretary of State for the Environment whether lie will take steps to encourage building more council houses, particularly in view of the rise in private house purchase prices to levels beyond the possibilities of those on ordinary incomes; and if he will make a statement.

The present Government, unlike the last Labour Government, place no restrictions on the numbers of further dwellings which local authorities can build to meet local needs. There are welcome signs that the decline in the public sector which we inherited from the previous Labour Government is being halted. [Interruption.] I am glad to see, too, the substantial increase in private sector building and the continuing rise in home ownership.

But what is to be done by young couples who cannot afford to buy their own homes on mortgage at the new exorbitant prices? Are they not dependent on council house building? Would not the best way for the Government to help therefore be to reverse their plans and instead increase the total subsidy for council house building from the present amp;£157 million a year to that for owner-occupiers of amp; £302 million a year? That would do more than anything else to improve council house building.

I am glad that the hon. Gentleman recognises that council house building is improving markedly, particularly in cities like London and Birmingham, where stress has been greatest. There was an 8 per cent. increase in London public sector building last year and a 26 per cent. increase in Birmingham starts——

What about council house building

I am talking about council building. I share the hon. Gentleman's concern about first-time purchasers, and I am glad to see that in 1971 there were 370,000 of them compared with 300,000 in 1970 and that more than 30 per cent. of all houses mortgaged with building societies were mortgaged by people earning £30 a week or less. The truth is quite simple. For a long time everyone has been wanting to own his own house, and now at last many people have the money to do it.

Will the Minister reconsider his statement about the figures for council housing sarts, which according to information his own Department publishes is quite inaccurate? Is he aware that the last monthly average published by his Department is a figure of 12,000-odd houses started in March compared with the average for 1970 of 12,800 and for 1969 of 14,700? How can he tell the House that there is an increase when there is a clear reduction?

I take the hon. Gentleman's point. What I should like to explain to him, because he understands about these matters with his long experience of local government, is that the decline in public sector approvals from 1968 to 1969, from 1969 to 1970 and from 1970 to 1971 has been as follows: a 19 per cent. decline between 1968 and 1969; a 19 per cent. decline between 1969 and 1970; and a 3 per cent. decline between 1970 and 1971. The curve is levelling out.

asked the Secretary of State for the Environment what are the latest available figures for house building in the public sector.

In Great Britain there were 12,100 new dwellings started in the public sector in March, 1972, 700 more than in March, 1971, an increase of 6 per cent.

Why is the Minister bragging? His right hon. Friend three years ago toured the country telling Tory1- controlled local authorities not to build council houses. Is he aware that when one subtracts from the figure he has given the 2,000 houses per month that are taken out of the public sector and put into the private sector the amount of current council house building which adds to the total housing stock is the lowest for 20 years?

I am glad to inform the hon. Gentleman, whose interest in these matters I respect, that under my wise administration public sector starts in London in March, 1972, were 2,513 compared with 2,077 in 1971; in Birmingham 355 compared with 223; in Newcastle 63 compared with 49, and in Manchester 305 compared with 267; and that the only place where we register a drop, from 165 to 139, is Leeds.

What does the Minister propose to do to persuade irresponsible Socialist councils to put the legitimate wishes of their tenants before party dogma? What does he propose to do to see that more council houses are sold to sitting tenants?

As my hon. and learned Friend knows, we have already lifted all restriction on the sale of council houses and encouraged local authorities to sell them at a discount of 20 per cent. and, with special authority, at a discount of 30 per cent. We are issuing shortly a circular re-emphasising the need to do this, both to meet the legitimate demand of sitting tenants and to ease the pressure on prices at the lower end of the owner-occupied market.

Will the right hon. Gentleman stop being a knock-about music hall turn? Will he stop this nonsense that we are constantly hearing about the Government doing better than the previous Government and get down to the reality that too many people are still without houses? Irrespective of what the previous Government did and what this Government have done, no Government have built sufficient council houses for the people who require them.

I could not agree more with the hon. Gentleman that neither party has done enough to meet the needs of the people. But in answer to criticisms made it is only legitimate—and I am sure that the hon. Gentleman would do the same if he were in my place—to point out that we may not be doing well enough but at least we are doing better.

asked the Secretary of State for the Environment if the 1,000 acres of building land at Harlow to which he referred on 27th April is within the present designated area.

The land in question would be outside the present designated area of Harlow new town.

I thank my right hon. Friend for that information. Is he aware that there is concern among people living outside the designated area of Harlow about just where the extra land will be? While we all welcome such a large extra acreage of building land, which will do a great deal to hold down land prices, we should all in my constituency be grateful to know as soon as possible where it is intended that that land will be.

My hon. Friend is on to a very valid point. The final acreages and densities have not yet been decided.

asked the Secretary of State for the Environment whether he will recommend the grant of planning permission for the construction of housing with temporary sewerage systems, to be linked at a later date with a permanent sewerage system, in order to avoid a bottleneck in the provision of land for housing.

My right hon. Friend said in the debate on land and housing on 27th April that he has undertaken to grant loan sanction for sewerage schemes in advance of need in connection with land assembly schemes and I think it will generally be preferable to proceed in this way. But every planning application is dealt with on its merits.

Has my hon. Friend any estimate of the acreage of building land which is held up for lack of suitable sewerage? Does he not realise that it takes about five years to provide sewerage in the normal way?

I have no estimate of that, but I think it best to proceed with the loan sanction for permanent sewerage. The package deals offered for temporary sewerage are not as satisfactory as we should wish.

asked the Secretary of State for the Environment if he will make a statement on his latest preparations for the Stockholm conference.

The official report entitled "The Human Environment: the British View" was published on 8th May.

"Sinews for Survival", the first of the reports of the four working parties set up to assess public opinion was published on 9th May.

"Nuisance or Nemesis", the second report on pollution, is being published today. The others will follow shortly.

What are the Government doing to solve the vexed problem of East German representation?

This is a matter for my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and a matter which the United Nations is taking up.

Nevertheless it is a matter which should be of great concern to the right hon. Gentleman. I hope he is bringing to bear on his right hon. Friend all the pressure he can on this question. Is he aware that one of the four reports he mentioned, "Sinews for Survival", made a distinct obeisance to the currently fashionable anti-growth views? I very much hope that his speech at Stockholm will not reflect that, or he will rightly receive a rough reception from the developing countries.

I hope that Opposition right hon. and hon. Members will recognise that it is very much in the interests of the East European countries and Soviet Russia to attend the conference. It is not something they should decide not to attend because of a political point which is raised in other spheres. I recommend that the right hon. Gentleman thoroughly reads the report "Sinews for Strength", which I do not believe should be taken as an anti-growth document. It specifically states that it considers that the problems of growth in the future should be carefully considered and that stopping growth is not the answer.

the Secretary of State for the Environment if he will give a general direction to British Railways to install telecommunications in long-distance trains: and if he will make a statement.

No, Sir.

Does not the right hon. Gentleman appreciate that increasing numbers of visitors, such as Americans and Canadians, are using the Glasgow trains to the South as a means of seeing the country? Would it not be sensible to have a system of inter-communication on these trains whereby points of interest, scenic areas and the principal cities could be explained to visitors? Would not this encourage more use of the trains?

I would have thought that such matters could be explained to visitors without necessarily installing a telephone on every train. But the question of the installation of such telephones is entirely a matter for the Railways Board, and the provision of facilities necessary to back up those telephones is a matter for the Post Office.

asked the Secretary of State for the Environment what consultations he has had with the Sports Council regarding sponsorship in sport, particularly by tobacco companies.

I am well aware of the Council's views.

Can the hon. Gentleman explain why, in a year in which the Chancellor of the Exchequer is giving away £1,200 million, the British Olympic team has to rely on Rothman's asking for coupons to send the team to the Olympic Games? Is it not an anachronism that the Government should be printing health warnings on cigarette packets while encouraging the smoking of cigarettes to back up the British Olympic team?

I make it clear that the British Olympic team does not depend upon the charity of Rothman's or anyone else, but it would be entirely wrong to prevent that part of the community which happens to smoke from contributing if it so wishes.

Is it not enigmatic that the policy declared by the Government is to dissuade smoking, particularly of cigarettes, but that the Government should then cause sporting interests to rely on cigarette companies to subsidise their sport?

Perhaps I can repeat to my hon. Friend that they do not rely upon the tobacco companies. But if a sports organisation wishes of its own free will to benefit from the support of tobacco companies, that is in the first instance a matter for that organisation.

Will the hon. Gentleman consult the Secretary of State for Social Services about the interdepartmental report to which the hon. Gentleman's Department contributed with regard to this subject? It is common ground between us all that we should discourage young people from taking up smoking, and surely it is indefensible that Rothman's should mount a campaign of this kind which is in contravention of Government policy.

I am already in contact with my right hon. Friend the Secretary of State for Social Services, but the hon. Gentleman should be careful before he makes these very large statements. There is no doubt that the £1 million or so which goes into sport from tobacco advertising brings benefits, including health benefits, to those who otherwise would not take part in sport, and these benefits need to be offset against the undoubted dangers which, I accept, can arise to young people.

asked the Secretary of State for the Environment if he will now make a further statement on the proposed Channel Tunnel.

The French Minister and I are still in negotiation with the two Channel Tunnel companies about financing the next stage of work. We are also awaiting their report on the studies carried out over the past year.

When is the right hon. Gentleman likely to receive the report? When will he update some of the factual information which is now up to 10 years out of date?

I hope to receive the re-port as soon as possible. It should then be possible to update the information.

Is my right hon. Friend aware that there is great apprehension in Folkestone about where the tunnel is to come out and what effect it could have on amenities in the area? Will he give assurance that when the report is produced he will arrange a public meeting where the people of Folkestone and district can express their views?

I will consider the suggestion. As soon as we have further information which may be of interest to my hon. Friend's constituents and others, I will certainly consider arrangements which would make possible an exchange of views, because I realise the anxieties to which he has referred.

asked the Secretary of State for the Environment whether he will seek powers to introduce an annual noise certification test for all vehicles two years old or more, to be issued concurrently with the Ministry of Transport certificate.

My right hon. Friend is now considering an extension of the annual test to cover noise following the recent report from the Noise Advisory Council.

I am grateful to my hon. Friend for that reply. Is he aware that the present noise enforcement procedures are not catching those who are creating most noise from motor vehicles and that the existing Ministry of Transport testing, while adequate in many respects, is totally inadequate in catching those driving "bangers" and noisy motor-bikes?

There is undoubtedly room for improvement, but the police bring about 14,000 successful prosecutions each year in this respect and my right hon. Friend is considering whether the annual test can be extended to cover such things as silencers, defective of otherwise.

I, too, welcome the hon. Gentleman's reply. What steps are being taken to ensure that when vehicles are designed, sometimes with deliberate appeal to younger drivers or riders—beach buggies, motor cycles and so on—they are not designed specifically to make a noise, quite regardless of the test?

My right hon. Friend has indicated his intention to impose further restrictions at the manufacturing stage of particularly noisy vehicles. I think the hon. Gentleman has made a good point and I will be glad to look into it further.

asked the Secretary of State for the Environment whether he will seek powers to extend the 12-point check list for general improvement grants to householders to include the requirement that an adequate standard of roof insulation be installed before a grant is awarded.

No, Sir. My right hon. Friend does not intend to make these grants more difficult to get by increasing the minimum qualifying standard.

Would not the hon. Gentleman agree that in view of the requirements that dwellings must be properly ventilated, with adequate heating facilities and substantial freedom from dampness, it seems highly logical to include the one factor which enables these requirements to be made economically.

The aim of the 12 points is to establish a minimum standard which a house must normally reach after improvement to qualify for grant. There is nothing to prevent a local authority giving a grant in the usual way for roof insulation if it is part of a scheme which it considers to be reasonable in relation to the property.

asked the Secretary of State for the Environment if he will list the provisions of the law which govern the responsibilities of a local authority to rehouse people displaced by clearance programmes.

Section 130 of the Town and Country Planning Act, 1971, imposes on local authorities an obligation to ensure that suitable alternative accommodation is available for persons displaced from residential property cleared under planning powers. There is also a rehousing obligation in Section 42(3) of the Housing Act, 1957, covering displacements from slum clearance areas. Further obligations are contained in Section 22 of the New Towns Act, 1965, Section 32(3) of the Housing Act, 1969, and Section 144 of the Housing Act, 1957, covering acquisitions for new town purposes, acquisitions in general improvements areas and acquisitions by statutory undertakers, respectively.

I thank the right hon. Gentleman for that reply but can he clarify the position regarding the closure of hostels? Notwithstanding his letter to me of 4th April regarding the closure of Colnbrook hostel, where a large number of people working in my constituency live, and his assurance that those who have been living there for more than two years would be rehoused, the overwhelming majority are not being considered by the local council for rehousing.

I have already written to the hon. Lady about Colnbrook hostel and have drawn the attention of the four local authorities concerned to the need to provide single person accommodation in the area. I shall be glad to receive further representations from the hon. Lady and take further action.

Will the right hon. Gentleman look at another aspect of local authority responsibility for rehousing in the case of tenants who are often kept in deplorable conditions because their landlords are contesting clearance orders? Should not the position be changed so that the local authority could rehouse tenants immediately a clearance order is made, at the same time preventing other tenants from being taken into the property, rather than that it should have to keep these people—as is the case in my constituency—living in deplorable conditions while the landlord has a quarrel with the local authority over the clearance order?

It is open to the local authority to offer alternative housing while argument is going on, if there should be argument or an appeal. It would be wrong to take steps to close houses without going through the proper procedure.

asked the Secretary of State for the Environment if he can now estimate the area of land in England for which planning consent for the building of houses has been given but on which no building has commenced: and whether this figure has increased in the last 12 months.

asked the Secretary of State for the Environment what estimate he has made of the number of dwellings for which planning consent has been given over the last two and five years respectively upon which building operations have not yet been commenced.

Complete information in the form requested is not available. Most of the authorities in the South-East outside greater London have worked together in analysing outstanding planning permissions in their areas and the housing figures; these suggest that permissions are currently outstanding for over 150,000 dwellings. I cannot break this total down to relate it to permissions given in any particular period, but the total has increased over the last two years.

I congratulate my hon. Friend on the enormous amount he is doing in this matter. Would not his task be greatly eased if he could induce local authorities to supply more reliable, more accurate and more up-to-date statistics? Is not this becoming more and more essential?

At the end of 1970 we encouraged local planning authorities, especially in pressure areas, to take measures to monitor the balance between house building rates and the grant of planning permission. I have not felt it necessary yet to ask for returns but I take to heart what my hon. Friend has said.

Is not the withholding of land which has just been described largely due to the greed for realisation of enhanced prices? Would not the best way to stop this be by public ownership of the existing use value of the land—that is to say, at its agricultural value?

The delay in developing when planning permission has been obtained may be for several reasons—for the purchase of other land to get a viable estate, for example.

It may be speculation.

It may be speculation in some cases. Local authorities have discretion to limit planning permission to a period of less than five years if there is good planning reason for doing so.

asked the Secretary of State for the Environment, following his recent initiative, what report he has received from the Clean Air Council panel on the means whereby the Teesside County Borough Council domestic smoke control programme may be accelerated.

I expect the panel, which is to consider evidence from each of the nineteen so-called "black" local authorities of Tyne and Tees, as well as from other sources, to report to the Clean Air Council in October.

As this is a matter vitally affecting the health and well-being of over 500,000 people in and around Teesside, I congratulate my hon. Friend on this admirable sense of urgency. Does he foresee any obstacle at least to doubling the rate of progress of the programme which, as he knows, at the present rate will take until 1984 to eliminate domestic smoke from Teesside?

I know of no obstacle, administrative or physical, to a massive increase in the clean air programmes of these areas. My right hon. Friend has made it clear that the Government are anxious to see faster progress and I am glad to have my hon. Friend's support in urging the local authorities to get on with it.

Is the hon. Gentleman aware that the former Labour Council of Newcastle-upon-Tyne had planned to have clean air by the end of 1970, that the present council is talking in terms of having clean air by the end of the decade and that the local health committee has requested extra staff to accelerate the programme in compliance with the Secretary of State's desires but that the finance committee has thrown out its request?

My impression, having met the local authorities in the area, is that they are ready and willing to make progress in conformity with the advice my right hon. Friend has offered. I hope that the hon. Gentleman and all other hon. Members representing the area will join with the panel of the Clean Air Council in creating a cleaner North, which can be had.

asked the Secretary of State for the Environment whether he is satisfied with the adequacy of the powers given to the Greater London Council under the London Government Act to increase the housing densities in outer London suburbs: and if he will make a statement.

I am awaiting the report of the panel of inquiry into the Greater London Development Plan, which includes a statement of policy by the Greater London Council on residential densities.

Would the right hon. Gentleman agree that in the inner London boroughs we have been waiting for the powers of persuasion to work on the outer London boroughs to increase their densities and help with the housing programmes but that they have had no real practical effect? Is not the inner London housing programme always handicapped by the fact that we have to pull down one house in order to build a new one? Figures recently published by the outer London boroughs of their housing programmes show that their response to pressures from the centre is totally inadequate, given the amount of open land they have in those parts of London.

Yes, but in statutory terms the system of the Greater London Plan is the only one available to the GLC. This has now come to its conclusion. I hope to act on it quickly and I will then immediately look at the problem.

Will my right hon. Friend note that in the London Borough of Waltham Forest, and in particular Chingford in the part I represent, although it is an outer London borough densities are already at least as high as we need and there is not any more building land and it is part of an absurd political campaign on the part of Opposition Members consistently to tramp this one around?

Obviously there are variations from one borough to another, but there is a severe housing problem in London which has to be tackled by an overall London authority.

Is the right hon. Gentleman aware that it is not a political campaign but a campaign to make more houses available to people who do not have a home? Of course I am not blaming this situation on the Secretary of State, but will he tell us what is happening to the various voluntary efforts that are being made by the so-called Action Committee and the London office which the London Boroughs Association is trying to set up and what degree of voluntary co-operation is forthcoming from the outer boroughs?

Progress is being made in a number of spheres and I am heartened by the work of the Action Committee. My hon. Friend the Minister of State for Northern Ireland, when he was Under-Secretary of State in my Department made considerable progress with the London boroughs in a number of initiatives. Likewise the release of railway and hospital land has made more land available for housing. The overall study of the Greater London Development Plan and work by the Action Committee will continue.

asked the Secretary of State for the Environment if he will list the Acts of Parliament passed since June, 1970, which have increased the maximum fine for pollution offences, giving the average percentage increase.

The Oil in Navigable Waters Act, 1971, increased the maximum penalties on summary conviction for certain offences under this Act by a factor of 50. The Dangerous Litter Act, 1971, made provision in certain circumstances for the maximum fine to be increased from £10 to £100. The Deposit of Poisonous Waste Act, 1972, created new pollution offences subject to a maximum penalty of unlimited fine on conviction on indictment.

When does my hon. Friend hope to complete the review of penalties for pollution offences, and will the increases in the size of fines be maintained?

I cannot anticipate the results of the review but I can tell my hon. Friend that offences under more than 20 Acts of Parliament are being considered and it is my right hon. Friend's intention that the fines on summary conviction shall be increased substantially.

Will the Minister consider fining the people who are responsible for pouring waste into the River Aire and causing the foam at Castleford? We are talking about maximum fines, but these people are not fined at all.

The hon. Gentleman has discussed this matter in the House and with me on a number of occasions. He knows as well as I do that the industries in question are doing their best, in conjunction with my Department, to arrive at a solution to that difficult problem.

asked the Secretary of State for the Environment what is the latest estimate for the date on which the Neasden underpass will be opened.

In the spring of 1973.

In spite of the sins of the Department in so many quarters, I should like to convey the thanks of my constituents to the Minister's Department for the way in which it has expedited the silencing of a tremendous amount of noise caused by the building of the Neasden underpass. The underpass might be completed earlier if the new pile-driver, which is most successful, were provided with a full supply of piles to drive. Has the Minister yet received the costs of the public relations effort of the London Borough of Brent, so ably conducted on his behalf, and when may the borough expect to receive his cheque in settlement.

I am grateful to the hon. Gentleman for his earlier remarks but I would rather not comment on the last part of his supplementary question.

asked the Secretary of State for the Environment what study his Department is undertaking into checking the increased atmospheric pollution from vehicle exhausts in areas affected by new urban motorways, with particular reference to north-west Birmingham.

Under a contract from my Department's Transport and Road Research Laboratory and the City of Birmingham Public Health Department, the University of Aston is to undertake research into the levels of atmospheric pollutants emitted by motor vehicles at the Gravelly Hill motorway interchange from the time when it is opened by my right hon. Friend later this month.

I am grateful to my hon. Friend for that reply. Does he realise that, when his right hon. Friend opens what has become known as the missing link on the M6 next week, I shall hold the dubious distinction of having a constituency which is almost totally encircled by urban motorways? There is genuine concern among my constituents about the level of atmospheric pollution. Will my hon. Friend make sure that the results of the survey are published and that there is open discussion of them?

Yes, Sir. I assure my hon. Friend that lead, carbon monoxide, hydrocarbons, oxides of nitrogen and, as necessary, total oxidants will be monitored, and I am sure that my right hon. Friend will wish discussions to take place afterwards.

Is the hon. Gentleman aware that these questions reveal considerable concern about the noise and pollution of vehicles? Will he speed up the studies, extend them beyond the Birmingham area to the whole of the country, consider particularly lorry drivers, other road users and the people who live in the areas and please give top priority to this?

Yes, Sir, my right hon. Friend and indeed other Departments of Government are very conscious of the need to have effective monitoring and evaluation of all forms of environmental pollution.

asked the Secretary of State for the Environment when he expects to publish the final version of new design rules for box girder bridges.

Interim design rules are being prepared by the Merrison Committee in accordance with its terms of reference and will be based on the appraisal rules which the committee has already drafted. My right hon. Friend expects to receive these interim rules before the end of July and will publish them shortly thereafter.

What will be left of the weight/price/design expectations originally evoked by the box girder bridge, as well as its fundamental economics, by the time the Merrison Committee reports? What effect are the recently imposed safety conditions having upon the British bridge-building industry?

I draw the hon. Gentleman's attention to the interesting debate on this subject last Friday. The present indications are that the design rules may have very little effect on weight and design considerations and that there is a great future both for these bridges and for the British bridge-building industry. Mr. Speed: I draw the hon. Gentleman's attention to the interesting debate on this subject last Friday. The present indications are that the design rules may have very little effect on weight and design considerations and that there is a great future both for these bridges and for the British bridge-building industry.

asked the Secretary of State for the Environment when he will publish his decision on the public inquiry held in Durham in November, 1971, into the proposed amendment to the County Durham Development Plan, to remove certain settlements from "D" categorisation.

asked the Secretary of State for the Environment if he has reached any conclusions on the report of the public inquiry into reclassification of villages in County Durham held in November, 1971: and if he will make a statement.

My right hon. Friend expects to announce his decision shortly.

I am grateful for the reply but is the Minister aware that it is now four years and two public inquiries since the application to recategorise the village of Hamsterley in my constituency? Since there is no known opposition to the proposal, why does it take so interminably long to make a decision?

It was a complex inquiry—but not quite as long ago as the hon. Gentleman says. The inquiry took place in November, 1971, on the request of the county council which submitted an amendment to the development plan under which a dozen "D" villages were to be reclassified. The decision will be made shortly. The decision letter is already in draft.

Is the Minister aware that a progressive local authority in my constituency will not receive his reply with any gratitude? The authority feels that the matter is being delayed. Is the hon. Gentleman aware that necessary development, about which the Minister is always making public speeches, is almost ready to go ahead and is being delayed only by the Department dragging its feet?

The hon. Gentleman will know that this has been a difficult subject. The idea of the "D" villages is to concentrate scarce resources in selected settlements which have the greatest potential as growth points and can be well equipped with modern living standards. He also perhaps knows that the hon. Member for Crosby is a little vulnerable over this and is in sympathy with him.

Will the Minister allow me, as one who has no constituency responsibility but who happens to live in the area, to support both my hon. Friends, particularly my hon. Friend the Member for Durham, North-West (Mr. Armstrong), in drawing the hon. Gentleman's attention to the fact that some of these attractive villages, to which the local people have a strong attachment. have suffered adversely because of the long period of indecision, and to express the hope that a favourable decision will be quickly forthcoming?

Yes, but I am sure it is right to try to concentrate the resources on those villages where the living conditions can be well improved.

asked the Secretary of State for the Environment why, under his proposals for reorganisation of water authorities, private water companies are to be treated differently from public water undertakings.

The acquisition of the statutory water companies would mean rejecting over £200 million worth of investment by the private sector.

In view of the statement in circular 92/71 that the Government are satisfied that the full integration of water services is now essential, what difference is there between the services provided by public water undertakings and those provided by private water companies?

The quality of the service varies between one undertaking. whether private or public, and another, but the crucial point is that there is no point in simply taking into public sector use some £200 million worth of investment when a perfectly good job is already being done.

Does my hon. Friend agree that the private water companies' standard in respect of efficiency, research and development has been extremely high?

Yes, I agree that it has been extremely high, but I would not wish that to be taken to mean that the standard in public sector and local authority water provision has been worse.

Is the hon. Gentleman aware that there is considerable resentment across the political parties in local government that there should be this disgraceful discrimination and that large municipal undertakings which have operated efficiently, economically and successfully are to have the supply of water removed from their control while small private companies, for the reason the Minister has given, are being left in private hands? Is this not just blind political partisanship?

No. The hon. Gentleman fails to understand what is involved. It would be inappropriate to put bodies of elected members of local authorities in a position where they were merely agents of a regional water authority. The private companies will be agents. It would be wrong to put in local councils as agents.

asked the Secretary of State for the Environment what has been the average annual increase in the prices of houses built for sale in each of the last five years.

The average price of new dwellings in Great Britain mortgaged with building societies was 6 per cent. higher in 1967 than in 1966. On a similar basis prices were higher by 5 per cent. in 1968, 7 per cent. in 1969, 6 per cent. in 1970 and 13 per cent. in 1971.

Is the right hon. Gentleman aware that I was more or less aware of those figures before I tabled the Question? The Question was tabled simply to indicate the increasing impossibility, notwithstanding the nonsense the right hon. Gentleman uttered in answer to Question No. 8, of young married people getting a house. Does not the right hon. Gentleman know that even in some of the most unfashionable London suburbs the average rent of a co-ownership, non-profit-making house is £10 a week exclusive of maintenance and rates? I have figures to substantiate this. Very few young married couples can afford that amount of rent and maintenance.

I hope that the hon. Gentleman, whose interest in these matters I appreciate, will allow me to help him with his researches into these matters. It never was easy for a first-time purchaser to buy a house, but if anything it appears to be rather less difficult today. The average age of borrowers from building societies was a year or two less in 1971 than it was in 1967 and the number of borrowers under the age of 25 was 3 per cent. higher. This is a serious problem. It is not a party problem. The truth which we must recognise is that people have always wanted to own their own homes, but now far more people have the money to do so than had it before.

Is my right hon. Friend aware that the Question and answer pinpoint the real problem facing the nation today? This is a matter that ought to be faced not merely by a departmental Minister, excellent though he is, but by the whole Government, the whole trade union movement and the whole nation. The inflation in house prices reflects everything that is happening in the country today in regard to soaring prices everywhere arising from wage increases.

I should be the first to join my right hon. and hon. Friends in all measures that can possibly be taken to resist wage inflation. The one satisfactory aspect of the present situation that I can see——

Nothing is satisfactory.

Yes, there is the steady growth of home ownership.

Is it not becoming increasingly clear to the House and to millions of intelligent people throughout the country that the greatest single factor in the constant inflation which we all deplore is not wage inflation but the scandalous exploitation of land and property by greedy elements in society which are compelling the trade unions to follow and to recoup themselves for the scandalous rents and scandalous land prices that are becoming counters in speculation by conscienceless people who are running the big trusts and combines with which many hon. Gentlemen opposite are personally involved?

I repudiate as unworthy of the hon. Gentleman any suggestion that there is anyone in the Government with an interest in the inflation in house or land prices. I think that the hon. Gentleman has got the sequence wrong. It is the increased demand which has put up the price of houses and the increase in the price of houses which has put up the land values.

Does my right hon. Friend agree that for many years local authorities have been hamstrung in putting in the services and sewerage systems so that land can be brought on to the market? Does my right hon. Friend agree that the Secretary of State's remarks two or three weeks ago could be very helpful?

I agree entirely with my hon. Friend. There has been restriction in the past, but under the present wise Administration this is being brought to an end.

Will the right hon. Gentleman consider at least some positive suggestions to contain this situation—for example, action at least to contain the return on investment in land purchases such as has been put to the Department and so far rejected, and also an undertaking to consider the need to increase massively the rate of local authority building at reasonable rents as the biggest single way in which inflation could be restrained in land and property in big city areas?

As the hon. Gentleman knows very well, under the present Administration, unlike under the previous one, there is no restriction of any kind on local authority programmes. I would be totally opposed to any restriction of credit for private building. I believe that the expansion of building in both the public and the private sectors will bring supply more closely into balance with demand and that this is the only sensible way of trying to stabilise prices.

I beg to move Amendment No. 102, in page 46, line 42, after 'assessment', insert:

'from the asset or assets purchased with the sums borrowed'.

I understand that it will be for the convenience of the Committee if Amendment No. 67 is taken at the same time, in page 47, line I, leave out from 'rate' to end of line 3 and insert:

'which constitutes a going commercial market rate of interest, relief under this section will be permitted to that extent, but not exceeding a gross rate of 12 per centum per annum'.

I understand that the Committee does not demur from that.

The Amendment seeks to limit the extent to which interest as defined in the Clause would be allowed, but I want to make it absolutely clear that we on this side of the Committee oppose the Clause as it stands. The Clause emphasises and goes to the very root of the difference between the two sides of the Committee. Indeed, we had this spelt out in the early hours of this morning by the Chief Secretary to the Treasury. It is a good time, at night, to have these differences spelt out.

We had some very interesting comments by the hon. Gentleman, and I think they are worth repeating, because they go to the heart of our difference. I have not got the printed OFFICIAL REPORT, but I have taken these extracts from the typewritten copy in the Library. The Chief Secretary said:

"We are merely going some way to redress the distortion, which was too far in the other direction."

He went on:

"On unearned income of £100,000 the effective rate of tax only shows a fall on that income of 0·8 per cent."

Only a fall of 0·8 per cent.! This really goes some way to indicate the difference between us, because we would like to see someone with unearned income of £100,000 having not a fall in the rate of tax but an increase, because any fall can only be at the expense of those at the other end of the scale.

The Chief Secretary went on to say—this may have been because of the time of the morning, because I can hardly believe that he really means this—

"I believe we have struck a fair balance."

The Government feel that they have struck a fair balance in what they have done about investment income. I suppose the hon. Gentleman could be forgiven for what he said because he was replying to a suggestion by his hon. Friend the Member for Surrey, East (Mr. William Clark) who was not satisfied even with what he was asking for. He wanted more. He wanted investment income surcharge to be reduced to 5 per cent. The Chief Secretary told him that the effective rate under the unified tax does not exceed the effective rate now until a single man has an investment income of about £150,000 a year. In other words, for a bachelor the effective rate of tax does not change under the unified tax system until he receives £150,000 a year. That is the element of fairness which the Chief Secretary sees in this Budget.

That and the Clause in the way that it deals with loan interest go a long way to indicate that the Government are using their so-called reform of the tax system as a cloak for massive unfairness. We seek a very much fairer system than that which the Chief Secretary has in mind. We seek to remove the opportunities for blatant tax avoidance. One could use the Government's own case for VAT—a case which now has many holes in it—namely, that if there were a comprehensive tax it would be possible to keep the rate lower. That is the Government's case for VAT. One could make the same case for income tax. If there were a truly comprehensive tax which was not avoided as easily as the Government are seeking to have it avoided there could be a lower rate of tax, and that is what we seek. The Clause is typical of Tory philosophy. It does not stop loopholes; it creates massive new ones, and those loopholes are not being created for the docker and the railwayman.

The only case for the Clause—and it was not made by the Chancellor either in his Budget speech or on Second Reading—is that if loan interest is disallowed one is taking income on a gross basis rather than on a net basis. There are two points against the purity of that argument. First, the loan interest under the Clause will not be available to every taxpayer. The vast majority of taxpayers either cannot or do not want to borrow—or if they can borrow so much they do not—in excess of £500 by way of loan and, therefore, there will be no benefit to them. The real benefit of the Clause will go to those who borrow sums very much in excess of £500.

The only other point to sustain the argument to which I have referred is that if it were allowed against an income-producing asset the allowance would be at the rate that was charged. In other words, if someone buys an asset the income from which is taxed at 60 per cent, it is fair to set the interest which he pays against that income-producing asset. But on the one hand that is not allowed for the majority of those who buy assets of small value not producing income; namely, those borrowing on hire-purchase. On the other hand, however, it is allowed for the small number of people who buy expensive assets which are not producing income but are, instead, producing capital growth which is either free of tax or subject to tax at the rate of only 30 per cent, as a capital gain, whilst the interest, which is as much as 90 per cent, at the top end, is allowed against investment income.

If the Chancellor is genuine about what he is seeking to do in the Clause he should accept the Amendment, because it seeks to limit the interest against the income of the asset purchased and at the same time disallow any surplus interest against other income. I hope the Minister of State will not say that the Amendment is technically not correct, or that it should have been worded differently. He knows the principle that we have in mind, and he knows the case that I am making, and if he were to accept the principle of the Amendment it would be a simple matter for him to introduce an Amendment of his own on Report.

But we know that the Chancellor is not willing to restrict interest in this way, and that the result, in practice rather than in theory, will be not to remove an anomaly but to create a massive new one which will provide help for the few and refuse help for the many. This is not a case of allowing only the interest which is now disallowed. The Clause gives the green light to people to adjust their affairs to take advantage of the Chancellor's gift, and there will be considerable and important side effects.

There is one side effect relating to mortgages. Money is now flowing into the stock market and unit trusts. I understand that the amount of money flowing into building societies is beginning to diminish. That is my narrow experience, and it is apparently the experience of some financial commentators. That was the view taken by one commentator in the London Evening News the other day. I shall be interested to hear from the Minister whether there is any evidence of that kind of repercussion on building society receipts. If anyone doubts the grave repercussions and the extent of the free gift by the Chancellor he has only to look at the financial columns of the daily Press and particularly the Sunday Press to see just how people will take advantage of the Clause.

We are told by the Chancellor that the cost of this provision will be about £3 million this year and £7 million next year. In other words, that will be the figure when people have had time to organise in order to obtain greater benefits. I believe that the figure of £7 million is likely to turn out to be a massive understatement, and I shall be interested to learn from the Minister on what basis he makes his calculation that the cost will be only that sum next year. Is it, as I believe, that he has done this calculation in the deliberate knowledge that the extent of the benefit will be confused by the new unified tax scales and the relief to investment income so that it will not be possible truly to get an idea of the full extent of this gift? The reason why I believe that £7 million will prove to be a considerable underestimate is my knowledge of the great sophistica- tion of the tax avoidance industry. It will not be slow to take advantage of the Clause.

The Chancellor recognised the scale of what he was doing because he took fright at the greediness of his hon. Friends, and what he has done is illogical. Despite his own arguments and philosophy he has restricted this to £2,000. How does he square that restriction with the Conservative philosophy of a free market and the maximisation of profits? Why has he limited this to £2,000? I believe that by doing that he has gone more than half way towards meeting the case that I am making. Is it, perhaps, that he is feeling just a small degree of shame at the extent to which he is allowing a few taxpayers to manipulate their tax affairs at the expense of the average taxpayer? That is what I believe he is really doing, and I suppose one could paraphrase the late Sir Winston Churchill and say "Never have so few been given so much at the expense of so many."

One could sum up by saying that there is no excuse for creating this bonanza. There is not even the usual claim for reducing the top level of taxation, because the Chancellor is reducing taxation for a few who can, and will, manipulate the tax system through the lucrative undergrowth along paths thoughtfully provided by the Chancellor. Such schemes are numerous. I do not propose to set all of them out before the Committee. but, as will be well known, they include life assurance, unit trusts, bonds and public school fees.

In that respect it is not only under this Clause that those who are paying public school fees will be helped, because we had a very interesting little debate at about 12.30 a.m. today. The Chief Secretary referred to public school fees. We were talking about the Amendment about VAT in education. The Chief Secretary said:

"In so far as they are charities"—

that is, public schools—

"they stand to benefit from the concessions … in estate duty and capital gains tax. This represents a significant measure of support and encouragement to the independent schools."

4.0 p.m.

We know what those Clauses are about. But there is more yet to come for those paying public school fees, as hon. Members on the Government side will be aware, because they can manipulate this Clause to very considerable advantage. These schemes were going very well before 1969, when my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) put a stop to them. But they will certainly grow again.

I hope that we shall not have any humbug about its being good for growth, investment and the economy. The type of investment which the Clause encourages would not put the national interest first; it would put the quickest possible capital gain first. Judging from the debates we had yesterday, it would be interesting to know what sort of consultations the Chancellor had and what consideration he gave to the effect of this Clause on the economy. Unless someone could prove that these schemes proliferated in the past anything other than the growth of the wealth of a few I would not be prepared to listen.

Precisely.

The Clause has no merit. Therefore, I say now that my right hon. Friend, when he has the opportunity—which will not be long delayed—would once again disallow this type of interest and all the schemes that go with it. I am aware of the shuttlecock argument and the awful tangle that one can get into when successive Governments repeal the other's legislation. But that would be no excuse for leaving this appalling Clause on the Statute Book.

I recognise that the pledge has important consequences, and that is the intention. I hope that it will mean that the more blatant schemes will be killed in advance. If the Minister of State does not agree, it would be interesting to know whether the old borrow-almost-all type of policies will once again come back, or whether he wants to see them return. I am sure the Minister of State is aware of the type of scheme under which one paid one or two premiums on a very substantial policy and borrowed the remainder. So I hope the more blatant schemes will be killed in advance.

I do not apologise for giving that pledge. The Government should not object, because they claim that the Clause is only equitable and that they do not intend to encourage such schemes. Thus, the pledge kills only the scheme designed to use the Clause in a way that the Government do not intend.

The best way to save all concerned a great deal of trouble would be to throw out the Clause now. I hope that that is what the Committee will do.

I shall intervene only briefly on the subject of the Clause in general and the main Amendment. However, Sir Robert, as I understand that you have selected Amendment No. 67 in my name and the name of my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) for discussion with the main Amendment, I shall speak about that also.

Regarding the general principle, what the hon. Member for Heywood and Royton (Mr. Joel Barnett) has said will be categorically and enthusiastically rejected by my hon. Friends as a partisan, sadly dogmatic and anachronistically doctrinaire view of what my right hon. Friend the Chancellor has done to rectify something which the previous Labour Administration did in 1969, I believe, as a party political piece of tax relief, adjustment or reduction. That was exclusively motivated by party political reasons and was based traditionally on the kind of long-standing argument which has always been manifested within the ranks of the Labour Party about the Conservative Party representing a particular narrow, sectarian interest, and so on.

I categorically reject that. It will be rejected by my hon. Friends, and possibly—though they may not say so loud and clear—by Opposition hon. Members.

There had been established over the years before 1969 a firmly accepted principle in this country that loans were available for abatement of the tax paid in respect of their interest and that that applied to the generality of loans and was, therefore, indivisible in its effect. However, I concede the argument of some hon. Members over previous years that, unfortunately, there had been abuses creeping into these arrangements, particularly in recent years. It was for the old arguments, perhaps, that these abuses were seized upon by the financial spokesmen of the present Opposition as a reason for abolishing a general abatement of taxation which was to the immense benefit of large numbers of loan seekers and loan interest payers of a very modest size obtaining loans for a host of different purposes. The classic example was when the finance companies began to move away from hire-purchase-type contracts, where the asset was secured as far as they were concerned, to the credit sale-type of agreement, where no other security except that of the borrower himself existed but none the less interest relief could be obtained.

The expansion of the total hire-purchase debt outstanding over that period, when interest relief was a very attractive additional inducement for people to raise money on moderate net interest terms for purchasing a whole range of consumer durables, was to the immense benefit of the community as a whole. Therefore, to my mind it is the usual approach of the Opposition to say "Let us take our king-size sledgehammer and crack the tiny nut of abuse"—in total terms it was a relatively tiny nut—"in order to deprive out citizenry from the opportunity of obtaining loans on fixed relief terms which are to them very attractive and enable them to buy goods and finance services for themselves and their families, and to have access to things which might not be available otherwise."

Therefore, there will be widespread support among my hon. Friends and in the country as a whole—this has already been demonstrated—for the Chancellor's imaginative decision to bring back this relief for interest payments in general. None the less, we recognise that the abuse that crept into this system in recent years must be dealt with, and, therefore, there will be the special interdiction arrangements for gilt-edged securities and an upper ceiling of relief, which will contain that problem. But it is a very minor problem in relation to the total benefit.

The hon. Gentleman has spoken about a large number of people who will benefit from being able to deduct interest. As I read the Clause, it appears that the first amp;35 is not deductible, so many people will be unable to deduct their interest.

My reaction to that is that I should like to see a reconsideration, not necessarily this year but later, perhaps, of the fact that the first £35 of interest is not subject to relief. But it is fair to suggest that that can be taken separately from the general argument.

I return to the point, which I do not think the hon. Member for Heywood and Royton can deny, that, again speaking from memory, the total of hire-purchase transactions grew by several hundreds of millions of £s in the more recent period before the Labour Government's financial crisis and before 1969 when interest relief was abolished—from about £750 million to well over £1,000 million. Much of the growth was due to the attraction of interest relief, to the net interest arrangements and to the fact that many millions of people were able to benefit.

I wish to say a few words about my Amendment because it is much more technical in its aim and is symbolic, to some extent, in its objective. I should be most grateful if my hon. Friend the Minister of State would, in reply, spell out more clearly what the Government mean by "a commercial rate of interest". It could give rise to a great deal of doubt in many circles and in the public mind. I know that there are a number of precedents in previous tax Acts about a commercial rate of interest, but they have always tended to introduce confusion, and, therefore, in symbolically proposing that there should be an upper limit of 12 per cent. as a potential maximum market rate of interest I wish to impinge the light of the Government's attention on this matter, because it needs to be cleared up.

The Government should clearly say, even during periods of high interest rates—and they characterise the Labour Party's periods of administration rather than our own—that they would not envisage anything other than a certain maximum rate of interest to be in accord with the going market rate; or they should go the other way and say that interest relief will be available irrespective of the level of interest negotiated on a loan.

What does the phrase "commercial rate of interest" mean? To expert accountants—the hon. Member for Heywood and Royton is certainly one—it can mean something very different from what is means to people who have only a vague idea of the rates which obtain in the market for the purchase or financing of goods and services. I would appreciate clarification on that more narrow point.

I am one of those who have greatly admired the courage and ability of the Chancellor of the Exchequer in his fiscal reforms. He is doing a great deal to simplify the taxation system and has introduced many reforms which my party and I have advocated for many years. It is nice to have a Chancellor who surmounts difficulties and gets things done. However, I have always had doubts about allowing interest to be charged against tax. I have never seen the principle on which it rests. It is a concession, or, to use a more neutral word, a provision, which helps the rich, or at least the comparatively rich. It often helps the very rich. One must have a fairly substantial income before it is of any use.

It has been argued in the past that it was of great benefit to people who did not have large incomes. But, while it would be cut of order to argue the Clause in general, the first £35 of interest is excluded, and this would seem to do a great deal to rebut that argument. The Amendment would at least limit it to the asset or assets purchased with the sums borrowed. There is a great deal to be said for the Amendment, and I shall be interested to hear the Government's arguments on it.

I do not take the view of the hon. Member for Harrow, East (Mr. Dykes) that the opposition to the Clause from this side of the Committee is founded on a narrow, bitter, dogmatic view; far from it. If the hon. Gentleman makes inquiries among members of his party he will find that many people have been unhappy about this provision, and they sympathised, although they may not have expressed their sympathy, with the Labour Government when they abolished this concession.

4.15 p.m.

Apart from the fact that this appears to be a tax concession to those who are, to some extent, being well done by under the Bill and possibly need no more relief, it comes at a particularly unfortunate time. The Budget in general and the fiscal parts of it relating to tax are part of the general management of the economy. We all agree that the great danger facing this country is inflation.

If we are to counter inflation, there must be restraint. There are continual appeals for restraint. Restraint must mean the restraint of incomes right down the scale and, in particular, at the top of the scale. The Government are totally blind if they think that the people putting in wage claims are unaware of or do not mind the tax concessions in the Budget.

The rule that what is good for one person should be applied to all is a very old established principle in economics as well as in politics and morals. Yet again and again people at the top of the scale who are able more than to keep pace with inflation are assisted. People are given rights to subscribe for shares on special terms. We have had the cuts in surtax. There have been very large concessions in income and perquisites for very well-off people. On top of that, there is this further concession. I do not wish to exaggerate. I do not say that this concession will have a stunning effect on the economy. But it is typical of a certain attitude of mind which believes that we can draw a distinction between the railway driver who is not asking for a fortune and the man with substantial income who is to get a concession which will enable him to do a bit better still.

I ask the Government to think again about this matter. It is absolutely fatal to introduce this kind of concession at this moment, not because in itself it will make all that difference but because it is indicative of different standards being adopted for different types of people. If the Government want to deal with the economic state of the country, they must draw us all together and make us all aware that this is not the time for this type of concession. Not only is it indefensible in principle, but it should not be introduced at this time from the purely practical point of view of running the economy.

Like the right hon. Member for Orkney and Shetland (Mr. Grimond), I greatly admire the work of my right hon. Friend the Chancellor of the Exchequer in reforming taxation, and if I have not intervened in the debates on the Bill before it is because the best way in which I can express my admiration is by silence.

I think that the Amendment is rubbish. I do not see how we can ever separate out groups of assets which are purchased with the money borrowed and say "This lot of money was used to purchase this lot of assets". That is not a practical way of going about solving the real difficulty which has been mentioned from the Opposition benches.

Is the hon. Gentleman aware that if the Clause is passed taxpayers will have to separate out interest in order to have it allowed if they have bought houses or other property?

That was not my point. Perhaps the hon. Gentleman would allow me to develop my speech.

I understand the principle on which the Clause was put in the Bill, and I greatly admire the Government, who keep their pledges. The Conservative Party was pledged to introduce this concession. It would have been very difficult for the Government to avoid introducing it after the clear pledge which the late kin Macleod gave.

I will examine the underlying principle. If one borrows money and buys assets with it, it is right and equitable that the interest one pays on the borrowed money should be able to be set against the interest one receives on the assets one has purchased. At first sight that sounds a good principle, but I wonder whether the paying of interest on borrowed money is not like any other form of expenditure. It might be said that rents, food or national insurance contributions are equally essential items which have to be paid out of one's income. The case has to be made more strongly than this particular form of expenditure on interest on borrowed money is in some way an automatic deduction from one's gross income. That has been accepted for very nearly the 200 years that income tax has been with us.

On the whole, we have lived in times of stable currency. There would be little or no advantage in borrowing money to purchase assets because what one spends on the interest will be matched by what one receives from the assets. We now live in times of unpleasantly high inflation and it seems that a different set of circumstances apply. One can borrow money and in ten years when one comes to pay it back the assets purchased are greatly more valuable than the money to be paid back. Therefore, although the principle is arguable, its application in times of inflation must be tempered by an understanding of the unfortunate effects it can have both in equity—the point made by the right hon. Member for Orkney and Shetland—and from the point of view of the contribution which it might make to inflation.

Lying behind the rise in land, share and house prices has been massive purchases of assets of these sorts—antiques and works of art as well—by people who have borrowed money for this purpose knowing that they will be able to sell at a profit at a future stage.

Although I should be happy with the Clause if my right hon. Friends had got the rate of inflation down to an almost non-existent level, I think we must temper our acceptance of the principle underlying it by the practical effects of allowing these transactions to take place in a period of rapid inflation. Not only does it contribute to inflation by pumping money into the system and enabling people to bid up the prices of assets, but at the same time it enables the better-off to protect themselves against inflation at the expense of the less well-off.

It is a little awkward that we have the figure of £35 in the Clause. It would be slightly less awkward if interest were allowable up to £35 rather than not allowable below £35. I understand the technical reasons why it is difficult to relieve interest on hire purchase and other such small transactions, but if we are to have this principle we should have it for all people however small their borrowings and whatever means they use to obtain those funds.

I hope that it will be possible to examine these arguments in relation to the present situation and the concern which has been expressed by all right hon. and hon. Members who have spoken about the £35 exemption.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has put forward a convincing argument. He recognises that there are grounds for loan interest relief on the basis of security. At the same time he met the objection of the right hon. Member for Orkney and Shetland (Mr. Grimond) in that he saw that in its incidence it may be unjust, if not arbitrary, on social grounds. Moreover, the hon. Gentleman recognised that some of the consequences may be objectionable in an inflationary situation. The hon. Gentleman also recognised the £35 bar to be indefensible. I can do not more than to demolish that argument. I hope the Committee will forgive me if I do so a little less briefly than the right hon. Gentleman and the hon. Gentleman who have just spoken.

It is important to be clear about the separate category in which loan interest falls. We are all aware that income tax falls essentially into three categories. We are all familiar with the first broad range of allowances which reflect the taxpayer's marital status and the number of dependants and the second group of allowances to which a taxpayer is entitled if he incurs expenses in the course of his trade or profession. We are not concerned with those now. The third category which many find confusing is the small, but select group of allowances which arise as a result of financial transactions, some of which include those transactions which have been mentioned this afternoon.

This confusing category breaks down into three recognisable parts: life assurance premiums, pension fund contributions and interest payments, all of which attract at least some form of income tax relief. It is the latter sub-category that attracts us. It is interest payments and the terms in which they receive relief which the Clause seeks to change and to which the Amendment is opposed.

For example, under the Clause the interest we pay on our bank overdrafts is to be deductible in calculating our tax bill, irrespective of whether the borrowed money is to be used to produce taxable income.

When this matter was last debated in the House in 1969, quite properly it was pointed out that if the lender of money has to pay tax on the interests he receives it is unfair that the borrower should forgo tax relief on the interest he pays. That is an argument we can all understand. To that extent, as far as the argument goes, there is no arbitrary discrimination. Yet there is discrimination, if of a subtle kind, rather like the comforts of the Savoy being denied to the poor, although ostensibly the door is open to the poor and the rich alike.

It is a well-established paradox that only the rich can borrow, primarily because the poor have insufficient credit for the purpose. Their substitute for borrowing—hire purchase, a form of legalised usury—is to carry no tax privileges. That is simply because the conventional hire-purchase contract does not, strictly speaking, and contrary to the impression I received from the hon. Member for Harrow, East (Mr. Dykes), involve a loan of money. There is, therefore, no form of interest element in the sum repaid so that no tax relief can be claimed.

That was the point I was trying to make. The hon. Gentleman is correct about hire-purchase agreements not qualifying in that way. That is why the vast majority of so-called hire-purchase companies have moved on to the credit-sale type of agreement where a loan of money is granted to the borrower.

But the conventional hire-purchase contract is still widespread. It is still the method to which so many poorer people have to resort. It is true that consumers are now arranging to pay for their goods under credit-sale agreements, but as yet there has been no great movement from Egypt into the Promised Land, much less a considerable movement of people towards the personal loan, which hon. Members on both sides understand even better, which qualifies for tax relief.

I will meet the hon. Gentleman and concede that an increasing number of poorer people are now able to raise personal loans. However, they will still not be able to benefit under the Clause. If a person borrows £466 at a flat rate of 71½ per cent. he will get no tax relief. That is because of this other remarkable feature of the Clause that there will be no tax relief on the first £35 of interest. If, for example, a personal loan is used to buy a washing machine or a fridge or to make an installment on a car, there will still be no income tax relief. At this interest rate one would have to borrow more than £466 to qualify for relief. The banks admit that their average personal loan is around £450, but I insist, contrary to what the hon. Member for Harrow, East says, that the poor still tend to go to the hire-purchase firms. The better-off have bank accounts and get their money at a cheaper rate from them. At 9 per cent. flat one has to borrow only £390 in order to be paying interest of £35 a year and so qualify for tax relief.

4.30 p.m.

The Chancellor's action is of less benefit to the poorer borrower. On the other hand, the richer he is the greater the benefit. Anyone paying the top rate of surtax on earned income, now down to 75 per cent., who wants to borrow £1,000 at 7½ per cent. flat will pay, after tax relief, 3·95 per cent. If a person wants to buy a yacht, however, he would have to pay only 2·14 per cent. rate of interest. If he were living on unearned income—for example, investment income—and paying surtax of 88·75 per cent. he would do even better. The yacht would cost only 1·15 per cent. in interest, as The Guardian pointed out, though it did not use my terms.

Such a customer might get even better terms from the bank than would a poorer person. Rather than being foisted off with an expensive personal loan costing a true rate of interest of 15 per cent., for example, he would arrange an overdraft at 9 per cent. or 10 per cent. if he knows his way around, so that his borrowing would cost him less. This raises a point which we must not overlook, for we tend to confuse rates of interest. We tend to confuse nominal rates with true rates. For such a person borrowing £10,000 with the top, unearned, marginal tax rate, paying overdraft terms of say, 9 per cent. true rate, the net tax borrowing rate comes down to a true 1·33 per cent.

I have said enough to show why we on this side of the Committee are so sensitive to relief on loans, and it shows why the last Labour Government decided to end loan-interest tax relief in 1969, except for house purchase or improvement. I hope that when the Minister of State replies he will recall what I said when I touched lightly upon this on the Committee stage of the Finance Bill last year. He did not understand my reference to it then, although I can understand why when I look back at HANSARD, as I did this week. What I have said also explains why we wish to mitigate the effect of this Clause by means of this Amendment, restricting any relief to assets purchased.

What of the many other different means of providing consumer credit? With the whole legal structure of consumer credit facilities in the melting pot as a result of the Crowther Committee's report, why do we have to revive this issue now? For this is a substantial issue,one that symbolises the difference between the two parties' fundamental attitudes towards personal wealth. That is why I am glad to speak in support of the Amendment.

My contribution will be very brief but I should like to hark back to one of the earlier remarks of the hon. Member for Heywood and Royton (Mr. Joel Barnett). He said that Clause 71 was a gift from the Chancellor to a relatively small group of people. I think it should be said quite plainly that all the Chancellor has done has been to restore partially what only a year ago was considered to be the elementary right of every taxpayer. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) was right to point out that from the time income tax began until 1969 nobody questioned the principle that there should be relief of tax in respect of interest paid.

The hon. Member for Heywood and Royton went on to say that he feared that if Clause 71 became the law of the land all sorts of dubious schemes would proliferate, and he was against restoration of this relief for that very reason. This is an argument which is frequently advanced from the Opposition benches. I recognise that no tax scheme which approximates in the slightest degree towards justice could prevent all avoidance. But it would be terrible if people were to be deprived of legitimate relief because of the fear that some would abuse the system. That is like saying that no one should be able to charge against the profits of his business the costs of earning those profits because some may be tempted to put in false expense claims. That is a ridiculous attitude. Therefore I would say that in principle I am in favour of restoration of relief for tax on interest paid.

What concerns me and concerns a number of my hon. Friends is that part of Clause 71 which prevents any relief in respect of the first £35. I cannot reconcile that either with my ideas of justice or with what I understand to have been our pre-election pledge. We can take just pride on this side of the House in the fact that we have redeemed so many of the pledges we made before the last election. It gives me great pleasure to go through our election manifesto and not only to strike off one by one those pledges which we made and have kept but to know what will come next, because it is listed in the manifesto. I know that it will not be long before the Government redeem the next pledge which I see on the list. But I cannot remember the late lain Macleod saying that there would be only partial restoration to the system which obtained before the 1969 Budget.

I know that my hon. Friend the Minister of State will say that it is in the interest of administrative convenience that the first £35 shall not be allowed, but I ask him to go away and think about the matter again and to see whether these administrative difficulties can be surmounted. Unfortunately, it is the experience of us all as politicians that on the first occasion the plea of administrative inconvenience is put forward. On the second occasion it is put forward with perhaps a little less enthusiasm. And as the rebellion on the Government back benches grows, the Front Bench spokesman eventually does go away and think about it properly for the first time. I urge my hon. Friend the Minister of State to go away and think about it again so that we can say to the country that we have redeemed our pre-election pledge in full.

Far be it from me to utter dire threats to the Government Front Bench, but the Minister of State might take heed of what his hon. and learned Friend the Member for Nelson and Colne (Mr. Waddington) said about the £35 limit. I hope that he will also clear up one mystery for us. Why did the Treasury alight on the sum of £35 and what are the administrative inconveniences? Perhaps in his reply he will give us a good reason, but it ought to be spelt out.

I see the hon. Member for Harrow, East (Mr. Dykes) leaving the Chamber. I noticed that he said that we were dealing with one tiny nut. But I seem to remember 24 hours ago that the Chancellor was rebuking my hon. Friends and myself for trying to suggest that we were talking about "tiny nuts", or at least small sums of money in relation to children's shoes. The Chancellor said that it involved £12 million which would pay the running costs for six 500-bed hospitals for a year. I suppose that the hon. Gentleman's tiny nut is, to borrow the Chancellor's terminology, 3½ 500-bed hospitals per year, even on the Government's calculations.

The information I have from lawyers is that £7 million is probably an underestimate. That figure is not what is thought in the City, where friends of mine give a figure of £15 million to £20 million. I do not know who is right, but the Minister might spell out precisely what sums the Treasury expects in terms of the erosion of the revenue or otherwise.

I should be prepared to see the sense in what the Government are doing if it could be established that it was related to growth. Has loan interest any relation to growth? With a fair amount of good will, I do not see how the change can be claimed to be made in the interests of growth. If it is, the Minister must spell out why. Granted that the expectations of small businessmen will greatly influence their decisions for growth one way or another, it does not seem to me that this is the kind of measure to achieve it.

The right hon. Member for Orkney and Shetland (Mr. Grimond) was on a very valid point. Although it may be true that those who are negotiating for the National Union of Railwaymen and the Transport Salaried Staffs Association. let alone the majority of their members. do not pretend to know the ins and outs of the recondite measures we have been debating, or even the ins and outs of loan interest, we should be under no illusion that they know what the score is. Many of their leaders are very clued up on the provisions of the Bill. The Government should reflect on whether this is the kind of measure which looks to fairly objective people as a handout, as a directing of money towards the better-off and something biased against the worst-off. Is this the time when such a change should be made, during delicate negotiations? If the cry is for restraint and that inflation is the major enemy, this measure seems to make no kind of sense, especially if no convincing argument can be adduced that it is a growth measure.

Lawyers and friends tell me that experience shows that giving loan interest rebates lends itself to precisely the kind of avoidance, and a whole ethos of avoidance. that my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) spelled out. What sort of advice has the Treasury had on the possibilities of avoidance? This is not quite the same kind of question as I put yesterday on consulting outside bodies, but it is a perfectly serious question. How much discussion has there been on the possibilities of avoidance? Can the Government convince us that the allowance of relief on loan interest does not lend itself to avoidance in the way many people in the City have suggested?

The hon. Member for West Lothian (Mr. Dalyell) and the right hon. Member for Orkney and Shetland (Mr. Grimond) both made the same point, that the Clause will benefit a section of the community and that we as a party have been gearing our efforts in that direction. The relief is available only to those who pay interest, and the right hon. Member for Orkney and Shetland said that what is good for one should be good for all. But the Government can point to a substantial record of benefits given to people in need which are not available to everyone. We introduced the family income supplement for the working poor, which is not a benefit available to the rich but is exclusively available to those who need it.

Opposition Members do not make the point that we have introduced a range of benefits available only to those in need. All the time they say that the Conservative Party is discriminatory, that we give reliefs to people who borrow money and that those who do not borrow do not receive any relief. Obviously those who have no investment income do not pay tax on their investment income. It is misleading to go on about the benefit which may become available to one section without mentioning the 2½ million people who will pay no tax as a result of the Government's measures. When we came to power a man earning £20 a week, with two children, paid £60 a year in taxes, but he now pays no tax and qualifies for substantial benefits.

There are two sides to every coin. Labour hon. Members harp on about the railwaymen being very aware in their wage negotiations that there will be relief for loan interest. I hope that the railwaymen are also also aware that the same Government introduced substantial benefits for people who needed help, and that the railwaymen will stop trying to encourage inflationary wage settlements and wage demands by people whose needs are not always absolutely established. Labour hon. Members are misleading when they harp on as they do, and the right hon. Member for Orkney and Shetland also spoke in this vein.

4.45 p.m.

The hon. Member for Heywood and Royton (Mr. Joel Barnett) has not always felt about bank interest as he says he feels now. I have looked at the OFFICIAL REPORT of the Committee debates on the 1969 Finance Bill when he and his hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) pointed out some of the anomalies that arose from not giving any relief for loan interest. They did not vote with their Government when an Amendment was moved to allow relief for people borrowing money to acquire shares in companies they worked for.

If the hon. Gentleman reads through those debates fully he will find that my hon. Friends and I generally supported the Clause then proposed by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), but there were one or two small Amendments which eventually my right hon. Friend conceded.

But only partially. The allowance to people who wanted to borrow money to buy shares in companies was fairly limited, and the relief given was very limited. That in its turn produced a great number of anomalies. The hon. Gentleman talked amusingly about anomalies when he spoke about VAT, but there were substantial anomalies in the relief he and his hon. Friends squeezed out of the then Chancellor. There are still very serious anomalies. I cannot see why it should be right to allow relief on money borrowed to buy shares in a private company or closed company but not to buy shares in ICI if one happens to work for it. It is a crazy situation when a large number of our labour force are excluded from relief on money borrowed to buy shares to obtain a stake in their company. We said at the last General Election that the anomalies arising from abolition of the relief were very serious and that we would remedy them, bringing back relief.

I share a number of my hon. Friend's misgivings about the first £35. I accept that the Chancellor's argument that 1,000 additional civil servants would be involved in extending the relief is very valid, but I hope that later we shall be able to reconsider the matter and extend the relief to the first £35 of interest paid.

What we are doing is right. It is all very well to say that a number of very rich people will enter into schemes, but the hon. Gentleman and I know that if this provision is not available they will look for another. We are talking about a tiny group. If we made a law so watertight that it caught them, it would make life impossible for the rest of us. The Government can point to the fact that avoidance schemes are being made less valuable by their cutting the overall rate of tax for all. We are devaluing the currency of tax avoidance schemes based on exorbitant rates of tax.

The hon. Gentleman returned to a favourite theme of his, which is constantly repeated from the Opposition benches, that there is disincentive effect in high taxation. I do not believe him. I invite him to stand with me outside the gates of any factory in my constituency and talk about its being no disincentive. He would be laughed out of court, and he knows it. Being a practising accountant, he knows, as I do, that we spend a lot of time advising people who want to get on with the job of building up their businesses but have been forced or encouraged to divert too much of their energies towards working out how not to pay the excessive taxes imposed by him and his hon. Friends. We are creating a system in which people have incentives to get on with doing the job they are best at. We are reducing the value of the tax avoidance schemes, cutting into the value of the tax avoidance lawyer.

The overall effect of the Bill will not be what the hon. Gentleman says it will be. It will create a freer, more enterprising environment, and I welcome that.

I agree in one respect with the hon. Member for Enfield, West (Mr. Parkinson). The Clause is the other side of the family income supplement coin; it is the family income supplement for rich families. The only difference is that it is more like a family capital supplement, because it provides them with capital at very low rates of interest.

The only conclusion we can come to about the exclusion of the first £35 is that the Clause has been drafted for purely party political motives. It has no relevance to the pursuit of a just and equitable tax system. It has no relevance to reducing unemployment, and it will do nothing to alleviate the serious economic situation. It is intended primarily as a reward for those few people, most of them based on the City, who just before the last election made a substantial investment in the Tory Party and have seen their investment treble and quadruple. The Clause is the second half of a package deal. The first half appeared last year, when the Chancellor abolished the short-term capital gains tax. This year he is removing the discrimination, as the Government call it, against interest payments, thereby enabling the rich speculator to convert his income into capital by using borrowed money subsidised by the general taxpayer.

The Government cannot make a case in logic or justice for making interest payments deductible. One Conservative Member tried to argue that there was some kind of hallowed principle enshrined in the income tax legislation that interest payments should be deductible. A better case could be made out for allowing other expenditure, such as rent, rates and the cost of food. There is no such principle. The deduction for interest payments crept into the original income tax legislation mainly for the purpose of assessment machinery. The reasons have now disappeared.

I should like to quote briefly from a judgment by Viscount Radcliffe on this matter in the House of Lords, in the case of the Commissioners of Inland Revenue v. Frere. He said:

"…it is irrelevant to the determination of a person's taxable income that some part of it has been expended by him on what would normally be regarded as his own income account, in paying rent, wages, mortgage interest, rates, insurance, for example, or that the payments that he makes for such purposes will themselves constitute or contribute to assessable income in the recipient's hands.…The mere fact, then, that part of a taxpayer's income has been used to pay interest on a loan during a year, even assuming that you visualise 'income' as a separate spending fund, would not in itself set up a reason for reducing the assessment of his taxable income. The payment of the interest, whether long or short, would be no more. for this purpose, than an 'application' of his income."

But if a case can be made out on grounds of social justice—and it can in certain circumstances—for some interest payments to be deductible, it cannot be made out in the way the Government have drafted this Clause. If considerations of justice and equity had arisen in their minds, they would have at least allowed the first—35 and disallowed the balance. In that way, they would at least have been spreading the benefit over a wider group of people, generally the less well off in substance than the minority who are actually to benefit.

Reference has been made to the amount of loan one can borrow from the bank on which the interest would be about £35. Possibly one could get a loan of £400, but not much more. The Government are, however, to exclude loans of £400 or so, although this might be the kind of amount that a young married couple, for example, might secure for the purchase of such things as kitchen appliances. The Government are excluding that kind of interest payment in favour of long interest payments on loans of more than £400 up to £20,000.

Thus, a rich man may borrow £20,000 from the bank, being able to set off the interest—say, £2,000 a year—against his other income. He will be able to buy a capital asset, which he may well sell within a few months at a profit which will be taxable on 30 per cent. The interest payments will be deductible against his other income. It does not matter that the capital asset produces no income. He will have made some real money, as they would say in the City, having converted his money into low rates of interest. It is not a case of avoidance or of abuse or of finding one's way round the Clause. The Clause does it all for one. This is a deliberately drafted device by a Tory Chancellor to enable the rich to convert income into capital and to do so by money borrowed at very low rates of interest.

Another indication of the political motive behind the Clause is in subsection (1)(b). This deals with short-term interest, which is the interest on bank overdrafts and various other short-term loans meant to be repaid fairly quickly. This is right in the case of loans from banks and discount houses. It is fair enough to allow deductibility of interest in such cases. But tucked away in the middle of subsection (1)(b) there is a reference to stockbrokers' loans. It stipulates that the interest paid in respect of loans from stockbrokers will qualify for this relief. I do not know how stockbrokers get into this. Banks and discount houses are in the business of lending money, but stockbrokers are not. They may lend money but they are not in the business of lending money; they are in the business of buying and selling shares. Solicitors and department stores, for example, also lend money, so why do stockbrokers alone creep in? I suggest that this is a very nice reward for the City.

What could be more convenient if one sees the opportunity to make a gain on a new issue, for instance? A man goes to the stockbroker saying that he has no money to buy the shares. He borrows the money from the stockbroker. The stockbroker buys the shares for him. They are sold again within six months or so and there is a profit on 30 per cent. The stockbroker gets his quick return and commission. The man pays a low interest and gets a taxable gain on 30 per cent. The Inland Revenue will actually assist him to do so. He will pay 30 per cent. for the amount in relation to trading gain. This is all neatly tied up for the City, following the abolition of short-term capital gains tax. Under short-term capital gains tax, such a situation could not have arisen because a sale within a year would have attracted surtax and income tax. This is all part of a package. The Government could not put it all through last year because of a guilty conscience, but they have done it in stages.

Will the hon. Gentleman deal with the situation in which shares depreciate in value?

In times of roaring inflation, which the present Government have caused in the country, shares appreciate quickly in value—many of them at a rate of 8 or 10 per cent. That is the situation which obtains at present.

The Prime Minister, when worried by a guilty conscience, perhaps, took out Disraeli, dusted him down, and called for one nation. That is common practice with the Conservative Party in such circumstances. But how are the Government creating that mythical conception? If they really believe in one nation, they can make a start with this Clause. They can either withdraw it or accept the Amendment. Either way, they would be demonstrating their sincerity to the millions who support the conception of one nation. But they will not do it. They have no hope of securing the support of the unions or the working people when they introduce legislation of this kind. Not only do they have no hope of getting it—they do not deserve to get it.