asked the Chancellor of the Exchequer what percentage of income is taken in income tax from a man with a wife and two children under 11 years of age earning the present national average; and how this compares with the similar figure for each of the last 10 years.

As the answer contains a number of figures, I will with permission publish it in the OFFICIAL REPORT.

Will the Chief Secretary confirm that the slice taken in direct taxation rose steadily throughout the 1960s and must have contributed towards the pressures for inflationary wage demands? Will he confirm that the peak has passed, that on the latest figures the percentage taken in direct taxation is lower and that the rising trend has at last been reversed?

My hon. Friend is quite right. The figures show that the proportion of this family's income taken in tax increased from under 6 per cent. in 1965–66 to over 14 per cent. in 1970–71 and that, as a result of my right hon. Friend's cuts in income tax, the trend has been reversed.

Will the Minister confirm that the poor, hard-pressed, underpaid, top civil servants and judges will still do very well even after paying tax on the extra £2,500 they are to receive?

Assuming the same family with an income all earned, a man on £20,000 will be paying £10,207.29 in tax this year.

asked the Chancellor of the Exchequer what would be the cost to the Exchequer in a full year of raising the exemption from the proposed investment income surcharge from £2,000 to £3,000, £4,000 and £5,000, respectively.

About £35 million, £55 million and £70 million.

Does my hon. Friend agree that the taxpayers in this bracket have been hard workers and hard savers and have always been putters-in rather than takers-out, and that it is unfair that they should be discriminated against? If he is not prepared to help all those with savings, is he prepared to make concessions for retired people?

My hon. Friend knows that, as a result of the unification of income tax and surtax next year, the first £2,000 of investment income will be taxed at the earned income rate and will be below the point at which the surcharge starts, so that the people to whom my hon. Friend refers will find that they have secured a significant benefit in their tax liabilities next year.

Is not the term "unearned income", upon which this is based, wrong, and is it not against the best interests of the country that people who save and invest should receive the impression that they are not working in the best interests of the country, and should not the tax position reflect that to a greater extent?

My hon. Friend is absolutely right. As regards nomenclature, I thought I used the phrase "investment income"; the other words have not passed my lips since 18th June, 1970. If my hon. Friend studies table 18 in the Red Book he will see that there are considerable advantages to the people to whom he refers.

asked the Chancellor of the Exchequer (1) what representations he has received about zero rating for the purposes of applying the value added tax the design and consultancy services within a construction organisation, and charging the full rate when the services are provided by independent professionals; and what replies he has sent;

My right hon. Friend has received representations on both these points from a number of associations and individuals. I met a delegation representing the professional associations concerned with the construction industry on 6th June, and told them that their views would be given full consideration.

I am grateful to my hon. Friend for that reply. Is he aware that if the present proposals are implemented they will be illogical, onerous and unfair, since certain design services in the construction industry will be zero rated and independent firms will be VAT-ed? Will he look carefully into this matter as it is causing bitterness in the design profession?

I understand my hon. Friend's point about the position of independent professionals in the exempt sector. That is a theoretical description of the situation, but there are many factors which influence companies in deciding whether to employ independent architects or surveyors. I do not think it can be argued that VAT would be the decisive factor.

When does the Chancellor expect to complete his consideration of this question and to inform the House?

At the appropriate time.

asked the Chancellor of the Exchequer what is his latest estimate of the growth of gross domestic product.

The present indications are that we are on target and that the economy is growing at the rate forecast at the time of the Budget, namely 5 per cent. a year over the period referred to in the Budget Statement.

Will my right hon. Friend confirm that he intends to pursue his policy of economic growth as a matter of absolute priority? Will he further confirm that the decision last Friday to float the £, which I warmly welcome, is further confirmation of this intention?

The fact is that the prosperity of the British people ultimately depends on the rate of our economic growth. I think it is satisfactory that the economy is expanding at more than twice the rate it did from 1964 to 1970.

In view of the recent statement by Dr. Mansholt in favour of a zero growth rate for the European Community, could my right hon. Friend assure us that the British Government have no intention of falling in with Dr. Mansholt's curious ideas?

My hon. Friend must have misunderstood me. I have already expressed a view about the determination and intention of the British Government.

asked the Chancellor of the Exchequer what effects he estimates the reductions in purchase tax in the 1972 Budget have had on the cost of living.

I would refer the hon. Member to my reply to the hon. Member for Manchester, Ardwick (Mr. Kaufman) on 27th March.—[Vol. 834, c. 22.]

The hon. Gentleman's reply, like that of his right hon. Friend in answer to the previous Question, was no reply at all. Is he aware that many of the reductions in purchase tax announced in the last Budget have not been passed on to the consumer? Has he seen the numerous Press reports indicating that articles on which purchase tax was reduced in the last Budget have increased substantially in price since the Budget?

I gave the hon. Member for Manchester, Ardwick (Mr. Kaufman) a specific answer on this topic on 27th March. Purchase tax reductions in the Budget were mostly reflected immediately in prices in the shops. Although there were exceptions, they were relatively few.

Does my hon. Friend agree that it takes some little time for these changes to come through because, goods already in the shops having attracted purchase tax and this having been costed in the retail price, the remission of purchase tax takes place on forward buying by retailers?

I understand my hon. Friend's point though, as I said, most of the cuts were passed on immediately. One of the advantages of VAT will be that the problem which my hon. Friend mentioned will be ameliorated. It is true that in regard to various articles the process takes some time to work through. Some of the articles which have been mentioned in this respect were based on cost-of-living figures for last year and were then related to the arguments for this year.

asked the Chancellor of the Exchequer if he will make a statement on the current rate of inflation.

Yes, Sir. Over the past year the rate of increase of prices has been almost halved.

In view of that subjective answer, does the right hon. Gentleman not agree that his objective is objectionable in that it means that for those on fixed incomes, particularly old-age pensioners, any increase in pension is overtaken by inflationary pressures in the economy? Will he make a statement saying how he intends to protect them from the hidden devaluation which is taking place at present?

The hon. Gentleman is quite right to say that it is pensioners and those on small fixed incomes who are the principal sufferers from inflation. That is why over the past year we have taken the various actions which we have taken. This has ensured in the past year that the retail price index for all items has increased by just over 6 per cent. compared with almost 10 per cent. a year ago.

Is my right hon. Friend aware of the fact that what is disturbing is that 800,000 building workers have put in wage claims of 20 to 23 per cent.—[HON. MEMBERS: "Hear, hear."]—and that 2½ million engineering workers have wage claims of up to 40 per cent., and that these wage claims are causing old-age pensioners and others to suffer?

My hon. Friend is quite right, and I am sure it will be noted outside this House, if it is reported, that when my hon. Friend made his observations about those wage claims they were cheered by the Opposition.

Is the right hon. Gentleman aware that the value of average earnings has dropped by £200 since he took office under two years ago? In view of the fact that devaluation is bound to increase the cost of living, will he abandon those elements in Government policy which are calculated to increase the cost of living—namely, rents, food and the new VAT?

I can assure the right hon. Gentleman that real earnings have been going up at a considerable rate over the past year or two. I thought the right hon. Gentleman would be the first person to accept that. What is certain is that any increase in prices as a result of any change in the exchange rate will be not nearly as much as the increase in prices resulting from inflationary pay claims.

asked the Chancellor of the Exchequer what was the increase in the money supply (M3) during the financial year 1971–72, in percentage and in money terms, respectively; and how these figures compare with those for each of the previous five years.

The money supply (M3) increased by £2,913 million—16 per cent.—in the financial year 1971–72. With permission, I will circulate figures for the previous five years in the OFFICIAL REPORT.

On Friday my right hon. Friend the Chancellor of the Exchequer told the House that he did not wish the increase in money supply to add to inflationary pressures. In view of the fact that the effectiveness of monetary policy must grow from public knowledge of its objectives, can he say whether Mr. Sam Brittan was correct to say that my right hon. Friend intends the rate of increase in money supply to come down from the present dizzy heights of 23 per cent. to the slightly less exorbitant figure of 15 per cent. by the end of the current financial year?

A restrictive monetary policy would be inappropriate in present circumstances, but we recognise that an excesively fast expansion in monetary supply could add to pressures at a later stage. Therefore, we have considered this point. The objectives remain as my right hon. Friend stated in his Budget: to ensure that adequate finance is available for the extra output which our policies will produce. The increase in Bank rate represents not a change in monetary policy but a move to prevent a faster expansion in the money supply.

When does my hon. Friend expect the increase in money supply in 1971–72 to be fully worked through in terms of prices?

My right hon. Friend will be aware that there is a great deal of dispute over the leads and lags in this matter but, as I indicated, we believe that the policies which we are adopting are consistent with all our overall economic objectives. We do not believe that restrictive policies would be appropriate in present circumstances, but we recognise that an excessively fast expansion in monetary supply would add to the inflationary pressures at a later stage. We have therefore take appropriate action.

asked the Chancellor of the Exchequer what, on the basis of the General Index of Retail Prices, is the purchasing power of £ sterling, taking it as 100p on 18th June, 1970.

asked the Chancellor of the Exchequer by what percentage the value of the £ sterling has decreased since June, 1970.

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

Taking the internal purchasing power of the £ sterling as 100p in mid-June, 1970, its value in mid-May, 1972 is estimated at 87½p. This estimate is based on changes in the Consumer Price Index between 1970 and 1971 adjusted by movements in the General Index of Retail Prices for the months at the beginning and end of the period. If the estimates were based solely on movements in the General Index of Retail Prices, the corresponding figure would be 86p.

It does not matter what one does with figures. They all come out the same. Is not the hon. Gentleman aware that while the Chancellor of the Exchequer has been busy floating the £ on the foreign exchange market, at home the £ is rapidly sinking? Is he aware, further, that if it is right for City speculators to look after their six-and 12-months forward positions on the market, as they have been—causing the floating of the £, some would argue—it must also be right for ordinary wage earners to look after their 12-months forward positions in terms of wage increases? If the right hon. Gentleman is so concerned about old-age pensioners, let him bring forward the pension increase tomorrow.

The crucial point which should be brought out is that the figures do not remain the same, contrary to what the hon. Gentleman suggests. Since June, 1971, the trend is very clear from the figures which have been given in answer to Questions which the hon. Gentleman has put constantly. They are 10·3, 10·1, 10·3, 9·9, 9·4, 9·2, 8·2, 8·1, 7·6, 6·3, and, in May, 6·1. While that is a matter about which we must not be complacent, it shows a trend in the right direction.

Would the hon. Gentleman care to do the country a favour? Could he go a little further and forecast what the £ is likely to be worth in 12 months?

The House knows that it is not normal to give forecasts of that kind.

Is the hon. Gentleman aware that the scandalous 14 per cent. cut in the value of the £ took place before last Friday's events? Will he say what additional reduction there will be in the purchasing value of the £ as a result of Barber's backdoor devaluation?

As I say, it is not normal to give forecasts on prices. I have no doubt that in due course we shall consider what will happen in the future, and I have no doubt that the hon. Gentleman will put down a Question on the results, as he has done consistently.

In view of the fact that, during this period of reduction in the purchasing power of the £, the level of savings has risen substantially, would not it cast some light on our frequent consideration of replies to Questions by hon. Members opposite if both these statistics appeared simultaneously?

My hon. Friend's point is of very great importance. We ought to look at the overall position of the economy. In that respect, the level of savings is of great importance.

asked the Chancellor of the Exchequer what financial incentives he now proposes to introduce to stimulate investment in manufacturing industry.

The economy is now growing fast, and rising demand, coupled with the new national and regional incentives, will stimulate investment.

Is the hon. Gentleman aware that according to the DTI's latest survey almost half the firms engaged in manufacturing industry are even more pessimistic about future investment than they were before the Budget, before the setting up of the Industrial Development Executive and before the publication of the Industry Bill? Is the hon. Gentleman aware, further, that this lack of confidence in the British economy, like the lack of confidence in international sterling, is the free enterprise market's assessment of the Chancellor's management of the British economy over the last two years?

It is fair to point out that the DTI survey is only one of several. I have in mind especially the CBI survey and the Financial Times survey of business opinion, which show a remarkable strengthening of investment intentions since the Budget measures and point to a substantial rise in investment in the year ahead. I agree with the hon. Gentleman to the extent that in so far as there is hesitation in investment, it reflects some doubts about the future. But let the hon. Gentleman be in no doubt that the anxieties arise because of the fear of inflation, and that by far the biggest single element in rising costs and prices is inflationary wage claims and settlements.

Is the Government's figure for gross domestic fixed capital formation on target?

We are looking for a significant increase in the volume of investment this year, and we are confident that it will come.

asked the Chancellor of the Exchequer what has been the increase in the standard of living on the basis of real disposable income per head since June, 1970.

Between the second quarter of 1970 and the fourth quarter of 1971—the latest available quarter—the standard of living on the basis of real personal disposable income per head rose by 4 per cent.

Does my right hon. Friend agree that that is an annual rate of about 2·7 per cent., representing the increase in the standard of living since the last election, and that that figure invalidates the implication in the supplementary question addressed to my right hon. Friend by the right hon. Member for Leeds, East (Mr. Healey) under whose Government, on a similar basis, the standard of living was increasing at about 1·3 per cent.?

With respect, my hon. Friend is doing an injustice to the right hon. Member for Leeds, East (Mr. Healey). Between 1964 and 1970 the standard of living of the British people on the same basis rose at an annual rate not of 1·3 per cent. but of 1·5 per cent. My hon. Friend is right in saying that for the period which I quoted, the annual equivalent rate is 2·7 per cent.; in other words, that our standard of living has improved at almost twice the rate under this Government's policies of expansion and tax cuts that it did under the Labour Government's policies of restriction and tax increases.

Is it not a fact that the floating of the £ is a massive vote of no confidence both at home and abroad in what the right hon. Gentleman's inflationary policies have done? Despite all this, will the right hon. Gentleman persist in telling us that it is all a great victory? Does not he intend to change his policies in any way?

I made it quite clear in my statement about these matters on Friday that one of the principal reasons which led to the troubles a week or so ago and the action which I felt it right to take in the national interest was the fear of inflation. Certainly that is true.

Amid the welter of figures which we have had today, is it not a fact that my right hon. Friend's announcement of a 4 per cent. rise in the standard of living is almost the only one worth hearing? Will my right hon. Friend publicise it as widely as possible?

The truth is that we are all—right hon. and hon. Members opposite and my right hon. and hon. Friends—in business together with the same objective of improving the standard of living of the British people. Therefore this is an extremely relevant figure.

Will the right hon. Gentleman accept that whether the standard of living, on the basis of real disposable income, has increased by 2·7 per cent. or by 1·5 per cent. is completely irrelevant? What is important is the dispersal of the wealth of the nation, out of which those at the lower end of the scale have been coming badly whereas those at the top have received a tremendous increase?

If one thinks about real earnings, average earnings during the past year have increased by 5 per cent. after allowing for the increase in the cost of living. The hon. Gentleman is quite right to say that one of the problems about improving the position of the lower paid, as we have found repeatedly, is that it seems to be impossible in many cases to improve the position of the lower paid without the trade unions concerned insisting that that improvement should be reflected all the way up through the differentials. This is one of the major problems.

But if the right hon. Gentleman is concerned—I believe that he is right to be concerned—about the need to compress differentials, how on earth can he justify giving people on £20,000 a year an increase of 18 per cent.? Should not the Government start there if they want to influence the unions' attitudes on this matter?

I can assure the right hon. Gentleman that if the average level of wage claims were anywhere near the average annual rate of increase involved in those increases, we should be doing very much better.

asked the Chancellor of the Exchequer if he will make a further statement on the future of the regional employment premium.

I would refer the hon. Member to my hon. Friend the Minister of State's reply to the hon. Member for Dunbartonshire, West (Mr. Ian Campbell) on this subject on 20th June.—[Vol. 839, c. 59.]

Is the hon. Gentleman not aware that total confusion reigns as to what is to be the future of the regional employment premium? In 1970, in his Budget Statement, the Chancellor said that it was to disappear in 1974. That was revised in 1972 to the statement that it would be phased out after 1974. Bearing in mind the fact that the REP is worth £100 million a year to regional development and also the need for some constancy in regional development intentions, is it not high time that the Government made up their minds what will happen in 1974, so that industry in the regions knows where it stands?

I do not agree that there is confusion over this matter or that the timing of the phasing out is having an effect on investment. The Government's view remains the same as that in my right hon. Friend's statement in his Budget speech.

asked the Chancellor of the Exchequer what consideration he has given to the future exchange rate of the £ sterling.

I would refer the hon. Member to the statement I made on 23rd June.—[Vol. 839, c. 877–87.]

Is not the sudden devaluation of the £, precipitated by runaway inflation, an indication of the complete bankruptcy of the Government's economic programme and the total falsity of the Prime Minister's election promises? Would the right hon. Gentleman remember that, if he intends to ask the unions to bale him out of this situation by way of restraint on wage claims, the first thing that he must do is reverse the Government's policies, which have been unrestrainedly partisan and provocative? Finally, would the right hon. Gentleman reassure us that he will take steps to protect the low income groups in this devaluation?

In answer to an earlier Question, I explained the position of the low income groups. If I may refer to those people on small incomes for whom the Government have a special responsibility, it is worth noting that the purchasing power of the retirement pension is almost 5 per cent. higher than it was in June, 1970. As the hon. Gentleman knows, pensions are being raised by a further 12½ per cent. in October. But the hon. Gentleman is quite right to point out—this was the implication behind his question—that our first priority is inflation.

I congratulate my right hon. Friend on the very wise and timely decision that he took last Friday, but will not the success of his policy depend on his ability to contain the increase in money supply in the next few months?

It is certainly true that the rate of increase in money supply is a most important factor, and one which I have very much in mind.

Since the right hon. Gentleman refers to the lower income groups, has he failed to realise that the persons on the lowest disposable income and the lowest standard of living, who are most likely to be most heavily affected by his creeping devaluation proposals, are the retirement pensioners? Will he not now, in decency, bring in supplementary pensions Estimates to increase at once the retirement pension?

I have explained that the purchasing power of the retirement pension is almost 5 per cent. higher than it was when we came into office. As for the future, I think that the whole House was very pleased that the Government acceded to the request, which has been made repeatedly for 20 years or so, that there should be a review of pensions every year.

When the Chancellor met his colleagues among the Common Market Finance Ministers yesterday, did he raise with them the point that the devaluation of the £ means an increase in prices not only of imported food next year but of British food under the common agricultural policy? Did he insist to them that it is intolerable for the British Parliament and people to accept this additional impost?

I have already said in answer to the right hon. Gentleman or one of his hon. Friends that any effect on prices of the action that we have taken will certainly be very much less than the effect on prices of excessive pay claims. If the right hon. Gentleman wishes to ask me about my discussions in Luxembourg yesterday, I can say to him that the very first point made to me yesterday in Luxembourg by the first Finance Minister I met concerned the right hon. Gentleman's remarks.

Has my right hon. Friend noticed that hon. Members opposite, just now echoed by the right hon. Member for Leeds, East (Mr. Healey), repeatedly use the word "devaluation" to describe a floating operation of the £ which has not yet been properly tested in the foreign exchange markets of the world? Is this not further evidence of their attempts to talk down sterling?

Following that question, and reverting to the Question on the Paper, does the Chancellor endeavour to pretend, as he did on Friday and over the weekend, that this is not a devaluation? Has he any intention of returning or any belief that we can return to a rate of 2·60 dollars—[An HON. MEMBER: "What about 2·40?"] No, 2·60 is not equivalent to 2·40, because the dollar has changed and we are lower today against the weighted average of world currencies than we were in December. This is a very important point—[HON. MEMBERS: "Who repaid the debt?"] Hon. Members should not get so excited. Will the Chancellor give us any indication of what he said in Luxembourg yesterday about how long a period of floating he expects us to undergo?

On the first point, the London market has opened only today, and the European markets are still closed, and I should therefore have thought that it was too early to draw conclusions. As for the second point, about how long the floating will continue, I have made it clear, as I did last Friday, that it will be temporary. I have explained to our Common Market colleagues that we shall return to a fixed parity as soon as possible.

asked the Chancellor of the Exchequer what review he has now made of Her Majesty's Government's prices and incomes policy.

asked the Chancellor of the Exchequer if he will make a statement on the Government's policy towards prices and incomes following recent pay settlements.

We are continuing to urge on both management and unions the need to moderate pay and price increases and to bring home to all concerned the social and economic damage arising from inflation. Both sides of industry are aware of this concern, and the Government hope that the talks taking place with the CBI and TUC will prove helpful in fighting inflation.

Can the hon. Gentleman assure us that he will not carefully wait until the rent increases have been made, the value added tax has been imposed and the price of food has shot up because of Market entry, and then come along with a compulsory wages freeze?

On the second part of that question, my right hon. Friends the Prime Minister and the Chancellor of the Exchequer have made our position clear. As for the housing finance proposals, they will involve those who can afford it paying fair rents, but they will also introduce rent rebate schemes to help the lowest paid and the less well off. This is very important in the context of wage claims. As for value added tax, my right hon. Friend, in giving reliefs specifically to those main areas of expenditure which bear most heavily on low income families, has taken steps so that there is no reason to suppose that value added tax will be regressive. In both these areas we have taken very much into account the effect of this kind of change on low income families and, correspondingly, on wage claims.

Have the miners, and now the railway men, ended for good the Government's efforts to de-escalate the rate of increase in wages by holding down settlements in the public sector? Can we look forward to a new initiative in prices and incomes? Will the right hon. Gentleman take into account the fact that trade unions have a responsibility to protect their members against present and future inevitable price increases?

The answer to the first part of that question is, "Most certainly not". In answer to the last part, the hon. Gentleman should look carefully at what has happened to earnings and prices. In the two years to April, 1972, average earnings rose by nearly 25 per cent., while retail prices rose by just over 16 per cent. The answer to the hon. Member's second question is that over half the public sector settlements have been at 8 per cent, arid under, and the average, even including the rail settlement, has been about 9 per cent. There have been setbacks and some settlements have been very high. But it is absolutely essential that we should continue the process of de-escalation if we are to beat inflation and to get the economy on a sound basis.

If exhortation proves to be ineffective in securing wage restraint, will my right hon. Friend be prepared to adopt more positive measures to ensure that our competitive advantage which flotation has secured is not impaired, and nor is the standard of living at home impaired, by inflation?

As I have pointed out, my right hon. Friends have made our position on a statutory policy very clear. It is worth pointing out that the policy which we have adopted over the past two years has been very effective indeed in bringing down the rate of inflation. It is not the case that we should be complacent at the present time; clearly we have a long way to go yet. But we are determined to continue the trend we have established over the last two years, which I spelled out clearly in answer to an earlier Question.

Is it not clear that whatever the hon. Gentleman may say about the success of his policy on prices over the past two years, his view is not borne out by those who have held sterling overseas? The money market that opened this morning showed a fall in sterling, and this is directly attributable to the Government's failure on inflation. Whatever the Government may say, those people who vote with their money in London have decided that the Government have come unstuck. When will the Government change their policy and bring about some credible alternatives?

Last Friday, my right hon. Friend the Chancellor spelled out very clearly the relationship between his proposal to float the £ and the question of inflation. This is common ground throughout the House. None the less, this ought to lead all sides of the House to pursue more rigorously policies against inflation, and there is a considerable degree of schizophrenia on the Opposition benches in encouraging wage claims, on the one hand, and complaining about inflation, on the other hand.

asked the Chancellor of the Exchequer to what extent his Budget forecasts in relation to prices, incomes, production and investment are on target; and if he will estimate the rate of growth in the economy over the next nine months.

It is not the practice to provide forecasts of prices and incomes, nor is it usual to give estimates of the rate of growth of the economy other than at the time of the Budget. As to investment and output, it is too early to make a detailed assessment of developments in the economy in the first half of this year, but the Budget forecast allowed for a fall in domestic product in the first quarter and the latest indicators of demand and activity appear consistent with the central forecast made at the time of the Budget which covered the 18 months to the first half of 1973.

I am not sure what that gobbledegook means, but if it means that the Government are on target, does that mean that the measures announced last Friday were planned in June, 1970, and that this was the climax of the Conservative Party's "Better Britain"? Will the hon. Gentleman say what were the reactions of the Ministers in Luxembourg yesterday, apart from the snide remark of the Chancellor just now about my right hon. Friend the Member for Leeds, East (Mr. Healey) when clearly my right hon. Friend was reflecting—[HON. MEMBERS: "Question."]—the effects of the Government's policies rather than the causes of them?

The second part of the hon. Gentleman's question was answered by my right hon. Friend a few moments ago. The first part was answered by my right hon. Friend last Friday.

My right hon. Friend the Chancellor confirmed on Friday, and again today, that the containment of inflation was our first priority. May we take it that, if need be, such other desirable objectives as the achievement of a particular rate of growth or a particular rate of reduction in unemployment will take second place to this objective?

One must look at the overall economic policy as a whole. Certainly my right hon. Friend made absolutely clear the great importance we attach to the question of inflation.—[Interruption.] I am answering the question, if hon. Gentlemen will listen. The recent unemployment figures have been extremely heartening. On the subject of economic growth, my right hon. Friend has pointed out what our proposals are. One should not overlook the fact that a faster rate of economic growth and greater production may itself be a very important weapon in fighting inflation. That is why we believe that my right hon. Friend's Budget judgment was right, that we must achieve a faster rate of economic growth because the relationship between production and prices is a very obvious one which the House will understand. Therefore, one must not assume that there is any inconsistency between the achievement of these various objectives.

As the initial result of any downward movement in the exchange rate is usually inimical to the balance of payments, has the hon. Gentleman made an estimate of the result of last week's activities on the Budget forecasts? Furthermore, as European estimates of the severe effect of our coming entry into the Market had an impact on European opinion and helped to move the rate, with what additional burdens shall we now be faced as a result of the dribbling devaluation of the last few days?

I do not accept the hon. Gentleman's final adjectives. As my right hon. Friend pointed out a few moments ago, it is too early to make a statement and we must wait and see how the situation develops.