asked the Chancellor of the Exchequer if he will make a statement about the progress of discussions with Commonwealth countries on the status of the Basle Agreements.

The present Sterling Agreements remain in force until September, 1973. Informal consultations have been held with the Governments concerned about the implications of recent United Kingdom measures for the operation of the agreements.

Have any of the parties to the agreements let the sterling proportion of their reserves fall in the last 12 months below the minimum agreed? Are the United Kingdom guarantees under the reserves activated only when a new parity is set for the £, or can they come into force if the £ floats far below the level of 2 dollars and 40 cents? If it is the case that it needs a new parity, how low can the parity be set without the guarantees being called into force? Finally, could the right hon. Gentleman tell us what would be the cost to the reserves of every point below 2 dollars and 40 cents at which the parity would be set if the guarantees were brought into force?

The hon. Gentleman will realise on reflection that all the points he raised are of a confidential nature. But there has been no occasion for implementing the guarantees.

asked the Chancellor of the Exchequer what further steps he proposes to take to reduce unemployment.

The reflationary measures which I have taken are already making a significant and welcome impact on the level of unemployment.

Should not the welcome for the fall in unemployment be seen in perspective against the sombre background of over 800,000 unemployed? Will the right hon. Gentleman give a massive boost to industrial training schemes so that men out of work can be helped to cope with the increasingly complex new processes?

My right hon. Friend the Secretary of State for Employment announced to the House on 8th August proposals for the extensive modernisation of industrial retraining which involves spending from £70 million to £80 million a year on the expanded training opportunity scheme and from £25 million to £40 million over and above what is raised in levies on selective grants and other forms of retraining.

Does not the right hon. Gentleman appreciate that among the disabled nationally there is 15 per cent. unemployment? Is he aware that in an area like the North-East, where there is already a higher-than-average level of unemployment, the disabled suffer even more? Will he take steps to increase the employment level among disabled people?

It has always been the case that in areas where there is greater-than-average unemployment the problems of the disabled are also greater. I assure the hon. Gentleman that we have this very much in mind.

What reliance does my right hon. Friend place on the accuracy of the present unemployment statistics issued by the Department of Employment? Does he not agree that there are places where the figures grossly overstate the position and places where they grossly understate it, with the result that the total figures are completely misleading and may be leading my right hon. Friend into wrong policies?

I do not think the total figures are grossly misleading, but when considering the actual figures in relation to policies to be pursued, one has to take into account the breakdown of the figures and what they truly represent.

asked the Chancellor of the Exchequer if he will list in the OFFICIAL REPORT all the goods and services it is proposed should be exempted from the general rate of the value added tax.

My hon. Friend will find the list in Schedule 5 to the Finance Act, 1972.

Does my hon. Friend agree that one of the main aims of the new tax, replacing, as it does, selective employment tax and purchase tax, has been successful—namely, that its base and incidence should be as widespread as possible to keep its rate as low as possible? If he feels that that aim has indeed been achieved, would he be prepared to commit the Treasury to a review, at the earliest possible opportunity, of the perhaps inevitable but nevertheless irritating anomalies and unfairnesses which have been created, such as in the case of children's clothing, uncut flowers and the design professions in the construction industry?

I agree with the first half of what my hon. Friend said, but I cannot accept what he said about anomalies. All these matters were debated at considerable length during our debates on this year's Finance Bill, and it would be premature for me to say anything more at this stage.

Why is the Committee on Value Added Tax on Children's Shoes taking so long to report?

It is not fair to the Committee to say that it is taking a long time. It is doing a thorough job. As my right hon. Friend made clear in appointing the committee, it was his intention that it should report in time for its views to be taken into account before next year's Budget. There is a Question on the Order Paper later, and I do not wish to say more on the subject now.

asked the Chancellor of the Exchequer if he will list those items which the Child Poverty Action Group asked him to relieve from value added tax and which he has decided to relieve.

The Child Poverty Action Group asked last February that food, other than items at present liable to purchase tax, houses and rents, fuel, foot- wear, clothing, transport and vehicles, health services, education, newspapers, books and periodicals should be relieved from value added tax or that in some cases the rate should be reduced. All these except vehicles, footwear and clothing have been relieved by zero-rating or exemption.

Is my hon. Friend satisfied in general that the introduction of VAT will not materially affect the ability of charities to continue to raise money and thereby to carry out their good work?

The question of charities was debated at considerable length in the proceedings on the Finance Bill. The House will be aware of those debates and the announcements made by my right hon. Friend at that time. We have received further representations from charities which will be carefully considered.

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 between the fourth quarter of 1964 and the second quarter of 1970, and between the second quarter of 1970 and the latest available quarter.

Between the fourth quarter of 1964 and the second quarter of 1970 the standard of living on the basis of real personal disposable income per head rose by 8 per cent. or at an average annual rate of l½ per cent. Between the second quarter of 1970 and the second quarter of 1972 the standard of living on the same basis rose by 10 per cent. or at an average annual rate of 5 per cent.

Is it not remarkable that in two years of Conservative Government the standard of living has increased more rapidly than in the whole 5½ years of Labour Government, and that the rate of increase on an annual basis is over three times as fast under the Conservative Government as it was under the Labour Government?

My hon. Friend is quite right. This is a tribute to the policies we have been pursuing.

When congratulating himself on a performance in which we have had the highest rate of inflation in peacetime this century, will the right hon. Gentleman also tell us the difference between the balance of payments inherited by the Conservative Government and that which the Labour Government inherited?

What I can tell the hon. Gentleman is that despite the problems we faced last June, when it was decided to float the £ temporarily, at the present time our reserves are twice as high as they were when we took over from the last Government. Since we have been in office we have repaid the whole of the short and medium-term official debt which we inherited.

May I congratulate my right hon. Friend on achieving a 5 per cent. growth rate and a 5 per cent. increase in the standard of living without going into the Common Market?

I take the point but, of course, one of the objects of joining the EEC is that we shall do even better.

Does not the right hon. Gentleman agree that there is a danger that giving these average figures masks the fact that a considerable number of our people are still living below the poverty line and that this is one of the dangers of this kind of question and answer? Whereas many of the stronger people in our economic society have increased their real earnings, a substantial proportion of the community still suffers from very low earnings.

The position is that the proportion of people living on very low earnings is, I believe, decreasing, and in particular, if one goes beyond earnings and looks at the index generally, one sees that certainly one section of the community during the past two years has been doing very much better than during the previous five years in real terms—and that is the pensioners.

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-September, 1972, the latest date available, is estimated at 84p on the basis of the movement in the General Index of Retail Prices.

Is the hon. Gentleman aware that this time last year, when I was putting similar Questions, I was told that things were going to pick up in the next 12 months? What has happened? Since then the figures show that 2½ years of Tory economic policy and pure competition have resulted in the worst inflation we have ever experienced in this country? May we take it that laissez-faire economics is well and truly buried?

The hon. Gentleman is wrong in the first part of his supplementary question. It is important to take into account the increase in the real standard of living achieved, a point which my right hon. Friend has just made. The hon. Gentleman referred to last year's Questions. If he looks at the figures for September last year, he will see that the increase in the index of retail prices was 10 per cent. whereas in September this year it was 7 per cent., representing a very considerable improvement.

Is the hon. Gentleman aware that in Lanarkshire we have a deep depression and large-scale unemployment? Is he aware that the people there are sadly disillusioned with the Prime Minister's statement that he would reduce prices at a stroke, so disillusioned that there is no doubt that when we have a General Election they will once again return a Labour Government?

What we have undoubtedly achieved is a marked reduction in the rate of inflation. What we now have to do is to build upon that and to get back to a solution which could lead to a major contribution to our welfare in future, and with that in view the tripartite talks are of great importance.

asked the Chancellor of the Exchequer what was the annual rate of increase in money supply (M3) in the latest period of three months for which figures are available; and whether the rate of increase since his Budget statement has been in conformity with the policy therein outlined.

The annual rate of increase in the wide definition of money stock (M3) in the three months to mid-September was about 22 per cent., and the rise in the narrow definition (M1) was 4 per cent.—again at an annual rate. These rates of growth are slower than in the earlier part of the financial year when, as my right hon. Friend told the House on 29th June, the growth of money and credit was faster than appropriate to our objectives for the growth of the economy. This slowing down reflects the steps we have taken to moderate the rate of growth of money supply.

It is indeed welcome that there should have been some slowing down, but does not my hon. Friend agree that the rate of increase in the money stock is still horrific? Furthermore, would he care to comment on the remark of the Governor of the Bank of England last week that there was no monetary policy which would at the same time stimulate growth and restrain inflation? Would he tell the House to which direction our monetary policy now inclines?

My right hon. Friend has made it abundantly clear on many occasions in the House and elsewhere that his stance on money supply has been to make sure that in no sense would there be any restriction on the rate of growth of the economy through any tightening of the money supply. At the same time, he has made it equally clear that if the money supply is allowed to increase too fast, that could lead to inflationary pressures. When I tell my hon. Friend that the M3 figures in the three months April to June showed a rate of increase of 8 per cent., whereas in the three months to September it was only 5 per cent., he will agree that we can say that we have made considerable progress.

Is not my hon Friend also concerned with the figures for the increase in personal liquidity, now standing at more than £33,000 million, more than the national income and in effect having the inflationary tendency to raise prices, particularly of land?

I think that it is now recognised that the rate of increase in the money supply in the early part of the year undoubtedly had an effect on the increase in the value of land and houses. I am sure that my right hon. Friend will recollect the directive given to the banks by the Governor at the beginning of August saying that they should exercise restraint in that form of lending.

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

The latest period for which we have full balance of payments figures is the first six months of this year, when there was a current account surplus of some £135 million. In the third quarter the visible trade figures were heavily distorted by the effects of the dock strike. We continue to earn a substantial surplus on invisible account.

Would the Financial Secretary care to comment on the somewhat cryptic statement in the summit communiqué that perhaps national currencies would no longer be used as instruments of economic reserve?

I do not think that that arises from this Question.

Have Treasury Ministers noticed that the prospect of joining the EEC has led so far this year to a further fall in industrial investment and persistent weakness in that area?

I do not think that that arises on this Question.

Is it still the Government's view that the underlying balance of payments situation justifies a rate of 2·60 dollars to the £, as was apparently the Chancellor's view last summer when he said that we were forced off that parity only by speculative movements?

My right hon. Friend has made our position on the floating of the £ very clear and I do not wish to add to what he said.

asked the Chancellor of the Exchequer what were the percentages of the revenue taken in direct taxation and indirect taxation in the year 1971–72; and how the figures compare with those in the year 1969–70.

The shares of central Government's total current receipts taken by direct and indirect taxation respectively were 42·4 and 34·3 per cent. in 1971–72 compared with 40·9 and 38·0 in 1969·70.

As indirect taxation is normally considered to hit the poorer harder than the richer members of society, would not my hon. Friend agree that there has been a change in the incidence of taxation from the rich in favour of the less well-to-do since the Government took office?

Certainly in cutting both forms of taxation my right hon. Friend has had in mind the effects that taxation can have on broader issues, as my hon. Friend suggested. It is for that reason, particularly because of prices, that we have put so much emphasis on the cuts in indirect taxation.

Will the hon. Gentleman give us the figures for next year when value added tax is introduced?

The available information has been clearly stated both in the Red Book and in statements made during the Budget debates.

Despite the surprise with which his hon. Friend's statement was heard, will the Financial Secretary confirm that over the two periods the amount of tax collected rose by more than £1,600 million and that this in itself is evidence of the considerable degree of inflation over which the Chancellor has presided? Will he confirm that if he wants to reduce taxation even more, he could preside over an even faster rate and transfer even more to prices and charges? Does the Chancellor intend to continue with these policies, which are undermining his desire to get agreement with the TUC? In the circumstances, will he at least confirm that he will not proceed with the £300 million tax hand- out due to be given to the higher income groups next April?

The fact is that we have made substantial reductions in both direct and indirect taxation. The true indicator, as the hon. Gentleman will recognise, although he did not say so, is the figure for the overall level of taxation as a percentage of the gross domestic product. In 1969–70 that was 34·5 per cent. and in 1971–72 it was 31·8 per cent. A further significant reduction may be expected this year.

asked the Chancellor of the Exchequer if he is satisfied with the effectiveness of both the general scheme and special scheme for giving preference for Government contracts to companies located in development areas; and if he will make a statement.

Yes. Despite the limits on what such schemes can achieve they contributed to the £174 million of orders from Government Departments which went to the development areas in 1971–72.

Is my hon. Friend aware that the total of contracts given under these schemes by Government Departments to firms located in development areas represents less than 10 per cent. of all contracts? Is he further aware of the disappointment of firms located in development areas with the statistics? Would he not agree that the scheme needs to be reviewed if it is to he made more meaningful?

I think that the 10 per cent figure may be a little out of date. For 1971–72, contracts made in development areas were 12·5 per cent. My hon. Friend must recognise the limits of the scheme in that many of the goods that the Government and the nationalised industries require simply are not made in the development areas. I am sure that my hon. Friend does not suggest that the Government and the nationalised industries should buy products that they do not need.

Is the Chief Secretary aware that Honeywell, a computer organisation in my constituency, is often not allowed to tender for computer contracts with Government agencies and that ICL, without negotiating and without submitting tenders, is getting contracts? Is he further aware that 5,500 people from Honeywell in my constituency are out of work? Will Honeywell be given an equal opportunity with IBM to tender for contracts, especially as mine is a special development area?

As the hon. Gentleman will recognise, questions concerning particular products should be addressed to the Ministers concerned, and in this case it will be my right hon. Friend the Secretary of State for Trade and Industry.

Will the Chief Secretary confirm that these schemes will still be possible after 1st January, 1973, and that they will not be outwith our obligations to the Common Market?

As the right hon. Gentleman knows, the Common Market regulations are not in force and do not apply to us at present. It is only in respect of contracts as opposed to supplies that the directives have been made effective. As far as I am aware, there is nothing in the schemes that would conflict with that.

asked the Chancellor of the Exchequer on how many occasions indirect taxation was increased between October, 1964, and June, 1970; and on how many occasions it has been increased since June, 1970.

Indirect taxation was increased six times between October, 1964, and June, 1970. Since then it has been reduced three times—including the halving of SET, and the largest-ever cuts in purchase tax.

I should like to congratulate my right hon. Friend on what I trust is a habit-forming condition. In the light of the misunderstanding which appears to occur among members of Her Majesty's Opposition, is he satisfied that the introduction of VAT next year is no reason to suppose that this trend will not continue?

I certainly hope that the present Conservative Government, just as other Conservative Governments, will continue to be a Government cutting taxa- tion, in marked contra-distinction to the policy pursued by the Labour Government.

Before we have any more self-congratulation, may we have the unemployment figures for the same period?

Unemployment has been going down considerably over the last few months, as the hon. Gentleman will see if he looks at the figures.

Will the Chancellor explain something that has been puzzling me? As it has become clear by this time that there have been massive cuts in indirect and direct taxation, and there has been a sharp rise in real income, why is it that the Government are now receiving more money through both direct and indirect taxation than any Government in our history? Why, as has become clear from previous answers, only by prodigious efforts and brilliant statecraft might it be possible to get the level of inflation, the level of the growth in the money supply and the balance of payments back to the same conditions as existed under the Labour Government?

I shall he happy to answer the hon. Gentleman. If he looks at the matter fairly and objectively, I think he will agree with me that what matters is the proportion of the gross domestic product that is taken by taxation—[HoN. MEMBERS: "Answer the question."]—I have been asked to answer the question and I will do so; I will deal with the latter part of that question, too. Taking taxation as a proportion of the GDP, under Labour it rose from 25 per cent. in 1964 to 35 per cent. in 1970, while we have been successful in reversing that trend so that in our first two years the proportion has fallen to 32 per cent., and I expect a further substantial reduction this year.

asked the Chancellor of the Exchequer what is the current level of the official gold and foreign currency reserves; and how this compares with the level in June, 1970.

Converted at par, the reserves stood at £2,337 million at end-September this year compared with £1,163 million at end-June, 1970.

While congratulating the Government on these figures, may I urge them not to fritter away the hard-earned reserves by returning to a fixed parity? Will they instead allow the £ to find its own level for as long as possible?

I could not agree with my hon. Friend there. My right hon. Friend has made clear what our intentions are with regard to the question of floating and fixed parities.

Before the hon. Gentleman accepts these congratulations too wholeheartedly, will he accept that it was only the floating of the £, which came about as a result of the massive outflow of funds, which prevented the gold and dollar reserves from falling catastrophically? Does he agree that it was only the effective devaluation of the £ which brought this money, of which he is now boasting, back to this country?

I do not think that hon. Gentlemen should confuse the fact that we are floating with the question of the rate. The fact is that we did take rapid action in the light of currency flows, in marked contrast with hon. Gentlemen opposite who did not do so, with disastrous results on our reserves.

asked the Chancellor of the Exchequer what he estimates to be the current growth in the gross domestic product.

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

The indications are that the economy is growing at the rate forecast in the Budget, namely 5 per cent. a year over the period referred to in the Budget Statement.

Does my hon. Friend agree that this is a matter for more self-congratulation? Ought not he and his right hon. Friend to go about the country boasting that we are now exceeding the growth rate even of France and therefore of all the countries of the Six—or might that boast be a slight contradiction of what we heard 12 months ago?

It is true that my right hon. and hon. Friends and I go about the country, not boasting, but giving an objective appraisal of what we have achieved. It is also true to say that my right hon. Friend and my Treasury colleagues point out that we are determined to achieve the rate of growth mentioned and that we believe that the prospects in the European Community will give us great opportunities in future.

While recognising the great improvement in the rate of growth under this Government compared with the Labour Government, may I ask my hon. Friend whether he will consider a further reflationary package to increase the rate of growth to 6 per cent.?

It is worth stressing that between 1964 and 1970 the gross domestic product grew at an annual rate of 2·2 per cent. and that the economy is now growing at more than twice this rate, due in some considerable measure to the very large reductions in taxation which my right hon. Friend has brought about. As to the point of a 6 per cent. growth rate, the Budget forecast allowed for growth at 6 per cent. between the first half of this year and the first half of next year because it was realised that the coal strike would depress output in the first half of this year.

In the midst of the welter of congratulations which the hon. Gentleman and his hon. Friends are receiving, would he care to explain why there is the need for these crisis conferences with the CBI and the TUC? Is he prepared to scrap them now that everything is going so well?

I have made it clear that I do not believe that it is right to be complacent. Certainly, having taken steps to bring down the rate of inflation created by the previous Government's irresponsibility, we believe it is now right that we should hold discussions on a tripartite basis to find a solution to these problems which will be long-lasting and will continue under not only this Government but the Conservative Government after the next election, too.

asked the Chancellor of the Exchequer what has been the net increase in National Savings in the most recent annual period for which figures are available; and what were the comparable increases or decreases in the same period three, five and seven years previously.

In the 12 months to the end of September, 1972, the amount invested in National Savings increased by £928 million. This compared with a decrease of £30 million in 1968–69, an increase of £110 million in 1966–67, and an increase of £150 million 1964–65.

Does my hon. Friend agree that these figures are quite outstanding and encouraging? Does he further agree that to give a further boost to National Savings and to protect the funds invested he should give serious consideration to introducing a savings certificate or savings bond, the repayment terms of which were linked to the cost of living?

That would normally be a budgetary matter. I have noted my hon. Friends suggestion. It might be helpful to spell out the sequence of figures, not in the order my hon. Friend asked but as they actually happened, from 1964 to 1972. The figures then run: plus £150 million; plus £110 million; minus £30 million up to the end of the period of office of the last Government; and then plus £928 million, which is the latest figure. This reflects substantially the efforts which the Government have already made to increase savings. I do not think that there is a case at this stage for introducing the particular kind of savings certificate my hon. Friend suggests. As to the measures taken by the Government—

You have read enough.

—we have taken steps to increase both consumer expenditure and savings.

Have these savings done any good or have they all gone into land speculation?

I believe that these savings, which have gone into National Savings, have done a great deal of good in helping to achieve a high level of investment.

In view of the Government's desire to increase all small savings, will the hon. Gentleman have a look at the possibility of exempting from income tax the small savings of ordinary working people who put their money into co-operative societies, to the extent of £20, as is done elsewhere?

I have noted the hon. Gentleman's suggestion. I do not think that in present circumstances and in the situation I have described it would be appropriate to do more because the performance is an extremely fine one of which the National Savings movement is rightly proud.

asked the Chancellor of the Exchequer what is the number of persons paying tax on earned income at the most recent available date and two years earlier.

The latest year for which figures are available is 1969–70, when about 24 million persons with earned income paid tax. The figures for the two preceding years were about 23½ million and 24 million respectively.

Is it not clear that many of those who were taken out of the tax net not long ago will be paving income tax again by the end of the year? In view of this, if the Government's claims are to be justified and the congratulations being given to them are to be deserved, is not early action required, if not merely to create further justice then at least to prevent further over-burdening of the staff of the Inland Revenue?

Is it the proportion of incomes that is taken in tax that matters, and certainly if we had not made the substantial reductions we have made, reversing the trend of the previous six years, the figure would be much higher. What the hon. Gentleman says is to some extent true, but this is the effect of rising incomes in an inflationary period. This underlines the importance of the Government's campaign against wage-related inflation and of the discussions at present going on at Chequers.

Before it gets into all the economic textbooks that the thing which really matters is the proportion of income taken in tax, may I ask the hon. Member to confirm that the important thing is what one defines as a tax? Would he further agree that for the ordinary man what matters are the unavoidable charges on his income, which have not decreased under this Government but have increased?

I am not sure that the hon. Gentleman's party ever bothered about the proportion. Hon. Gentlemen opposite seem to think that rents, food bills, fares and all these things are to be regarded as taxes. We take a different view.

asked the Chancellor of the Exchequer if he has assessed the indirect effects upon the cost of living of the payment of normal social security benefits for strikers' families.

These cannot be quantified.

Would my hon. Friend not agree that possibly one of the side effects of these payments is to make it easier for strikers to insist on wage settlements which may be inflationary? Is this not of considerable importance for the economy and is it impossible to make an estimate?

I do not believe that it would be possible to quantify these effects. I agree with my hon. Friend that there is widespread public concern about these payments. As he knows, the Secretary of State for Social Services is studying this question, but it is not an easy one.

Is the hon. Gentleman aware that if the campaign which is being run by some of his hon. Friends succeeds, it will undermine the new approach of conciliation which has been undertaken by the Prime Minister? As the package deal is now in danger of sinking because it does not include profits, dividends and capital gains, will the hon. Gentleman warn his hon. and right hon. Friends that there will be even less chance of it succeeding if this campaign is pushed further?

I do not accept the second part of the hon. Member's statement. This is a complicated question and my right hon. Friend the Secretary of State is looking at it.

Does my hon. Friend not agree that there is a great deal to be said for the unions contributing towards paying their own people who are on strike? Is he aware that many people feel that if the public are to contribute to national assistance strike payments, the unions should also contribute?

I fully understand my hon. Friend's point. This question has complex ramifications. My right hon. Friend is looking at it.

Is it not clear that the trade union members of the country pay both taxation and national insurance contributions? Should not their wives and families receive assistance according to the law of the land? Will the hon. Gentleman repudiate the vicious campaign that has come from some of his hon. Friends? Does he agree that it is an absolutely disgraceful campaign and that they obviously want working-class people to starve when they go on strike?

The hon. Gentleman is certainly right with regard to the position of the striker by comparison with that of the dependants. As to the other aspect, my hon. Friends have expressed their views and the hon. Gentleman has expressed his. My right hon. Friend is looking at all aspects of this question, but it is a complicated one.

asked the Chancellor of the Exchequer whether he will now give an undertaking not to restore a fixed rate of exchange for the £ sterling.

No, Sir.

As all recent experience shows that growth and full employment is not compatible with fixed exchange rates, why cannot the Chancellor stick firmly to his Budget Statement that he would alter the exchange rate whenever necessary?

My Budget Statement was wholly consistent with the Government's view that the international monetary system should be based on a regime of fixed but adjustable parities, and that is our policy.

Does the right hon. Gentleman feel committed to returning to a fixed parity by, say, the end of 1973, and if he is to achieve even that target, will he not concede that he desperately needs the agreement of the TUC to the package on Thursday? In those circumstances, will he tell his hon. Friends, who earlier this afternoon were boasting about tax reductions, that he proposes to reverse all those policies to have any hope of getting agreement with the TUC?

I have made it absolutely clear on innumerable occasions that we intend to return to a fixed parity as soon as possible. I hope that this will be before 1st January.

asked the Chancellor of the Exchequer what studies have been made concerning the preservation of confidentiality in information exchanged with other Government Departments in the operation of future schemes for tax credits.

Paragraph 46 of the Green Paper on the Tax-Credit scheme states that the way in which the scheme would be administered will be the subject of further detailed study, Ministers are well aware of the need to take whatever steps are necessary to ensure that the customary standards of confidentiality are observed.

Is the hon. Gentleman aware, when he says that Ministers are already aware of the necessary steps, that his Department has already given confidential information to employers by classifying people with an H, L, or T in the new tax codes? Since Ministers are prepared to let confidential information be given away to that degree, how much confidence can people have about further possible breaches?

I am happy to have this opportunity to refute once again the wild and untrue allegations that have appeared in some newspapers about the HLT Scheme. The only information that could possibly be divined from that scheme is that if someone gets an H code he is entitled to the married allowance. As the hon. Member knows, in the leaflet that went out to taxpayers with the notice of coding, months before they will ever reach employers—no employer has yet had any notice of coding as a result of the HLT Scheme—it was stated in heavy type that if the taxpayer did not wish this information to be communicated to his employer, he could apply for a T—that is, a miscellaneous coding.

asked the Prime Minister whether he will make a statement on the summit conference.

asked the Prime Minister whether he will make a statement on the summit conference.

I would refer my hon. Friends to the statement which I made yesterday. —[Vol. 843, c. 791–814.]

Is not the lesson of the summit that British interests, such as regional development, have been successfully advanced from within the Community and that the policy of renegotiating the treaty is as irrelevent as the nitpicking performance which we had from the Leader of the Opposition yesterday?

Yes, Sir.

Part of the Community statement refers to proposals for dealing with pollution. Will my right hon. Friend say something more about what he has in mind in that respect?

This matter was very fully discussed during the first day of the summit and it was generally agreed that the interaction of pollution in Europe with the quality of life could be of such consequence to the member countries that a firm programme should be laid down for dealing with it in its different aspects. At the same time, there were several indications that we in this country have made much greater progress than some of the other members of the Community and the techniques we have learnt, together with, in many cases, the equipment we produce, will be of value to the Community as a whole.

Is it not clear from what the Prime Minister said yester- day that he has no idea of the amount we are likely to receive by way of regional aid, let alone whether it will equal the amount we give to the common agricultural fund? Has he not taken a leaf out of the book of his predecessor, Mr. Neville Chamberlain, whose slogan, slightly modified, would be, "If you cannot concede, try, try, try again"?

The summit laid down the regional policy, its basis and the source of the funds—that is, from the Community funds as a whole. It is to deal with two matters of particular interest to us—the results of industrial change and structural under-employment. This policy will be worked out in detail by the summer, and the Council of Ministers will settle, in the Community budget, the funds to be allotted to it.

I am sorry that the Prime Minister has not taken the opportunity to add to the information he gave us yesterday because, as he will well understand, the whole House is interested to know what is involved in the regional fund. The communiqué refers to its being financed from the Community's own resources. Does the Prime Minister envisage a switch from the existing uses of the Community's own resources into the regional development fund, or does he envisage the Community raising additional resources within the category of "own resources"?

The sources of the Community's funds are already laid down. The balance between various uses of those resources has to be settled in the Community's budget by the Council of Ministers.

When dealing with the difficult but very important question of political machinery, will my right hon. Friend bear in mind, and ask his colleagues to bear in mind, that it already exists in Western European Union, which could well be used if the members of it so desired? If they so desired, Ireland and Denmark might well be interested to join it, and that might help.

The views of the Heads of Government at the summit were that the machinery should develop in the Community itself. Western European Union fulfils a particular purpose in connection with the treaty, which is of great importance. But I do not believe that my hon. Friend is right in thinking that the Republic of Ireland would wish to join Western European Union.

Will the Prime Minister elaborate on the answer he gave just now to my right hon. Friend the Member for Stepney (Mr. Shore) about the Community's own resources in relation to regional expenditure? Is it not a fact—I think that the right hon. Gentleman will agree with this—that the Community's own resources are pretty fully committed with expenditure commitments, including, above all, the common agricultural policy? Does he interpret what is now proposed as meaning that there will be a switch from existing expenditure—for example, a reduction in the common agricultural policy subsidies—in order to accommodate the regional expenditure; or does he feel, as is probably realistic, that additional taxation will have to be raised, which would fall very heavily on us in the present circumstances of taxation? Which of those two does the right hon. Gentleman have in mind—additional taxation for the regions, or a switch from agricultural expenditure within the present total?

The Community resources are increasing considerably, first, because of the economic growth of the Community, secondly, because of the additional new members, and, thirdly, because of value added tax coming into operation. The total amount of the budget will have to be judged from year to year, as with any other budget. The balance will be apportioned by the Council of Ministers.

asked the Prime Minister if he is satisfied with the progress of his Government's policies to combat inflation.

We have substantially reduced the rate of increase of prices since the summer of 1971. What we are now proposing is a voluntary arrangement with the TUC and the CBI on ways of achieving our agreed economic objectives, including moderation in the rate of cost and price inflation.

While the rate of increase in the standard of living and the growth rate in this country have both practically doubled and the rate of inflation has halved since the Government came into office, may I put it to my right hon. Friend that the perfectly true and satisfactory statistical figures do not cut much ice with the housewife who is worried because prices seem to be rising daily? Is my right hon. Friend aware that any action which the Government can take to restore the value of money will have the full backing of the overwhelming majority of the people of this country?

I agree with the last part of what my hon. Friend said, but the facts he mentioned in the first part are fully borne out by the statistics. At this moment economic growth in this country is at least 5 per cent., which is far greater than the rate which the Labour Party achieved at any time during its last five years in office.

In the talks with the TUC, is not the Prime Minister basing his argument on trying to achieve an incomes policy which for many workers will mean an incomes freeze, and as his argument is central to the Government's philosophy, may I ask him how he has come to change his mind on the issue of incomes? He now wants to negotiate a so-called voluntary policy with the TUC after attacking the TUC and introducing the Industrial Relations Act, the Housing (Finance) Act, and so on. What has changed his mind?

The Government have been prepared to consult and negotiate with the TUC from the day they came to office, and the TUC is well aware of that. They have carried out their election undertakings to introduce the Industrial Relations Bill and the "fair rents" Bill, and we have carried both of them to the Statute Book.

Is it not a fact that the substantial taxpayer subsidisation of the wage and salary bills in the nationalised industries is liable to add to the pressures of inflation? If it be true that the Government are contemplating subsidising the price of imported foods and raw materials, will not that tend in the same direction?

The point raised in the second part of my hon. Friend's supplementary question is not under discussion other than from the point of view of what has been happening in certain specific arrangements about milk. On the first part, in any policy of price restraint one must weigh the impact of nationalised industry prices rising and themselves creating inflation against the impact of the subsidy which goes to the nationalised industries and its effect on the money supply. This is where the balance must be struck. But there can be no doubt that if the nationalised industries were to increase their prices in order to remove the need for subsidies, the impact on the retail price index would be very great indeed.

Can the Prime Minister explain why, when the Opposition put down Questions like this, he transfers them to the Chancellor of the Exchequer and when hon. Members opposite put down Questions like this he answers them? Is he not guilty of bias, and will he give an undertaking that in the next Session he will accept from the Opposition Questions on inflation like Question No. 03?

If the hon. Gentleman likes to give me any example of a Question which he thinks has been wrongly transferred, I will examine it. When he last made such an allegation in the House, I wrote to him showing that he was completely wrong.

asked the Prime Minister if he is satisfied with the co-operation between the Departments of Trade and Industry, Environment and Employment in increasing prospects for new jobs in Lancashire; and if he will make a statement.

Yes, Sir. Our regional industrial policy is designed to assist the creation and maintenance of employment particularly in assisted areas.

While no one other than people completely blinded by prejudice would fail to recognise the remarkable job which the Prime Minister did in Paris for the people of Lancashire, may I ask my right hon. Friend whether he agrees that the unemployment figures are totally misleading in that they overstate the problem nationally and understate it in certain areas? Does it not lead to difficulty in other Departments by devising a policy which can create local shortages of labour which are inflationary yet still leaving high unemployment in places like Bolton?

We are anxious that the employment figures should be as accurate as possible and a fresh examination has been made of them to see whether there are any difficulties of the kind mentioned by my hon. Friend. However, last month there was a reduction in unemployment in Bolton from 5·4 per cent. in September to 4·7 per cent. in October. I am sure that my hon. Friend and the House are gratified by that.

Is the Prime Minister aware that there is considerable concern among Lancashire cotton workers at the continued contraction of the British textile industry? Can he give them an assurance that the commitment which he accepted at the summit conference in Paris of a 15 per cent. increase in imported manufactured products from the developing world will not mean new and additional burdens for the British textile industry?

I fully realise the importance of that point. Those at the summit did not commit themselves to the 15 per cent., although we were prepared to accept it, had other countries been prepared to accept it. However, within that 15 per cent. it would have been open to us to apportion it between particular commodities which are traded with the developing word. The Community accepted a substantial increase, but we are able to govern the particular commodities which come in.

asked the Prime Minister how many ministerial broadcasts he has made this year.

Two, Sir.

Without commenting on the legal problem of thalidomide children, may I ask the Prime Minister whether he will make a broadcast calling on the Distillers Company to face up to its moral responsibilities, thereby endorsing the view expressed on both sides of the House? Will he announce in that broadcast that he has asked the Secretary of State for Social Services to convene and chair a conference between the company and the children's parents so that they can seek to expedite a solution, because the Government, having distributed the thalidomide, have their share of responsibility for this tragedy?

I do not accept the last part of the hon. Gentleman's statement. In the circumstances of the legal proceedings which he has described, I do not think that it would be right for me to broadcast or to make a public statement. But the hon. Gentleman has his Early-Day Motion on the Order Paper, and the Government will consider the question in the light of that Motion and Mr. Speaker's Ruling.

I do not suggest that my right hon. Friend should emulate his predecessor in the frequency of his television appearances, but would he accept that many of us on this side of the House and many people throughout the country would welcome more frequent appearances than has been his recent practice?

It is very gratifying that, in two days, both sides of the House should be in agreement on at least this one issue.

If the Prime Minister decides to make another broadcast, will he explain to the old-age pensioners, in particular, why the Government's policy on negative income tax, which is supposed to do them a good turn, must wait for five years, because many of them will be dead long before that?

The Green Paper itself has to be discussed, but I think that the whole House recognises the immense administrative problems of changing over the whole of our tax and social services payment system in the way proposed. We have always been prepared to look at the timing of this, but I do not think anybody would underestimate what is involved in it. From the point of view of old-age pensioners, we have accepted what no Government have accepted before, that is, an annual review. What is more, since we have been in office we have increased their pensions by approximately 33 per cent., a very considerable increase.