asked the Chancellor of the Exchequer if he will make a statement on the current progress of the reform of the international monetary system.

The deputies of the Committee of 20 are meeting this week in Washington, and I hope very much that they will make real progress towards international agreement on the reform of the monetary system.

Can my right hon. Friend assure us that he will press his colleagues in the Group of Twenty to come to some conclusive arrangement at their meeting this week?

It is likely that at this week's meeting of the deputies all aspects of reform will be covered. In answer to the wish of my hon. Friend that we should make real progress, I would say that when one considers the events that led to President Nixon's announcement on 15th August last year and all that has followed, the need for reform is obvious. At the last meeting of the IMF in Washington in September I did not meet one Finance Minister who took a different view. The encouraging thing is that by and large there is now a great deal of common ground.

asked the Chancellor of the Exchequer what plans the Government have for making good the deficits that will be incurred by nationalised industries which were about to raise charges but may not do so as a result of the freeze.

asked the Chancellor of the Exchequer what is his latest estimate of the cumulative cost to public funds of subsidies paid to the nationalised industries to compensate them for participation in price restraint and of the cost of such subsidies during the current financial year; and if he will make a statement.

As I said in answer to my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), on 24th October, we are in discussion with several of the boards about the amounts of financial assistance that will be required.—[Vol. 843, c. 214.]

Does not the hon. Gentleman realise that the coal, gas, electricity, transport and dock industries will go into serious deficit as a result of the CBI 5 per cent. norm plus the freeze? In those circumstances, would he not agree that the Government should make good those deficits by subsidies and also take into account the position which will arise in those industries as a result of their not being able to put up their charges sufficiently to meet their costs over a period of 18 months?

I am sure that the hon. Gentleman is remembering the figure which my right hon. Friend the Prime Minister gave on 31st October in the debate on the Address, when he said that deficits in the current year will be about £240 million. In the answer that I have just given. I have indicated that we are in discussion with these industries. Perhaps I might also mention the Post Office; the Bill to deal with the situation in this regard was given a Second Reading a few days ago.

My hon. Friend referred to the Prime Minister's statement. Did he not also say that the current deficit on the nationalised industries' profitability targets was running at £500 million a year? How will this be financed—by allowing interest rates to rise, out of higher taxation or by other means which will stimulate inflation? Surely the only way which is compatible with restraint of inflation is allowing interest rates to rise.

As I am sure my hon. Friend recognises, it would be wrong for any Treasury Minister to anticipate the future level of interest rates. As for the figure of £500 million, my hon. Friend is right. My right hon. Friend the Prime Minister said that this was the figure the industries should be earning on their capital if there has been no price restraint and no freeze. But the levels of compensation are still under discussion and it would be premature for me to try to take the matter further at this stage.

Is not the Government's philosophy wrong? Will the Minister start thinking in terms not of deficit but of just how much the public purse should pay towards services industries existing at all?

No one regards this as a particularly happy situation. It is one of the prices which must be paid for putting the stabilisation of inflation at the top of our priorities. We believe that the contribution which the boards of the nationalised industries have agreed to make over the last 15 months and more has played a part in keeping down the level of price inflation below what it would otherwise have been. I am sure that they are right and we are grateful to them for going along with this. But we must now deal with the position both in respect of the past and in respect of the effects of the freeze.

How much was included in this year's Estimates for subsidies to meet the revenue losses of the nationalised industries? Does my hon. Friend think that this is a right charge to lay against the taxpaper in view of the Conservative Party's general attitude to subsidies for industry?

If my hon. Friend would care to table a Question I could give him details of the amount that will be neces- sary to go into the Estimates for this year, some of which will go into the Supplementary Estimates. On the second part of my hon. Friends Question, I can only say that we regard the reduction of the level of inflation as of top priority and we believe that stabilisation of the prices and charges of the nationalised industries has a contribution to make in this regard.

Will the Chief Secretary now say what is the Government's attitude to subsidies?

I have nothing to add to what I have already said.

asked the Chancellor of the Exchequer if he will publish a White Paper setting out the full implications of Common Market economic and monetary union.

Such a document would be premature at the present stage.

Why are the Government seeking to hide from Parliament and the British people the full implication of even the first stage of economic and monetary union, which must involve some loss of control of our Budget, economic management and taxation? Furthermore, will the Chancellor assure the House that he will give away no details of his 1973 Budget to his Common Market partners before that Budget has been submitted to this Parliament?

On the second point, it is very unlikely that I shall be asked—I certainly have not been asked so far—for any of the detailed proposals I may consider making in my Budget. On the hon. Gentleman's first point, there is no question of hiding anything. The Government have made their position quite clear about this on many occasions. We support the intention recorded in the sumit communiqu" to transform the complex of relations between the members of the EEC in the enlarged Community into an economic and monetary union.

rose—

Mr. Bruce-Gardyne—I am sorry, Mr. Marten.

Thank you, Mr. Speaker.

I am sorry, it was a geographical slip.

Honoured and flattered as I am, may I ask the Chancellor whether he has seen the statement issued last Thursday by the CBI, which has come out against fixed exchange rates and which said that unless there is greater flexibility in the exchange rates this will lead to deflationary policies in this country and to restrictions on capital movements, which is just what many people opposed to this for a long time have been saying? Why has my right hon. Friend just woken up to this?

Perhaps my hon. Friend is a little out of touch. I have been having discussions on these matters with the CBI on a number of occasions and I know the CBI's views. The Government have made absolutely clear where they stand on fixed parities and on temporary floating.

Can the Chancellor enlighten us a little? We are not clear whether the Chancellor's discussions with the CBI led to the CBI converting him or led to his converting the CBI. As, however, the right hon. Gentleman has recommitted the Government to the objective of total monetary union, may I ask whether he shares the CBI view that this is impossible without total economic union and a common fiscal policy? Does he not agree with the overwhelming majority of opinion in the country that to aim for such things at this stage would be grossly prejudicial to Britain's interest?

I agree with the overwhelming majority of finance ministers throughout the world. What we want is a system of fixed but flexible parities.

As the Government have committed the country without prior parliamentary debate to economic and monetary union by 1980, would it not at least be reasonable to submit such a White Paper as the hon. Member for Waltham-stow, West (Mr. Deakins) requests, especially as no such steps were contemplated in the White Paper presented last year?

No, Sir, I do not think so, for the reasons I have given.

asked the Chancellor of the Exchequer if he will take steps to prevent increases in the price of packaged and tinned foods as a result of value added tax.

Most of these foods will be entirely relieved from VAT by zero-rating. Where purchase tax is currently applied to such foods the effect of the abolition of purchase tax and SET and their replacement by VAT will be a reduction in the overall tax burden on the goods in question.

Is the hon. Gentleman aware that he has not answered the Question? How is it that the cost of food will not rise, bearing in mind that the packaging of food is subject to value added tax? How can one buy food that is packaged unpackaged if the package is already wrapped?

I am afraid that the hon. Lady has not yet understood how value added tax works. What she must do is constantly to repeat to herself the words "I must remember to deduct my inputs". [Laughter.] Let me explain to the hon. Lady. Any VAT payable on packaging and tins can be reclaimed fully by the food manufacturer, so that the final product, including the packaging and tins, will be zero-rated.

Can my hon. Friend control his output, because some of the figures are indeed misleading? Included in these will be biscuits which are packaged in tins, and the cost will rise by 10 per cent. or 7½ per cent.

My right hon. Friend must appreciate that the only items of food which will bear any tax on the introduction of VAT are those which are now purchase-taxed foods. Purchase-taxed foods will be yielding about £35 million less on the introduction of VAT than they were when the previous Government left office.

As the Chancellor of the Exchequer has never made it plain that he intends never to tax food, will the hon. Gentleman take this opportunity of saying that at any rate the present Government will resist any attempt by the EEC to make us tax food?

We have made this clear on very many occasions. So far, the member States of the Community have agreed only to introduce the system of VAT. They have not agreed on the harmonisation of rates or coverage, and the hon. Gentleman knows that quite well.

asked the Chancellor of the Exchequer what estimates have been made regarding price increases on clothing and household goods when value added tax is enforced.

Most clothing and some household goods are liable to purchase tax at the rate of 11¼ per cent. of the wholesale value and this is roughly equivalent to a VAT rate of 7 per cent. Many other household goods are liable to the 25 per cent. rate of purchase tax, equivalent to a VAT rate of the order of 18 per cent. VAT at the standard rate of 10 per cent. will therefore result in small price rises for some goods and rather larger price reductions for others. The favourable effect of the abolition of SET also needs to be taken into account.

Is the Chief Secretary aware that the general public have no idea what he means when he says that certain items of food and clothing might cost less while others will cost more? Surely what will really happen is that ordinary working folk will find their clothing and food bills increasing dramatically. Will the hon. Gentleman therefore consider encouraging the Chancellor to converse with the Prime Minister about having proper consultations with commerce and industry and the trade unions to see what can be done to alleviate the effect of the tax? Will he also ask his right hon. Friend to refrain from making the sort of hysterical outbursts that he makes when this sort of consultation is under way?

The hon. Member has made a number of points, some of which are wholly wrong. Less tax will be charged on those items of food that will be subject to VAT than at present. My hon. Friend the Minister of State has given the figures. It is quite wrong and grossly irresponsible for the hon. Member to put about scare stories of that sort which Ministers speaking from this Dis- patch Box have flatly denied time and again. I hope that the hon. Member will use his influence to correct any false impression and that he will not follow the example of his right hon. Friend the Member for Leeds, East (Mr. Healey) who continues to spread wrong stories about the effect of our tax changes.

Does my hon. Friend agree that it might be difficult for the average housewife to calculate the adjustments which should be made in the removal of purchase tax and SET and in the addition of value added tax? Will he give guidance to housewives about which goods should be cheaper and which should be dearer?

My right hon. Friend the Chancellor has this aspect of the introduction of VAT very much in mind. We intend to ensure that the public fully understand the effects of the tax changes a little nearer the date of their implementation.

Will the Chief Secretary agree that the introduction of value added tax on 1st April next year will mean an increase of 10 per cent. in the cost of children's clothes? Is it not absolutely outrageous that the Government should be contemplating such a measure when either the freeze legislation or its follow-up legislation will be in force? Will the hon. Gentleman accept that the vast majority of the British people regard the tax as ludicrous, unjust and unpopular? Does he agree with those of his right hon and hon. Friends who believe that it is high time the Government announced their decision at least to postpone the introduction of the tax until these ludicrous and unjust anomalies are removed?

My right hon. Friend the Chancellor has no intention whatever of following that advice. Even on the right hon. Member's single example—and it is quite wrong to select one case, because one should look at the effect of the tax in the round—I do not necessarily accept that the price will go up by the full 10 per cent. Retail establishments are saving on the SET on their staffs and they are saving on the purchase tax on the inputs, on stationery and other things. The effect of the change must be considered in the round, taking full account of the effects of the ending of purchase tax and SET.

asked the Chancellor of the Exchequer how much lower the tax burden on food will be in 1973–74 under a value-added tax of 10 per cent. compared with purchase tax and selective employment tax combined at the rates prevailing in June 1970.

This reply also answers the supplementary question of the hon. Member for Ealing, North (Mr. Molloy) about food.

Does my right hon. Friend agree that, arising from that answer and the exchanges earlier resulting from the Question of the hon. Member for Eton and Slough (Miss Lestor), Opposition Members and some on this side are either so stupid as to believe their own propaganda or so malicious as to distort the truth deliberately? Does he also agree that in going around the country telling people that VAT will put up food prices when it will not, they are making it more likely that housewives will not resist those increases if any shops try to make them?

I could not have put the point better myself.

Will the right hon. Gentleman give us the other figures, when he talks about the £100 million, and tell us how many hundreds of millions of pounds were involved when food subsidies were abolished, and how many will be slapped on to the cost of food as import levies when we enter the Common Market? Is this why the price of food is going sky high?

Since we have been in office we have already halved the rate of SET—[Interruption.] I will give these figures. SET will be abolished altogether when VAT is introduced, and so will purchase tax. If the hon. Gentleman thinks that he and those who sit with him on the Opposition benches have anything to crow about with regard to the burden of tax on food, I would remind them that in October, 1964, when their Government came to office, purchase tax on those foods liable to it was 15 per cent. In July, 1966 the Labour Government increased it to 16½ per cent. In March, 1968 they increased it to 20 per cent., and in November, 1968 to 22 per cent.

What about subsidies?

Next April, when VAT comes in, VAT will be levied at a rate of 10 per cent.

With regard to our pledge not to put VAT on food, if at some time after 1st January the Common Market gets around to harmonising VAT and wishes that it shall be put on food, will the British Government pledge themselves here and now to regard that as a matter of vital national interest requiring the unanimous decision of the Common Market?

My hon. Friend cannot have been present when I dealt with this matter in some detail during the debates on the Finance Bill. I have nothing to add to what I said then.

When speaking of being stupid, does the Chancellor really think that, because the Treasury has theoretically worked out that purchase tax and SET rates taken together will give a remit on VAT, any manufacturer or retailer actually intends to return the SET charge to the consumer? Is there any reason why he should? Is there any mechanism that makes him do so? Has it happened in the past? Who is really being stupid about this?

Anybody is particularly stupid if he thinks that during the successive increases of taxation on food under the previous Government—[Interruption.] People are being very stupid indeed if they do not know that those increases made a direct contribution to increasing the price of food. The simple fact is—and the whole country knows this—that the Labour Government deliberately set out—[HON. MEMBERS: "Answer."]—by means of increases in indirect taxation to put up the price of food, whereas since we have been in office we have consistently reduced the taxation burden on food and so contributed towards much more stable prices.

rose—

Order. Let us move to calmer waters.

asked the Chancellor of the Exchequer what is his latest estimate for the overall trade figures out-turn in the balance of payments for 1972–73 and 1973–74.

It is not customary to give forecasts of the balance of payments between Financial Statements. Though the dock strike has distorted recent visible trade figures there seems to have been underlying growth in both exports and imports. The invisible surplus remains high and last month there was a small surplus on current account.

I appreciate my hon. Friend's standing inhibition about giving figures which can be misconstrued but, as with the adjustment with sterling it looks as though we shall have a trade balance-of-payments surplus of several hundred million pounds for the current year and for next year, will he confirm that the rate of growth of the economy continues to take priority?

The rate of growth of the economy continues in accordance with the forecast of my right hon. Friend the Chancellor of the Exchequer at the time of his Budget Statement. But I cannot add to what I said earlier about the balance-of-payments figures.

Will the Chief Secretary at least comment on the estimate of the OECD that we shall have a deficit on the balance of payments next year of over £300 million? Has he been informed by the OECD of what assumption has been made in reaching this figure of the value of the £ sterling during 1973?

I have seen reports in the Press but, as the right hon. Gentleman knows, it is not customary to comment on other people's forecasts. I shall certainly not be drawn into making a forecast of my own.

asked the Chancellor of the Exchequer what he estimates the present velocity of circulation of the money supply to be; and what he estimates it will be in 12 months' time.

The velocity of circulation, expressed as the ratio of gross national product at current prices to M3, was 2·75 in the second quarter of 1972. This is the latest period for which full national income data are available. Changes in the velocity of circulation are influenced by a large number of factors and I am not prepared to predict what its level will be a year hence.

I note that my hon. Friend can give only historic information about the velocity of circulation. As it is clearly impossible to forecast the velocity of circulation and as control of the velocity of circulation is essential if we are to be able to control the supply of money, would not my hon. Friend agree that attempts to control the supply of money must be a very inadequate means of controlling the economy generally?

My hon. Friend would find, I believe, if he looked at page 39 of "Economic Trends" that the velocity of circulation of money had not varied very much since the 1950s, and I do not think that is a particular item which he should look at when studying money supply.

Surely it is entirely permissible for the hon. Gentleman to consider money supply itself, though I agree with the Minister of State about the velocity of circulation. Will he now tell us exactly what is the Government's view on money supply? We have been looking at some of the Minister's previous answers and they are almost incomprehensible. We heard from the Government Front Bench earlier today that the stabilising of inflation was at the top of the Government's list of priorities. If that is so, why do they not act on the money supply—even though in our view that would have an effect on unemployment—because if inflation is top of their priorities surely they should act on money supply, whatever its effect elsewhere?

We are acting on the money supply. We are keeping it constantly under review and we have made extremely good progress in slowing down the growth of money supply from the fast rates in midsummer. The growth in M3 in the last three months has been 4¼ per cent. compared with an increase of 8 per cent. in the three months to mid-June. This trend is continuing and we are keeping it under very close review.

asked the Chancellor of the Exchequer when he expects to be able to return to the terms of the Smithsonian agreement.

asked the Chancellor of the Exchequer whether he will now announce that the £ sterling will cease floating on 31st December, 1972.

asked the Chancellor of the Exchequer if he intends to continue the sterling float beyond the formal date of British entry into the European Community on 1st January.

I have nothing to add to the many statements which I have already made.

Is not my right hon. Friend now in a position to notify a new middle rate to the IMF, and has he come to any understanding with our new partners in the Nine if we have to defer the end of floating until after entry?

I can answer my hon. Friend only by saying that I have already made it clear publicly and on many occasions that it is our intention to return to a fixed rate as soon as conditions permit. I have also said that I hope it will be possible to bring floating to an end before 1st January. I can go no further than that.

Does my right hon. Friend necessarily exclude devaluation of sterling in his calculations or is he talking of a return to a fixed rate based on the Smithsonian agreement, which was 2·60 dollars, and the rates associated with it?

I think that on reflection my hon. Friend will understand why I cannot speculate any further about the future course of the exchange rate other than to repeat the assurance I gave at the outset of the question.

What precisely are the conditions that are likely or not likely to permit?

Obviously the totality of conditions which affect any exchange rate.

asked the Chancellor of the Exchequer if he will formulate plans for taxing heavily the unearned gains of land speculators.

They are already liable to tax. Profits accruing to an individual from speculative dealings in land are liable to tax at full income tax and surtax rates. Companies pay the full corporation tax rate and in addition their shareholders are liable at graduated rates of any distributions.

Does not the Chief Secretary recognise that in spite of that considerable profits are being made, so much so that the Chancellor himself has described them as offensive although he has done nothing about them? Does not the hon. Gentleman consider that it borders on the obscene to freeze agricultural workers' and hospital ancillary staffs' wages while these speculators are reaping enormous benefits with the Government doing nothing about them?

It is quite wrong to say that the Government are doing nothing. The Inland Revenue's armoury for dealing with speculative gains is a strong one. It was toughened by legislation passed by the Labour Government and supported by us. If the hon. Gentleman knows of any case where he believes that speculative gains in property transactions have not been properly taxed—

Read the newspapers.

—perhaps he will pass the details to us so that they may be examined.

Is not this Question, although admittedly ambiguous, much more complex than it appears? If it refers to those who purchase land and build houses upon it, would not the effect of the suggestion by the hon. Member for Fife, West (Mr. William Hamilton) be one of two things? Would it not either raise the prcie of the house or increase the number of homeless people, which is not necessarily a good thing.

Those are obviously factors that any Government must take into consideration but as the rate of tax on the transactions mentioned by the hon. Member for Fife, West (Mr. William Hamilton) goes up to 75 per cent. in the case of speculative dealings and up to 87¾ per cent. if it is caught by the clause passed by the previous Government, I should have thought that they were sufficiently stringent penalties for transactions of this sort.

Will the Chief Secretary say how many assessments have been made during the last two years under Section 488 of the Income Tax Act, 1952, and for how much were those assessments?

The hon. Member for Heywood and Royton (Mr. Joel Barnett) has a Question down for written answer on that subject today. Obviously it is not possible to give details of individual assessments of that sort.

asked the Chancellor of the Exchequer what is the value of the £ sterling compared with June, 1970.

asked the Chancellor of the Exchequer what is the value of the £ sterling compared with June, 1970 based on the General Index of Retail Prices.

It is 83p—which is why the Government imposed the standstill.

Does not the hon. Gentleman recognise, on the basis of his own figures, that during the same period the cost of living has increased by 22 per cent.? Does he deny that between now and next April the cost of food will increase by 1 per cent.? Will the Chancellor take note of the situation and admit that the freeze will apply only to wages, and that he cannot control prices and will not able to do so?

The hon. Gentleman knows very well that over the period of 18 months the Government have had great success in bringing down the rate of inflation. It is a matter for regret that the rise in retail prices in October put us back to more or less where we were when the Labour Government left office. Prices were then rising at 8 per cent. It was because of the trend towards higher prices again that the Government had to impose the standstill.

Is the Minister aware that if this Parliament runs its full course, and things continue as they have been, the 1970 £ will be worth about 75p in 1975?

Less than that.

Given this rapid and constant fall in the value of money, does not the hon. Gentleman think that there is an argument for an immediate and dramatic increase in the old-age pension, and that when it is increased it should be tied to the cost of living index?

I am not aware of any such hypothetical situation. In October pensions were 35 per cent. higher than in June, 1970 and retail prices were about 20 per cent. higher. We have introduced an annual review of pensions, and during the present Government's period of office their real value has increased at double the rate of increase that occurred when the hon. Gentleman's party was in power.

Will my hon. Friend assure the House that by his initial reply to the hon. Member for Bothwell (Mr. James Hamilton) he was not seeking to imply that the freeze as such was an answer to inflation?

I am not suggesting that the freeze by itself is an answer to inflation. It must be looked at in conjunction with a whole range of fiscal monetary and economic policies.

Does the Minister recall, however, that it is only a fortnight since the Prime Minister said that the Government had a unique responsibility for controlling inflation? Does he agree that the appalling figures he has just given show that the Government have totally failed to fulfil that responsibility in the past 21½ years? In relation to the freeze, is he aware that the Economist predicts an increase in food prices over the next 12 months of 8 per cent. and that nothing in the freeze legislation will prevent this?

The Economist has had a number of observations to make on quite a number of things, including the right hon. Gentleman on occasions, but I do not think the right hon. Gentleman's predictions can possibly be borne out by the facts. I do not agree with what he said.

On a point of order. I beg to give notice, Mr. Speaker, that I shall raise a point of order on this Question at the end of Question Time.

asked the Chancellor of the Exchequer what is the value of postwar credits still outstanding.

Repayment of post-war credits to those who have produced certificates is nearly complete. Since April payments totalling £124 million in respect of post-war credits and interest have been made. It is estimated that up to about £40 million remains outstanding.

I am grateful to my right hon. Friend for that satisfactory answer. Does he acknowledge that the Government have an outstandingly better record than the previous Labour Administration in the repayment of post-war credits? In order to help the hard-pressed this winter, will he take all possible steps to expedite the release of the remaining outstanding credits, including, of course, his own?

The trouble is that I have lost my certificates. But I have arranged that repayments of credits to claimants like myself who have lost certificates will begin on 1st January.

asked the Chancellor of the Exchequer what are the current plans for housing Inland Revenue administration in Scotland.

It is planned to set up a computer centre in Cumbernauld to carry out routine work in connection with tax collection and with Schedule D, corporation tax and capital gains tax assessments, and to continue the process of moving to Edinburgh some of the PAYE work now done in London.

Is the hon. Gentleman aware that, compared with the rest of the United Kingdom, Scotland is not sharing in office expansion? Is he further aware that there is serious unemployment among white-collar workers in Scotland? Can he tell the House why it seems to be the policy of the Government for the headquarters of various Government organisations to be centred in and around London?

I can tell the hon. Gentleman that over 20 per cent. of all Government jobs generally so far dispersed have gone to Scotland and that of those planned to be dispersed over the next period 43 per cent. will go to Scotland. This may not bring a great deal of pleasure to some of the hon. Member's hon. Friends.

Will my hon. Friend agree that while more needs to be done the Government have a magnificent record in dispersing offices to Scotland and providing a lot more jobs? Can he tell us how many jobs are involved, what is to come and how many are in the pipeline?

I cannot immediately tell my hon. Friend the total number of jobs that have gone to Scotland under the Government's measures. Since dispersal was first started in 1963 under the previous Conservative Government Scotland has had an enormous share of that dispersal. I thank my hon. Friend for his remarks because Scotland has done extremely well.

When the hon. Gentleman refers to 43 per cent., we are entitled to know that it is 43 per cent. of what. Secondly, is he aware that the one clearly new Government Department so far created—the Intervention Board for Agriculture—far from going to the development areas, it is to be situated 30 miles from the Palace of Westminster?

In dispersal policy it is necessary to balance the economy of operation of a particular Department with regional policies. The Hardman Committee is now considering all these matters and will make its report in due course. Obviously, the centres of these Departments will have to remain in London but Scotland has done very well.

asked the Chancellor of the Exchequer if he will propose new fiscal measures designed to reduce unemployment.

No, Sir. Unemployment is responding well to the Government's massive reflationary measures.

Is the hon. Gentleman aware that "responding well" covers the fact that last month the total of longterm unemployed excluding school-leavers and students increased by 16,500? Will he say why the Government are taking so complacent an attitude towards the increase of long-term unemployment?

I deny that there has been anything complacent about the Government's attitude towards unemployment. We are entitled to point out that since last March, seasonally adjusted, unemployment has fallen by 123,000 bringing the seasonally-adjusted rate down from 3·9 per cent. to 3·3 per cent. in November. That represents solid progress.

Is my hon. Friend aware that Falmouth has the dishonourable and outstanding achievement of having the highest rate of unemployment for any town of comparable size in Britain? Is it not entitled to a slightly better reply than that which he has given?

Detailed questions on unemployment in particular districts are a matter for my right hon. Friend the Secretary of State for Employment. I will certainly draw his attention to what my hon. Friend has said.

On a point of order, Mr. Speaker. In the light of the totally unsatisfactory reply given by the Minister I wish to give notice that I will seek to raise this matter on the Adjournment at the earliest opportunity.

asked the Chancellor of the Exchequer why the Inland Revenue has decided that travelling and meal allowances paid to employees of the South Wales Electricity Board are now liable for income tax.

These allowances have always been liable to income tax. Their true nature has emerged only recently and arrangements are now being made to subject them to PAYE.

Will the hon. Gentleman agree that this is a very unfair position for these workers who, through no fault of their own and because of the closure of local offices, have been forced to move up to 20 miles to gain employment? When does he propose—will he ever dare to do so—to extend such double taxation to, let us say, company executives and directors or even Members of Parliament?

It is a general rule which applies to everyone that payments in respect of house-to-work travelling and meal allowances at a normal place of work are taxable. As I said in answer to the hon. Gentleman initially, these allowances were always liable to income tax. It is only recently that their true nature has emerged. No action will be taken to recover tax on payments made in past years.