asked the Chancellor of the Exchequer when he expects to finish consultations and make a statement on how taxation policy will operate in relation to North Sea Oil.

I expect the consultations referred to in my Budget Statement to be finished in time for legislation on artificial losses to be included in next year's Finance Bill.

The right hon. Gentleman must agree, however, that the statement of intent which he made during his Budget proposals has certainly stirred up a great deal of interest in the country. Will he give the House the categoric assurance that whatever proposals he presents, he will certainly be concerned about the people of this country, and the country in general, rather than about the welfare, or future welfare, of the oil companies?

The consultations to which the hon. Gentleman has referred were consultations which I mentioned in the course of my Budget speech, and they were about current losses and accumulated losses. I explained then that I would be having these consultations. With regard to the wider matters, I said in the Budget Statement that the Government already had under consideration the other important questions affecting licensing terms and the Government's take from operations on the United Kingdom Continental Shelf.

How will the Norwegian companies which operate in their part of the North Sea but which send their products through pipelines to England fare under this scheme?

I could not, off the cuff, answer a question about particular companies, or various companies in particular circumstances. That would not be wise. If my hon. Friend will write to me, or table a Question, I shall try to answer him.

As neither oil nor profits have so far been extracted from operations in the North Sea, will the Chancellor of the Exchequer what he estimates will be impeded in any way, by either the introduction of a barrelage tax or a change in the way in which profits are computed for taxation, in raising any money that he thinks fit?

Obviously a Chancellor is not impeded by what his predecessors have done. In reducing taxation I have not been impeded by what my predecessor did.

asked the Chancellor of the Exchequer what he estimates to be the average weekly tax burden of both direct and indirect taxation of a family of four; and by how much this would be reduced by reducing Government expenditure by £3,365 million, assuming all taxes to be reduced by equal proportions.

The answers are, very roughly, £12 and £2 respectively.

Does the Minister accept the figures prepared by the House of Commons Research Department, which indicate that the arms bill mentioned in the Question costs the average family of four £4·64 a week, which is an increase of £1·12 a week on the figure of two years ago? Is it not unreasonable that we should reduce the share of the GNP spent on arms to the average figure of the other European NATO countries?

As my answer indicated, I certainly cannot accept the figures to which the hon. Gentleman has referred as I have given different figures based on figures worked out by my right hon. Friend's Department.

Can my hon. Friend say how much of the defence budget is spent on wages of the many thousands of people employed in our defence industries?

That must be a question for my hon. Friend the Minister of State for Defence, to whose attention I shall draw my hon. Friend's remarks.

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 l00p on 18th 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 l00p on 18th June 1970.

asked the Chancellor of the Exchequer what is the value of the £1 sterling now, taking it as l00p on 18th June 1970, on the basis of the General Index of Retail Prices.

I have nothing to add to the reply given to the hon. Members on 22nd February.

Since 22nd February is a long time ago, and since the purchasing power of the pound has continually floated down, has the Financial Secretary any idea at what point it will settle and when?

The important point is the one which my hon. Friend the Minister of State made on 22nd February, which is that it is necessary to look at this situation in relation to what is happening to personal disposable income per head. If that is done, as my hon. Friend pointed out, the rise in the standard of living over the period referred to is almost double the rate in the period 1964–70, and that is something which should be generally welcomed.

Would it not help far more if the Opposition, instead of putting this identical Question down every time Treasury Questions are first in the list, did something to help the counter-inflation policy?

I very much agree with my hon. Friend. I do not wish to inhibit anything which Labour Members may wish to put on the Order Paper, but the counter-inflation policy which the Government are pursuing is of vital importance to every member of the community and I would therefore hope that that would be reflected in the attitude of all Members—but that is not always the case.

Should not the Financial Secretary add to the previous answer to which he referred the 14 per cent. increase in egg prices between last Sunday and this Monday; the 10 per cent. increase in bakery prices permitted by the Government; the Government-decreed increase in rents due next week; the massive rate increases brought about by Government policy; and the forthcoming mortgage interest rate increase, carefully postponed until the day after the county elections? In view of these blows against the standard of living of ordinary families, how can the Prime Minister have the nerve to say that prices are being stabilised?

The answer to the hon. Member is simple—I would not wish to endorse any of the points he has made. [Interruption.] We have discussed these points on previous occasions in great detail. My point is that the picture as a whole should be considered, and on that basis, in spite of the rise in food prices the standstill has succeeded in halting the acceleration of prices evident in the months before it was announced.

Is it not clear from a walk along any High Street that the shops, supermarkets and stores are displaying notice after notice clearly indicating a reduction in prices on the introduction of VAT?

That is a matter of common experience for those who have eyes to see. But, of course, it is important to take a balanced view, which is why the Government have published notices in the Press and will be publishing a leaflet setting out clearly the effects of VAT, so that the public will know where they stand. It is also why we have proposed powers in the counter-inflation legislation to enable us to control prices affected by the abolition of purchase tax and SET and the changeover to VAT to ensure that the price changes properly reflect the changes in tax.

Is the Minister aware that this catastrophic fall in the value of money, far from creating the one nation that the Prime Minister promised in June 1970, has created two nations—those who can keep pace with inflation and those who cannot? If this fall in the value of money is to continue at the present alarming rate, would it not be a good idea for the incomes of the unemployed, the sick and the pensioners to be pegged to a cost-of-living index authorised by the quarter and not by the year?

That comes oddly from an hon. Member who supported a Government which changed pensions only every two years. However, I agree with him 100 per cent. that the vital need to stop inflation and control the rate of increases in prices stems from the fact that it hits the weakest members of the community hardest. That is why we are determined to succeed in our counter-inflation policy.

Will the Financial Secretary explain his unprecedented refusal to give us the figures this month, as compared with four weeks ago? Is it because there has been no further fall in the purchasing value of the pound, or is it that the fall has been so great at a time when the Government are purporting to maintain a price freeze that if that fall came to the notice of the people the whole prices and incomes policy would be blown to kingdom come?

I deny categorically that there has been any deliberate delay by the Government in publishing the price index for February. It would normally be published tomorrow, and that is when it is due.

asked the Chancellor of the Exchequer if he will introduce legislation to prevent speculation in currency.

No, Sir. There are already extensive powers in the Exchange Control Act 1947.

Is it not plain that the activities of the multi-national companies are affecting the external value of the pound to a much greater degree than internal inflation? Is it not absurd of the Government to be so hard on hospital workers and soft on international speculators? Will the Chancellor do something about it?

The hon. Member misunderstands the situation. Obviously, we have no means of controlling speculation by non-residents—

Multi-national companies are resident here.

—and transactions by United Kingdom residents in foreign currency unconnected with commercial operations are illegal.

Does my right hon. Friend the Chancellor agree that speculation, in the sense of speculators rather than finance directors of companies and their activity, has been minuscule this time, with the flotation of the pound, compared with 1967.

United Kingdom residents —and that includes multi-national companies in the United Kingdom—are subject to the exchange control rules—

They are fiddling all over the place, and the right hon. Gentleman knows it.

—as they were under the previous Government, and transactions by them in foreign currency which are not connected with commercial operations are illegal.

asked the Chancellor of the Exchequer what is his latest estimate of the rate of growth.

As I said in my Budget Statement, I believe the economy will continue to grow at an annual rate of around 5 per cent. over the 18 months from the second half of 1972 to the first half of 1974.

Does my right hon. Friend not agree that an absolute assurance that we would have a 5 per cent. rate of growth over five years would do a great deal to restore confidence in this country, increase investment on a permanent basis, and enable us to increase living standards to a level comparable to that of our friends in the EEC?

I know that my hon. Friend is a fervent supporter of the Government's policy on growth. It is the case that we are now achieving double the rate of economic expansion of the past decade. There is plenty of evidence to support a 5 per cent. growth rate. Industrial production in the three months to January was 1½ per cent. higher than the previous three months and 6½ per cent. higher than a year earlier. Consumer expenditure rose a further 2¼ per cent. in the fourth quarter, to be about 7 per cent. higher than a year earlier and within that the retail sales index rose by 2¼ per cent. in the three months to January, to be about 8 per cent. higher than a year earlier. Unemployment has fallen in March by over 29,000, and is now 240,000 lower than a year earlier.

Will the Chancellor tell us that he is not planning a 5 per cent. level of growth for five years, but for 18 months? What are his plans for the rest of the period?

I have said on a number of occasions that the Government are committed to a higher rate of growth—

Not 5 per cent.

—much higher than the rate of growth achieved by the previous administration. Having heard that the Opposition are now committed to a faster growth rate, I would have thought that they would welcome what we have achieved. I look forward to the hon. Member making that point when he next speaks from the Dispatch Box.

Will my right hon. Friend confirm that it is no more in the power of the Government to guarantee a given rate of growth over five years than it is within their power to guarantee the state of the weather in the month of June?

What a Government can do, and what this Government have done, is to create the conditions which will enable the economy to grow faster.

Industrial investment?

It is all very well for the hon. Member to say these things, but it would be a welcome change if, just for once, he and his colleagues would refrain from running down our country.

The Chancellor of the Exchequer will be well aware that in my Budget speech I congratulated the Government on achieving, for the time being, a 5 per cent. rate of growth. Will the right hon. Gentleman clear up the confusion between what he has just told us and what the Prime Minister said last autumn? In September the Prime Minister said that he was aiming at a 5 per cent. growth rate for a further two years from that time. The Chancellor appears to have cut that period by nine months. Can he explain the disparity between the two estimates?

There is no inconsistency between what the Prime Minister said and what I said in my Budget speech.

asked the Chancellor of the Exchequer what was the increase in the money supply (M3) in the latest period of three months for which figures are available, expressed as an annual rate; whether this rate of increase was in conformity with Government policy; and if he will further define the objectives of monetary policy in the year ahead.

For reasons discussed in the March issue of the Bank of England quarterly bulletin, M3 is not at present a reliable indicator of the thrust of monetary policy. Although, therefore, the rise at an annual rate in the three months to mid-January was about 30 per cent., this has to be compared with the corresponding figure for Ml which was 6 per cent. On the last part of the Question, I have nothing to add to my right hon. Friend's Budget Statement.

I am grateful to my hon. Friend for that answer. I accept that M3 may in future leave something to be desired as the right statistic of monetary growth, but can my hon. Friend shed a little further light on the Government's clear monetary objectives in the year ahead? Did not my right hon. Friend tell us in his Budget Statement that the objective was to ensure that the very large borrowing requirement did not lead to an excessively fast rate of monetary growth? Will my hon. Friend define an excessively fast rate of monetary growth? Was the rate of monetary growth in the last period for which we have statistics excessively fast in that context? If it was, how much less would not be excessively fast?

It must be clear that there cannot be any one correct indicator of monetary policy, particularly in a period when we have rapid structural change in our financial institutions. It is essential to consider the whole array of published information. As well as the two measures of money supply this must include reserve ratios, bank lending to the private sectors, interest rates, and other indicators.

The hon. Gentleman did not answer the question of his hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). In his Budget Statement the Chancellor said that he would limit to the maximum extent the money supply resulting from the excessive borrowing requirement. What is his definition of "maximum extent"?

My right hon. Friend deliberately used qualitative words. We do not regard it as helpful to try to lay down rigid targets in advance for the development of monetary policy. Under the new arrangements it is essential to have flexibility.

asked the Chancellor of the Exchequer if he will raise the issue of progress towards EEC economic and monetary union at the next meeting of EEC Finance Ministers.

asked the Chancellor of of the Exchequer if he will make a further statement about economic and monetary union and the parity of the £ sterling.

asked the Chancellor of the Exchequer if he will make a further statement on his policy with regard to the parity of sterling in relation to other Common Market currencies.

asked the Chancellor of the Exchequer if the question of progress towards economic and monetary union is to be discussed at the next meeting of EEC Finance Ministers.

I shall be attending a meeting of EEC Finance Ministers in Brussels tomorrow morning, but that meeting will be concerned primarily with the reform of the international monetary system, prior to the meeting of the Committee of 20 which I shall be attending in Washington on Monday. I have nothing further to add to the many statements which I have made recently on the subject of economic and monetary union and the parity of sterling.

Is not the objective of European economic and monetary union a mirage so long as the British Government are determined—and rightly so—to seek fixed but adjustable parities for the £ sterling.

No, that does not follow. A number of objectives were set out in the summit communique, and those are the objectives to which we are working.

If it is right to have a floating pound, independent of the Common Market at this time, what are the criteria by which it would be judged wrong to have the same floating pound?

I have already told the House that I explained to my colleagues in the EEC that in present circumstances it was not practical for the United Kingdom to join a common float on the basis of the sort of conditions which were embodied in the Community's scheme. I have said repeatedly that it is the intention of Her Majesty's Government to join as soon as conditions permit.

Will the right hon. Gentleman consult his EEC colleagues and try to do something to bring about a much more stable situation? Does he agree that another international monetary crisis is bound to occur in the next 12 months, under the present arrangements? Will he bear in mind that unless the Government improve their management of the country's economy the pound will float down to a level where the cost of food and raw materials will become even more intolerable than at present?

The best way to improve the economic condition of this country and standard of life for the British people is for all sections of the community— which means both sides of the House—to join in fighting inflation.

I congratulate my right hon. Friend on his determination to allow the pound to continue to float in present circumstances. Will he explain under what circumstances he would regard it as right for the pound to return to a fixed parity?

I do not think that that would be appropriate. That is a matter for the Government to judge.

May I further congratulate the right hon. Gentleman on setting conditions for a joint float which were intended to be impossible for the other Common Market countries to accept in the first place? Further, can the right hon. Gentleman give the latest best estimate of the change in the value of the £ sterling against the weighted average of all the other currencies since June last year?

I could not give that without notice.

asked the Chancellor of the Exchequer whether, as part of the developments in European monetary co-operation, he will seek agreement among the Finance Ministers of the European Community to allow international settlements between Community central banks to be made in gold at a price more approximating towards that obtainable in the free market.

No, Sir.

Without expressing a view on the ultimate role of gold and the international monetary system, may I ask my hon. Friend whether it is not the case that any addition to the SDR system will take time, and in that situation is it not unfortunate that the gap between the official price of gold and the price on the free market effectively sterilises part of the world's monetary and foreign exchange reserves? If the Americans will not adopt a realistic attitude to the subject is it not about time Europe did?

The future role of gold is a matter for discussion in the Committee of 20. There are powerful objections to any change in its official price and we believe that there are better ways of tackling world monetary problems, on the lines that my right hon. Friend put forward at the meeting before last of the International Monetary Fund. Certainly, the role of gold is important and it has to be looked at in that context.

asked the Chancellor of the Exchequer if he will seek an early meeting with the Finance and General Purposes Committee of the Trades Union Congress.

I am always ready to meet the TUC.

When the right hon. Gentleman next meets the TUC, will he discuss with it the proposals in the Green Paper about family allowances and the tax credit system? Will he now clarify the statement which he made in his Budget Statement because many of us could not understand exactly what he meant then.

The reaction to that part of my Budget Statement was one of welcome. It was quite clear what it meant. I shall be delighted to discuss any aspect of the Green Paper with the TUC whenever it likes to see me about it.

Does my right hon. Friend agree that the Government have done a great deal to meet the TUC on many matters of Government policy on which it has made representations, including the 5 per cent. growth rate? Is it not now desirable that the TUC should give something to the Government so as to get a stable situation in industry?

As I have said, we are ready to talk these matters over with the TUC. Indeed, earlier this month I wrote to Mr. Feather saying that the Government would welcome any views that the TUC might wish to express on the consultative document on the Price and Pay Code. I said that if the TUC wished I was ready to make arrangements for discussion. To my regret the TUC chose not to pursue that suggestion.

The right hon. Gentleman has expressed to the House his wish to see the trade unions at any time. Does he recollect that last year he and I met at about one o'clock in the morning at 10 Downing Street and settled the miners' strike? Does he wish to remain a member of a Government that pursue a policy of brinkmanship, that break their word to the miners' union, and pursue brinkmanship to the extent that we may be plunged into another miners' strike? Is it credible for a Minister to speak, at the Dispatch Box, about negotiations with the trade unions?

The latter part of the hon. Gentleman's observations was not particularly helpful in the present circumstances. I have no doubt that the solid good sense of the majority of the British people will prevail.

asked the Chancellor of the Exchequer if he will now repay at par all original owners of 3½ per cent. War Stock over the age of 60 years.

One must have great sympathy with these people, but I fear there can be no prospect of our acceding to my hon. Friend's request.

While I welcome my hon. Friend's sympathy, may I ask him whether he is aware that many original owners of War Loan are now pensioners who, out of patriotism, loaned the British Government £100 for which they can now get only £6, in 1932 terms, after receiving a derisory rate of interest over the years? Do not the Government have a moral obligation to these people who if they had been similarly treated by a private finance company would have been entitled to the protection of the Fraud Squad?

I believe that many people share my hon. Friend's views, although they may not express them with such force. It has always been a basic principle of Government policy that all holders of a particular stock are treated alike. It would be extremely difficult if we were to accede to the request that my hon. Friend makes and do nothing for another elderly person—a pensioner— who had just disposed of his or her holding of war stock. That would seem to be grossly inequitable. It is for that reason that successive Governments have said that we must treat all holders of this and similar stock alike, and I believe that is right.

Can the hon. Gentleman say how many original holders of War Loan are still alive, and what would be the cost of making this repayment? Is he aware that his statement is exactly the same as all statements by all Governments of all political complexions, but that it is nevertheless a crooked, swindling statement.

In the unlikely event of there ever being a Liberal spokesman at this Dispatch Box, I strongly suspect that he would make the same statement. It is not possible to extract from the registers the information for which the hon. Gentleman asked without disproportionate expense in manpower and money. We recognise that there is great hardship among the holders of these stocks. Despite the search, over many years, by successive Governments no acceptable way has ever been found of dealing with the problem.

While agreeing that all holders of undated gilts should be treated alike, may I ask my hon. Friend why he cannot make a start, at least, and allow part of the estate duty payable to be satisfied by the surrender of long-dated gilts at par? Would this not make the market far more attractive and help those who put their money into non-dated gilts and have seen it being eroded year after year?

This suggestion has been examined, and it obviously has superficial atractions, but I must regretfully tell my hon. Friend that in reality it suffers from exactly the same disadvantages which affect all the other suggestions for dealing with this problem. I would not want to hold out any prospect of the Government's being able to meet this request.

asked the Chancellor of the Exchequer what factors have appeared since 6th March which may have a bearing on the Budget judgment for the medium-term course of the economy.

None, Sir.

Does my right hon. Friend not agree that among many factors there are, perhaps, three principal ones at the moment, namely, the overseas currency situation, the substantial spare capacity in industry, and the relatively low level of stocks to total output? Does that not lead him and others to believe that the concept that early over-heating is creeping into the economy is a ridiculous exaggeration?

My hon. Friend is right. Almost all commentators agree on one point, namely, that there are still plenty of spare resources to sustain a fast growth rate for some time to come. Making a general observation in relation to my hon. Friend's Question, I have no reason to diverge in any way from the view I took in my Budget Statement on 6th March about the medium-term course of the economy.

Is not one such factor which has arisen since the Budget the decision by the building societies to increase interest rates? Was that not caused to a great extent by the Chancellor's decision on Budget Day to raise interest rates on national savings and premium bonds, which has made them less competitive? Is this not a major cause of inflation, for which he is partly responsible?

I was talking about the medium-term course of the economy, and nothing that has happened since 6th March affects my judgment on that

asked the Chancellor of the Exchequer whether he will introduce a new coin of the value of ¼p.

No, Sir.

Since the minimum percentage increase that can practically be added to an item costing 5p is 10 per cent. and the minimum that can practically be added to an item costing 2½p is 20 per cent., will the hon. Gentleman tell us what will be the amount of VAT upon items which cost less than 5p?

This is a well-known difficulty with price changes on items with a low unit value. The prices unit of the Department of Trade and Industry and the Ministry of Agriculture, Fisheries and Food is advising traders to look at the range of goods they supply as a whole and to ensure if they round up to the nearest ½p in some cases they round down to the nearest ½p in others. Provided that, overall, they pass on to their customers the net effect of the tax changes, this is perfectly fair. There are provisions in the Counter-Inflation Bill to ensure that this is done, and if any constituent of the hon. Member or any other hon. Member has a case in mind, he can refer it to the machinery which has been provided. In this context, it is a very different situation from that which existed before decimalisation.

Would it not be more to the point if my hon. Friend increased the size of the ½p, which seems to be specially and perversely designed to cause the maximum inconvenience and cursing to the general public?

Many hon. Members— on the Government side of the House, at any rate—voted on the question of the form of decimal currency on a free vote, unlike hon. Members opposite, who were whipped into support of the pound system, of which many people have expressed disapproval. The ½p is fulfilling a useful function, particularly in relation to the point made by the hon. Member for New-castle-under-Lyme (Mr. Golding) about price saving.

asked the Chancellor of the Exchequer if he will state the value of income tax relief on mortgage interest in March 1971 and at the latest available date.

Relief was about £340 million in 1971–72.

That figure indicates the considerable importance of mortgage lending rates to a large number of people.

I took most careful note of what my hon. Friend said on this subject during his speech in the Budget debate. Following the introduction of a unified tax, building societies will have to pay a lower composite rate of tax on behalf of their investors. Many societies have already been able to raise the rates they pay. There is no evidence that unification by itself will make any difference to the rates they charge.

If tax relief to owner-occupiers is to continue at £340 million a year, and is to be increased as house prices increase, is it not unfair to cut the subsidy of £160 million a year to council tenants, as the Government are doing?

We have always taken the view that these two things are not to be compared. They are different in kind. The rules which provide tax relief for mortgages are exactly the same as those which were on the statute book when we came to office.

Will not the Chief Secretary consider disallowing mortgage interest relief for a second house, or for those with a high level of income? If he is not prepared to do this, does it mean that he is willing to allow mortgage interest rates to rise to 10 per cent. or more as a result of the interest rate war which the Chancellor of the Exchequer started? Did the Chancellor specifically ask the Building Societies Association not to increase the mortgage interest charges until the day after the local government elections?

As I said, the rules are exactly the same as they were under the Labour Government which the hon. Gentleman supported. I do not believe that the changes in the rules which the hon. Gentleman is urging upon us would have any effect on the mortgage lending rate. We naturally welcome the decision of the Council of the Building Societies Association to defer its decision on mortgage rates until its next meeting, but I must make it absolutely clear that that was a decision of the association. We do not take responsibility for the rates which building societies charge from time to time.

asked the Chancellor of the Exchequer what is the value of the total gain in the Budget to workers earning less than £25 a week.

The zero-rating of children's clothes and shoes and of purchase tax foods, together with the reduction of national insurance contributions for those with less than £24 a week, will help the low-paid. It is not possible to quantify the benefit for any particular income group.

Is the Minister aware that low-wage earners did not get from the Budget any increase in the tax threshold in respect of the 13 per cent. increase in money earnings last year? Is he further aware that before next year's Budget the tax threshold on current trends will have fallen to an all-time low of about 53 per cent. of average earnings, which makes nonsense of any claim of fairness to low-paid workers?

What makes nonsense of the hon. Gentleman's question is that while his Government were in office tax thresholds fell, in real terms, by 12 per cent. Since this Government have been in office, tax thresholds have risen by 81 per cent. in real terms.

Will my hon. Friend confirm that a married man with two children with an income of £20 a week was paying tax at the rate of £1 a week in 1970–71 as a result of the Labour Government's tax measures, whereas he has been completely relieved of tax by the two Budgets of my right hon. Friend?

I am happy to accept my hon. and learned Friend's expertise in these matters.

Will the Minister please remember that it is not good enough to excuse his Government's performance by pointing a finger at the Labour Government's performance, which was not very good either? Will he accept that all our partners in the Common Market have found that family allowances are the only satisfactory way to help the low-paid families, and that the Government must redeem their promise to increase family allowances?

I am sure that the hon. Gentleman recognises that in working out and publishing our proposals on the tax credit scheme we are ahead of the rest of the world, and that this system will give the greatest help to the low-paid, the pensioners and others who will benefit from it.

asked the Chancellor of the Exchequer whether he will arrange for VAT-registered small traders who have difficulty in producing quarterly returns to be enabled to make estimated VAT payments quarterly, fully and properly adjusted at the time of their annual audit.

There is no provision in the Finance Act 1972 for traders to make estimated payments of VAT each quarter. Customs and Excise will be reviewing the operation of VAT in the light of practical experience and my hon. Friend's suggestion will be borne in mind.

In view of the high administrative cost of VAT, particularly to small traders, will my hon. Friend bear in mind that anything he can do of this nature to help the small business trading community will be welcomed by it?

I do not accept that these costs are high. Small traders, by our £5,000 taxable turnover limits, will be exempt. The whole basis on which we have provided the machinery—after widespread and extensive consultations—has been to cut the administrative burden to the minimum. We have looked carefully at my hon. Friend's proposal. Although at first glance it appears to offer a significant reduction, on detailed examination it reveals considerable difficulties—but we will bear it in mind.

Does the Financial Secretary still intend to penalise the small traders who, because they did not understand his complicated tax, were not able to register? Does he intend that they shall not receive a rebate of purchase tax on stocks?

There are provisions lor rebate of tax for those who are registered. The hon. Gentleman has a Question on the Order Paper which is unlikely to be reached. The answer gives a full explanation of the present situation. There is no reason to suppose that the tax cannot go ahead on schedule and as planned.

asked the Prime Minister what representations he has received regarding the issue of industrial participation from interested bodies.

Representations have been received from the CBI and TUC. The Government have made clear that they welcome the principle of closer involvement of employees in the progress of firms. The Industrial Relations Act and Code of Practice contain provision for this, and the share savings scheme. announced by my right hon. Friend the Chancellor of the Exchequer in his Budget speech, is a further step forward.

Even so, the question of worker participation was carefully excluded from the Government's code of industrial relations practice. Is this to be the only area of policy in which the Prime Minister has not changed his mind? How long will Britain remain the only Common Market country without legislation on worker directors, and without a mandatory works council system?

It was agreed at the summit that we should now work for a European policy in this matter, and various proposals have been prepared. We are considering these proposals, which relate in particular to works councils.

Did my right hon. Friend notice the speech last week made by the Leader of the Opposition in which he said that a future Labour Government would legislate for many things that are already included in the Industrial Relations Act?

Yes, that is true. Most of the items in the speech of the right hon. Gentleman the Leader of the Opposition are already the law of the land.

asked the Prime Minister if he will place in the Library a copy of his public speech delivered at the London Hilton Hotel on Thursday 1st March 1973 on the economy.

I refer the hon. Gentleman to the reply which I gave to my hon. Friend the Member for Conway (Mr. Wyn Roberts) on 15th March.— [Vol. 852, c. 1469.]

Does the Prime Minister remember saying in his speech at the Hilton Hotel that he was in somewhat of a dilemma about the resources going to wages? Had that anything to do with the fact that on the same day he had announced the appointment of the Chairmen of the Pay Board and the Price Commission—each at a salary of £16,000 —together with salary increases that went straight through the phase 2 proposals?

There is no dilemma and no problem about the appointments. These were new appointments, and the salaries fixed were on the level of similar appointments.

Will my right hon. Friend say whether the official speech to be made by the hon. Member for Bolsover (Mr. Skinner) in the House tomorrow represents the official policy of the Opposition?

Her Majesty's Opposition had better wait to hear it. and then try to make up their mind.

What investigations have the Government undertaken to discover whether perfectly suitable people would undertake these two jobs for less than £16,000? [Interruption.] I assure the Prime Minister that I would offer my services for a good deal less than that. If the Government could have obtained perfectly suitable people to do this job at less than £16,000, why are they wasting the taxpayers' money by paying a salary in excess of that which they need to pay?

Unlike the Liberal Party, it is not the Government's policy to go for sweated labour.

Arising out of that interesting exchange, I take it that the Prime Minister is so worried about sweated labour that he will back the Liberal Party's demand for guaranteed minimum earnings?

We discussed with the TUC in the tripartite talks at Chequers the aim of ensuring a proper wage for all lower-paid workers and we are placing the emphasis on this in the Price and Pay Code.

asked the Prime Minister if, at any future meeting with President Nixon, he will discuss the prices and incomes policies of the USA and their possible application to the British economy.

The Government naturally keep themselves informed about the way in which the United States system operates. This was one of the points which I discussed with President Nixon during my recent visit to the United States and I also discussed it with Secretary Shultz both in Washington and earlier this week during his visit to London. However, our policy must be framed to meet the particular circumstances of the United Kingdom.

When the Prime Minister next meets the President of the United States, will he discuss with him the minimum income laws as they apply in the United States? I agree that they are not perfect, but will the right hon. Gentleman accept that the only way in which the lot of the underpaid and low-paid can be permanently satisfied in the long term is by the introduction of a minimum wage into the British economy—a wage of not less than £25 for a 40-hour week?

As I have said, we discussed the question of minimum earnings with the TUC in the tripartite talks. There was a general view that it would be unwise to try to institute a minimum wage law at this moment of time, particularly at the level the hon. Gentleman suggested, largely because it was thought that in many industries, particularly those covered by wages councils, it would not be possible to move to that figure or even others, which were discussed in one go, by passing legislation. Therefore, it was generally agreed by the TUC, the employers and the Government that we should endeavour to bring up the lower-paid as rapidly as we can, and by voluntary agreement.

Does the Prime Minister agree that an essential part of President Nixon's proposals was a reduction in public expenditure?

That was not a central part, and was not connected with the prices and incomes policy. The President introduced a prices and incomes policy on 15th August 1971 and has now moved into stage 3. At this stage he has reduced his Government expenditure.

Does the right hon. Gentleman agree that the Government's policies have now widened the breach between the trade union movement and his Government? Does he not think that it is now time that he wiped away all the existing laws which have caused the breach and got together with the TUC to start again on industrial relations?

No, Sir; I cannot agree anything of the sort. I do not believe that the breach, if such there be, between the TUC and the Government has been widened by the law. There is a wide range of issues on which we are constantly having discussions with the TUC. I regret that the TUC, on its own decision, did not take part in the discussions on stage 2. I hope that it will do so on stage 3.

Has the Prime Ministers attention been drawn to the fact that food prices in America are bearing heavily on United States counter-inflationary policy and, indeed, throughout the world? Will he consider instigating an international conference on food prices to see what can be done to bear down on world inflation?

It is true that the United States is suffering from increases in food prices, as are Europe and the United Kingdom. The United States Government have released large stocks which were being held and in addition have put 60 million acres of land into production in an endeavour to meet world requirements. I have no doubt that we, as well as other countries, will benefit.

asked the Prime Minister what recent discussions he has had with institutions representative of the City of London.

I have frequent discussions with individuals or groups from the City, but I have had no recent discussions with institutions representing the City itself.

Next time the Prime Minister speaks to representatives of the banks, insurance companies and other financial institutions will he, after paying tribute to their continued contribution to our invisible exports, ask them whether they will estimate by what percentage they think their efficiency will increase if and when they are taken into public ownership, as seems to be the policy of the Labour Party? Will my right hon. Friend ask them to give some thought to the future international rôle of the City in that event?

I do not think that I would put such an extremely hypothetical question to those in the City, but it is true that the surplus of earnings over payments from the City has grown very rapidly—from £200 million in 1965 to £650 million last year. I am content that the invisible earnings should continue to increase at that rate under a Conservative Government.

In the light of soaring bank profits and interest rates, is it not high time that the Government required all financial institutions to disclose real interest rates, joint stock banks to disclose their bank charges and, worst of all, the merchant banks honestly to disclose their true profits?

That is a very mixed bag of requirements. I do not think that many people in the world would criticise the honesty of the British banking system—a system which for many decades has been the envy of the rest of the world. I do not see how any Opposition Member who is concerned with finance could even think of raising such a question.

To what extent does the Prime Minister think that the bank earnings are due to the operation of the Eurodollar market, and, if that is on the way out—as it might be—what effect is it likely to have on our overseas balance of payments?

That, again, is a hypothetical question. It is difficult to make any calculations as to the extent to which changes in the number of dollars in the Eurodollar market will affect invisible earnings in this country.

Does the Prime Minister agree that at the rate he has been running inflation the City could hardly miss? It has been so wonderfully easy to make money there that one would expect profits to double, as indeed many of them have.

The hon. and learned Member for Northampton (Mr. Paget), who always sees things in a rather simple way, should realise that a battle is being carried on against inflation and that under the present Government's policy the charges and everything except interest rates for the whole of the banking system come under the code.

asked the Prime Minister if he is satisfied with the coordination between the Departments of Environment and Employment regarding action about housing land shortage in view of the availability of building operatives.

asked the Prime Minister if he is satisfied with the co-ordination between the Departments of Environment and Employment concerning arrangements to be made concerning the availability of housing land, in view of the present shortage of building trade operatives.

Yes, Sir. I am satisfied with the arrangements which the Departments have for co-ordinating their responsibilities.

We all await with great interest the announcement on land charges by the Secretary of State, and, above all, we welcome the fall in today's unemployment figure, but does my right hon. Friend agree that the desperate shortage of building workers will make it extremely difficult to get more houses built even if more land is released?

Yes, Sir. Regrettably, the construction industry ran down the total number of its employees at the end of the 1960s. [Interruption.] It is true that under the Labour Government they had no work. The Government have increased the number of places available for training, and by the spring of this year the number of places in Government training centres had risen from just under 3,000 to nearly 4,000. At the same time we have seen a doubling in the rate of recruitment of apprentices in the two years since 1970. We are making an effort to secure the skilled labour essential for the construction industry.

Although one cannot deny that there is availability of building operatives in some parts of the country, it is equally true that in other parts of the country, including my own constituency, there is a shortage of building labour. Since mobility of labour is one of the difficulties—and the housing shortage is fundamental to the problem—what steps are the Government taking to deal with the situation?

On the question of mobility of labour, we have greatly increased the arrangements in respect of payments to cover the costs of moving families, housing, and so on, in an endeavour to help those who are prepared to move from one part of the country to another. I would be the first to agree that the lack of mobility in certain kinds of labour is a great problem.

Will my right hon. Friend confirm that the Chancellor of the Exchequer's arrangements will apply to local authorities, hospital boards and other statutory bodies? Does he agree that this is a first step towards abolishing one form of local government secrecy which has done more to hold up the supply of available building land than has any other single factor for many years?

I believe that it will provide a valuable incentive, and this is appreciated by the bodies concerned.

Does the Prime Minister agree that one of the greatest factors in the rundown in the numbers of apprenticeships over the last 10 years has been the development of self-employed labour-only workers—otherwise known as "the lump"—in the building industry? Will he not support the Bill which I have presented to Parliament which deals with the question of labour-only sub-contracting and will allow the country to return to the situation of regular apprenticeships at all building firms at every level?

I do not entirely agree with the hon. Gentleman about his Bill. Nevertheless, I agree with his general thesis. As he knows, this has been the consequence of certain changes in taxation, again during the 1960s, and all these problems confronting the construction industry are real and deep-seated.