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.

asked the Chancellor of the Exchequer, taking the £sterling as 100p on 18th June 1970, what is its current value to the latest possible date based on the General Index of Retail Prices.

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.

Since 18th June 1970 the personal disposable income of the British people—and that is the best available measure of their true purchasing power—has increased one and a half times as fast as prices. The fall in the value of the pound from 100p to 78½ p in May 1973 must be related to the rise in pensions and wages, and the reductions in taxation, over the same period to provide a meaningful picture.

Is the Minister proud of those figures? Does he not realise that they are a fitting testimony to the pledges that were given at the General Election that the Tories would be able to look after the people's money better than the Labour Government did? Will he encourage his right hon. Friend the Chancellor of the Exchequer not to solve the problem in the same manner as he attempted by building society subsidies to get over the 10 per cent. interest rate? He will not get rid of the real problem facing this country by the Walter-Mitty-like sequences in which he was involved when he jumped out of the bath and told the Prime Minister that he had a plan to solve it.

The Government have every reason to be proud of their economic record. The standard of living of the British people has already risen far more in the three years of Conservative Government than it did in the whole six years of the Labour administration.

I agree that the purchasing power of the pound is very important, but is not it true that so, also, is the proportion of each pound that is retained, after tax, by the average wage earner? When being asked, in the future, to give the present values of the purchasing power of the pound, should not my hon. Friend also be asked to give the other figure alongside it?

I felt that on this occasion it would help to give hon. Members of the Opposition a simple explanation of the difference between the cost of living and the standard of living. The real disposable income of the British people has grown at a far faster rate during the period of the present Government than it did during the period of the Labour administration.

Is the Minister aware that while the fall in the internal purchasing power of the pound is quite dramatic, the fall in its external purchasing power is staggering? Is he aware that, since June 1970, against the franc the pound has depreciated by 20 per cent., against the mark by 30 per cent. and against the guilder by 25 per cent.? If this record is maintained, is the Minister aware that it will not be a question of how many francs we get for a pound but how many pounds we have to exchange to get a franc?

There has been a general shift in the relationships of one currency to another. That is perfectly correct. But the present rates of other currencies may not persist, and we should not draw conclusions about the strength of sterling from recent movements in the exchange rate.

Does my hon. Friend agree that the great successes of the motor industry based in the constituency of the hon. Member for Birmingham, Northfield (Mr. Carter) owe much to the competitiveness which it has derived from the changing value of the pound?

Certainly. I agree with my hon. Friend. The competitive position of the motor industry, in relation to its exports, has been enhanced.

Is the Minister aware that the embarrassed obscurity with which he veiled his shameful admission that the purchasing power of the pound has fallen to 78½p under the present Government marks the death knell of official price control in this country, with Sir Arthur Cockfield of the Price Commission as chief undertaker? Is the Minister further aware that if the Government cling to office until the last humiliating moments, as they did in 1964, the value of the Tory pound will sink to 63p?

The hon. Gentleman will be interested in the recent National Institute review, which pointed out that the Government's counter-inflation policy had met with considerable success. It should be remembered that between November and May raw material prices rose eight times as fast as they did in the corresponding months of the last year of the Labour Government, and seasonal food prices rose half as fast again, yet the rise in retail prices was about the same in the two periods. That testifies to the success of our counter-inflation policy.

When has my hon. Friend known the NIESR to be right?

I have every hope that on this occasion the National Institute's more optimistic forecasts will prove correct.

Does the Minister of State agree that the increase in real disposable income to which he referred took place in the first two years the Government were in power entirely as a result of wage increases which the Government did their best to stop and that during the months since the wage freeze was introduced prices, as he has had to admit today, have been rising at the rate of 9 per cent. a year, but earnings have been rising at under 8 per cent.?

The right hon. Gentleman's statistics are not quite correct. As he says, during the standstill earnings were held back but, despite this, there was a further rise of 1½ per cent. in real personal disposable income per head in the fourth quarter of last year. As the National Institute's forecast seems to be figuring in the discussion on this occasion, I should say that it predicts—I hope that it will be correct—a further substantial rise in real disposable incomes this year.

Does my hon. Friend agree that a most grotesque and vivid example of all the policies which have been advocated by hon. Members opposite is to be found in Chile, where the currency has depreciated by well over 100 per cent, in nine months?

If the Government are really proud of this policy, they must be dangerously crazy. Are we not now in a state of statutory inflation, fed by the Government themselves? Does not the Minister agree that no free society has sustained a loss of value of its currency at this rate without having a first-rate political crisis?

It would be more easy to answer the right hon. Gentleman's supplementary question if he could make a specific charge to which I could give a specific answer. I do not agree with his generalised criticism.

asked the Chancellor of the Exchequer if he will publish a weekly series showing fluctuation of the £sterling against a weighted average of the United Kingdom's major trading partners.

No, Sir. The monthly changes in the effective exchange rate are now being published in the Treasury's Economic Progress Report.

I am not surprised at that answer. Has the hon. Gentleman's attention been drawn to the fact that, as my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) remarked a few moments ago, the external value of the pound is falling even faster than the internal one? In the last six weeks it has been falling at the rate of about 1 per cent. a week. This must be added to the increase in world prices to which hon. Members opposite are always referring. The worst is yet to come.

As the hon. Gentleman himself said, I have answered that question. There has been a general shift in the relationship of one currency to another. This is still going on. Foreign exchange markets are unsettled. I do not think there is anything I can reasonably add to that.

Could we not make a contribution to reducing the money supply and stabilising the value of the pound by cutting the grant to the National Institute of Economic and Social Research?

Perhaps I can answer the first part of my hon. Friend's supplementary question by asking him what exactly he means by "stabilising the rise" in the money supply. In the last month for which figures are available—I speak from memory—M1 rose by about ½ per cent. and M3 by around ¼ per cent. I cannot say that one month's figures are indicative of the trend, but I do not think that my hon. Friend's implied criticism is fair.

Will the Minister of State confirm the figures given in the Financial Times and The Times today, showing that since the Smithsonian agreement only 18 months ago there has been a devaluation of the pound of over 151 per cent., which is substantially more than the devaluation that occurred in 1967?

I do not think that the true situation can be compared. We live in an environment in which many of the principal currencies are floating. Moreover, unlike what happened in 1967, we are pursuing a policy of expansion. The previous Government pursued a policy of stagnation. I have no doubt that the shift in currency relationships will improve the competitive position of British industry.

asked the Chancellor of the Exchequer what percentage rise in the cost of living can be attributed directly or indirectly to the floating of the £sterling in June, 1972, and subsequent exchange rate realignment.

It is impossible to distinguish accurately the simultaneous effects of the sterling float and the recent sharp rises in world commodity prices. Nevertheless, it can be said that the rise in world commodity prices accounts for far more of the rise in import prices than the sterling float.

What are the preconditions for returning to a stable sterling parity? How does my right hon. Friend view the prospects of a joint EEC float?

My right hon. Friend the Chancellor has on many occasions stated the conditions on which we would be prepared to join the European float. We are studying the Commission's report on reserve pooling and related matters. The proposals my right hon. Friend put to our partners in the Community in March would have meant a greater step towards economic and monetary union than our partner countries were then prepared to accept.

Does the Minister realise that because of the floating of the pound—or shall we term it the devaluation of the pound?—members of Her Majesty's Forces in the EEC countries have had their income devalued by at least £3 a week? What will the Government do about these poor people, who are having to pay a great deal more for the goods they buy than they were before the floating of the pound?

While I do not accept the hon. Gentleman's figures, I acknowledge his point, and the Government have the matter under consideration.

How can the movement of a floating exchange rate be a cause of domestic inflation?

I should have thought it was evident to those of the meanest intelligence that the movement downwards of the exchange rate must put up, relatively, the domestic price of imports. As I am sure my right hon. Friend realises, the wholesale import prices of basic materials and fuel have risen by 20 per cent. in the past six months, and food import prices have risen by 20 per cent.–25 per cent. Only a very small part of that is due to the movement of the parity of the pound.

If I may contribute to the right hon. Gentleman's seminar for his right hon. Friend, may I ask whether the Minister agrees that, as import prices on a weighted average of foreign currencies have gone up by 15½ per cent. in the past 18 months, since the Smithsonian agreement, purely as a result of the devaluation of the pound, between 4 per cent. and 5 per cent. of the percentage increase in the cost of living must be attributable to that devaluation?

What the right hon. Gentleman says is totally untrue in that, as my hon. Friend the Minister of State said earlier, there have been many movement of currencies throughout the world. Simply to regard everything as part of the devaluation of the pound, as the right hon. Gentleman claims, is sheer nonsense.

asked the Chancellor of the Exchequer if he will now increase the tax-free concession for luncheon vouchers beyond 15p per day in view of the increased cost of restaurant meals and VAT.

I have noted the hon. Member's suggestion.

What does that mean? Surely, with the rising cost of meals it is about time the concession was at least doubled.

The hon. Gentleman misunderstands the purpose of the limit, which is to allow the tax-free issue of luncheon vouchers. At present, the 15p a day is equivalent to a tax-free addition to income of about £35 a year. As only some people receive this, there is some justification for keeping this figure within bounds. The figure bears a reasonable relationship to an average cost of the subsidy of meals in works and office canteens. Perhaps that is not a bad comparison.

Is the Chief Secretary saying that the concession was unreasonable when it was first introduced?

I think it was probably on the generous side when it was first introduced.

asked the Chancellor of the Exchequer if he is satisfied with the present volume of money supply.

During recent months there have been sharp changes in the rate of growth of the monetary aggregates, but our judgment of the underlying trend is that it is satisfactory in relation to the achievement of our overall economic objectives. My right hon. Friend keeps the situation under continual review.

My Question relates to the volume of M3 and not monthly fluctuations in its rate of change. As the continued high rate of inflation—as the Government Front Bench was reminded by its back benchers on Tuesday—cannot be ascribed to wage costs at the moment, due to phases 1 and 2, or attributed wholly to the cost of imported raw materials, how far can the Chancellor be sure that it is not due to his own policies, especially his borrowing requirement and the present continued volume of money supply?

Our policies on money supply are aimed at ensuring that we maintain our current rate of expansion and, at the same time, that in no way does the growth of money supply increase the rate of inflation. These are the two objectives that we pursue, and I believe that we are pursuing them successfully.

Will my hon. Friend bear in mind that the two objectives he has stated are not regarded by all of us as being totally compatible? Does he recall that when the prices and incomes policy was introduced we were told that one of its purposes was to enable monetary policy to become rather less exuberant than it had been before, without embarrassing side effects? Is my hon. Friend satisfied that the 19 per cent. rate of increase in MI during the last three-monthly period conforms to that objective?

I do not remember my right hon. Friend or any of my hon. Friends in the Treasury using the adjective "exuberant" about the money supply. There is no single correct indicator of the money supply. The monthly series for M1 tends to move erratically from month to month, but the faster growth of M1 in some recent months may reflect, in part, the more active use of funds previously held on deposit accounts.

asked the Chancellor of the Exchequer if he is satisfied with his policy so far as its effect on the national trade figures is concerned; and if he will make a statement.

Yes, Sir, I think it is sensible to give maximum priority to economic growth, consistent with the achievement of an adequate trade balance in the medium term.

Does the Chancellor concede that at the present rate we could easily have a trade deficit of £1,800 million? If that is so, we are running into serious difficulties, and the so-called boom, which has not yet reached Scotland, will become a disaster over the whole country.

I do not accept the figures given by the hon. Gentleman. I make no apology for using the current account surplus to increase output and employment and to raise the living standards of the British people. I hope that the one thing that no hon. Member wants to do is to return to the economic stagnation that we had under the Labour Government.

Why has the rate of increase in our exports since we joined the Common Market fallen behind the rate of increase in our exports to Japan and America?

There are obviously many factors involved but I do not think anybody looking at the matter objectively expected us to achieve our full potential of exports to the EEC within only a few months of joining.

We are now running the biggest balance of payments deficit since the war, even allowing for the invisibles surplus. How does the Chancellor propose to finance this deficit?

I would have thought that the right hon. Gentleman, with his experience as President of the Board of Trade, would have seen advantage for this country in the fact that during the first five months of this year our exports have been increasing, in volume terms, twice as fast as our imports.

Since the Chancellor refuses to answer the question by my right hon. Friend will he answer one from me? Will it remain his policy to finance the deficit by borrowing at second hand from foreigners through the public authorities?

If he looked at the level of our reserves and then took account of the amount that has been borrowed by public authorities, which is a reasonable thing to do, the right hon. Gentleman, if he wished to be objective and to portray the facts, would admit that this is not a significant factor.

asked the Chancellor of the Exchequer if he will arrange with the manufacturers of pharmaceutical products to declare the names of doctors and details of amounts paid in respect of fees for participation in local drug trials.

No, Sir.

Will the Minister reconsider that decision? Is he aware that all of these fees are taxable and that there is a suspicion that some part of them represents drug sales promotion? Is he aware that the voluntary price regulation scheme of the Secretary of State for Social Services enables all these figures to be easily accessible? It would save doctors a lot of time if there were a centralised collection of them, so that doctors did not have to send in forms.

The hon. Member asked about this on 19th June and we have since looked into it, but we have been unable to find evidence of such payments being made and the Department of Health and Social Security is unaware of such practice. If the hon. Member has a specific case in mind, perhaps he would let me know.

asked the Chancellor of the Exchequer when he expects to be able to introduce legislation on the tax credit system.

asked the Chancellor of the Exchequer what are the Government's present intentions as regards legislation on a tax credit system.

Until the Select Committee reports, the House will understand that I cannot add anything to what was said in the Green Paper.

My right hon. Friend will understand that there is reasonable impatience, in view of the obvious benefits that the scheme can bring, that it should be carried into legislation at the earliest possible date, and to consummate the wide-ranging reform of taxation that has been a feature of his term of office.

I am grateful to my hon. Friend for his comments, but it would be as well if I were to leave the question of timing and any other matters of substance to be said after the Select Committee's report, which I hope will not be for too long.

Many of us on the Labour side do not share the relative euphoria expressed by the hon. Member for Bridgwater (Mr. Tom King). The system as envisaged will help the rich and not the poor. It will make the position of many groups of the poor, such as the single-parent family, many pensioners, the sick and the unemployed, worse. It will make it more difficult to achieve a more progressive income tax system and will be wasteful, because it will eliminate claw-back. The only vestige of a benefit will arise from the £1,300 million of extra taxation achieved through the system.

The hon. Member has obviously not read the Green Paper recently or he would know that the proposals in it would give a positive social benefit in cash to millions of hard-pressed families—particularly those with children. The proposals would increase the income of between 3 million and 4 million pensioners and relieve hundreds and thousands of people of the need to claim supplementary benefit. These proposals will be simpler and easier for people to understand and fairer than the present system of tax allowances. They will also lead to considerable savings in civil servants.

Any Labour Member who wants to know what the tax credits will or will not do would be better advised to await the report of the Select Committee, because obviously we are talking in a vacuum. It is obvious not only that the hon. Member has not read the Green Paper but also that he cannot possibly have read the report.

I entirely agree.

I, too, agree, and I hope that my hon. Friend would not have read the report. Equally, I hope that the Chancellor will not wish to mislead the House by suggesting that large numbers of pensioners and others will benefit, because they will benefit only if he finds the £1,300 million.

It comes a little strange from the hon. Member to talk about tax cuts—

Who was talking about tax cuts?

or of finding money in order to provide benefits—

Answer the question.

finding money to provide the wherewithal for the tax credit scheme which, in part, will replace certain aspects of the income tax scheme. Under the Labour Government it would clearly have been impossible to find the means to finance these benefits. Under this Government, which has already reduced taxation by £4,000 million, it will be possible to finance the tax credit scheme.

asked the Chancellor of the Exchequer how much money was collected from income tax during the last 12-month period for which figures are available and what was the total for 1969–70.

In the financial year 1969–70 income tax receipts represented 12·3 per cent. of the gross national product and amounted to £4,907 million. In the financial year ended 5th April 1973 the percentage had fallen to 11·9 per cent. of gross national product and amounted to £6,477 million. For the 12 months ended 31st May 1973 the figure was £6,577 million.

How does the Minister square that statement with the claim that people are paying less income tax under the Tories? How does he also square it with what the Chancellor was saying only a moment ago? Is it not clear that the Government are taking more tax off the working people of this country than any Government in our history, and will the Chancellor stand up sometime and tell us what he is doing with it?

What the hon. Member says is not correct. I give him one example. In 1969–70 taxes on personal income represented 22·7 per cent. of wages and salaries. By 1972–73 we had reduced tax on personal income to 20·9 per cent. of wages and salaries. The proportion of indirect taxation related to the gross national product has also fallen.

Surely what matters is not the amount of tax collected but the rate of taxation? Is it not a remarkable coincidence that under Labour Governments tax rates rise and under Conservative Government they fall?

I entirely agree. If the rates of tax in force at the last General Election were still in force today the British people would be paying £4,000 million more than they are.

Why, in spite of my constant pleas, does the Minister only ever talk about tax when he talks about what the Government take from the British people? Why does he not refer to the unavoidable charges that have been imposed on the people by the Government? Is the Minister intending to mislead the House to the extent of saying that the amount coming in does not matter, that the only thing that matters is the rate? Is that not palpable nonsense? Is it not obvious that if the base figure rises and more money comes in the rate does not have to be so high?

It is not palpable nonsense for the British taxpayer. If the rates had stayed the same as they were when we came to office people would be paying £4,000 million a year more in taxation than they are, so the rates are highly relevant. On the first part of the question, taking into account all the charges referred to by the hon. Member, adjusting for inflation and making all the other adjustments that he would wish, since June 1970 the real net income of the family with two children on about half the average industrial earnings has increased by 4·5 per cent. a year compared with 2·5 per cent. a year under the previous Labour Government.

asked the Chancellor of the Exchequer, in view of the case, details of which have been sent to him, where a man and woman living together are regarded by the Department of Health and Social Security as man and wife but are regarded by the Treasury as single persons for tax purposes, whether he will take steps to see that these people are treated by the Inland Revenue for tax purposes in the same way as they are treated for social security purposes.

It would not be possible or desirable, in a tax system which applies to many millions of taxpayers. for tax inspectors to conduct detailed investigation into couples' private affairs. These same arguments do not apply under the supplementary benefits system. which is designed to meet individual cases of need.

Does not my hon. Friend agree that it is absolute nonsense for one Department to regard people as being socially together and the other Department to regard them as being socially apart—for them to be regarded by his Department as being economically apart and the second Department as being economically together? Will he ask his right hon. Friend to re-examine the whole question?

Different considerations apply in the two cases. Supplementary benefits aim at the specific relief of need, and must take into account individual circumstances and the resources available to the individuals. The income tax personal allowances, however, do not directly reflect need. Their purpose is to graduate liabilities according to a very broad range of categories related to family circumstances. They are not the same thing.

What are the detailed investigations that are necessary in the one case?

I was referring to the natural inquiries that the Supplementary Benefits Commission makes before it provides supplementary benefits to a cohabitating couple.

Must it not be an injustice that a woman can be knocked off supplementary benefit because she is living with a man—it being assumed that the man is supporting her—and yet the man cannot make any claim on the Inland Revenue for her support? Surely the Government are trying to have the argument both ways.

I cannot answer for the system used by the Supplementary Benefits Commission. That is a matter for my right hon. Friend the Secretary of State for Social Services. In the tax system, which deals with many millions of taxpayers, it would not be practicable for tax inspectors to make the sort of inquiries into people's private lives and habits that the hon. Member seems to wish.

asked the Chancellor of the Exchequer what discussions have been held or are in prospect with M. Henri Simonet of the European Commission concerning the future of zero rates of British value added tax after 1975.

My right hon. Friend the Chancellor and my hon. Friend the Financial Secretary had a useful discussion with M. Simonet when he visited London in April and there have since been further discussions between M. Simonet and United Kingdom officials.

What, if any, indication has been received from the Commission about zero rates of value added tax? Will my right hon. Friend reflect that many of us, even though we be possessed of only the meanest intelligence, believe that the authority of the House turns upon the test of ultimate sovereign control over rights of taxation, and that we wish to be assured that that authority will remain undiminished?

I certainly would not put my hon. Friend in the category to which he referred. He will recall that under the European Communities Act there can be no question of additional taxation being charged without legislation in the House, and there can be no question of the Community's agreeing on a harmonised VAT, whether or not it involved the ending of zero rating, without a unanimous vote of all the members. That position is unchanged. I understand that the directive allows the continuance of zero rating for the time being.

As Commissioners of the European Commission seem to enjoy coming to Britain rather than answering questions in the European Parliament—[An HON. MEMBER: "Assembly."]—in the European Assembly, does the Chancellor know whether the gentleman referred to in the Question is likely to answer questions from the British delegation at that Assembly on the important matter of zero rating?

I cannot foretell, but there would obviously be a better chance of his answering questions if the hon. Gentleman were there to ask them.

May I put the question more simply than my hon. Friend the Member for Oswestry (Mr. Biffen) did? As of today, can we or can we not extend the area of zero rating without offending the rules of the Common Market?

As of today, if we chose to put down an amendment to the Finance Bill, I am certain that could be done.

Will the Chief Secretary now give us a clear assurance that the Chancellor either has told or will tell the Commissioner that under no circumstances will he agree to anything other than zero rating of food?

We have made it abundantly clear to the Commission and to our partners that we regard the zero-rating element of the value added tax as of the utmost social benefit—[HON. MEMBERS: "Answer"]—and I am confident that in the years ahead our partners will appreciate the truth of that in their circumstances.

asked the Chancellor of the Exchequer if he will state the total number of United Kingdom taxpayers with an income of £5,000 per year and above.

The estimated number for 1973–74 is about 625,000, counting married couples as one unit.

Does not that answer vividly demonstrate the British unfair society, in that the number of people earning more than £5,000 a year must now be well above 1 million, if the number is calculated by the number of luxury motor cars, luxury houses, yachts, expensive meals and all the other trimmings of expense accounts and other arrangements? Do not these matters clearly demonstrate that there is now massive tax evasion? What are the Government prepared to do about it?

The hon. Gentleman is entirely wrong. If houses, yachts and other items are given out by firms to their employees they are taxable as emoluments of the employee. They are taxable just as much as cash received. The hon. Gentleman is quite wrong.

Can the printers who print HANSARD and the Votes be added to that number?

It is a long-standing practice of the House that it does not discuss the tax affairs of individuals.

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

I believe that the economy is continuing to grow in line with the Budget forecast, which was for an annual rate of 5 per cent. over the 18 months to the first half of 1974. The latest provisional national accounts show that this is, broadly, the rate that we have been achieving since the second half of 1971.

Is my right hon. Friend aware that industry, discounting some jeremiahs in the City, consider it important that the economy should continue to grow at a fast rate? Will he assure the House that if there is any sign of our rate of growth slackening off he will take the necessary measures to ensure that the rate continues at 5 per cent.?

I have no intention of anticipating any action either way at any time. We discussed this matter at yesterday's meeting of the National Economic Development Council. I can assure my hon. Friend that the council took the view—that is, both sides of industry—that it was desirable that we should continue with the growth rate that we are now achieving.

Does the right hon. Gentleman accept the estimate given by the NEDO study group, which was published in this morning's papers—namely, that it will not be possible to maintain a growth rate of even 3½ per cent. to 4 per cent. in the longer run unless action is taken quickly to remove certain bottlenecks?

At yesterday's discussion with the NEDC it was the unanimous view of both sides—that is, the trade union movement as well as employers' organisations—that although some constraints and bottlenecks are now appearing in a number of industries in some regions, they are not widespread.

Does my right hon. Friend agree that if it were decided to introduce food subsidies it would be necessary to increase taxation to pay for them? Further, does he accept that that might well have an inhibiting effect on the future rate of growth?

We have never been doctrinaire about food subsidies or family allowances, which have recently been referred to in the Press. We have not hesitated to take direct action to keep down the prices of particular foodstuffs when that has been necessary. I refer to milk, potatoes, sugar and butter. I agree with my hon. Friend that the argument against massive, across-the-board food subsidies is overwhelming.

If food subsidies will look after the well-to-do, and if they will create extra demand, why is it that three months ago the right hon. Gentleman did exactly the same thing for the building societies?

That was a bridging operation, which was explained at the time. I believe that it had the general support of millions of people who are trying to buy their own homes. I am sad to note that the hon. Gentleman was not in favour of giving help over that particularly difficult time.

asked the Chancellor of the Exchequer if he will make a statement on the number of companies trading in the United Kingdom which have their registered offices in the Channel Islands and the arrangements which are made for payments of United Kingdom tax by these companies in view of the EEC discussions on tax havens.

It is not the place of registration that is material for determining a company's liability to United Kingdom tax, but where it is resident. A United Kingdom resident company is liable to United Kingdom tax on its world profits whether registered in the Channel Islands or elsewhere. The number of such companies registered in the Channel Islands is not known.

Does the right hon. Gentleman agree that many companies are registered in the Channel Islands for the purpose of tax evasion? Further, is he aware that the EEC has expressed disapproval of such registration? Will he consult his right hon. Friend the Secretary of State of the Department of Trade and Industry to see what reform of company law can take place to get disclosure of the companies in the Channel Islands?

I must repeat that mere registration in the Channel Islands does not enable United Kingdom companies to escape tax. If they continue to trade in the United Kingdom they remain liable to United Kingdom tax at least on the profits from their United Kingdom trade. The recent EEC directive, to which we subscribe, was aimed primarily at the position of companies in Luxembourg. Jersey and Guernsey have their own tax system and their own systems of law and administration. It would be entirely contrary to the normal constitutional relationship with the Channel Islands if we were to seek to intervene in their domestic affairs.

Will my right hon. Friend confirm that there are already measures in force which enable the Revenue to collect tax from the agents or companies of Channel Island companies trading here, and that there is no call for any amendment to the law?

I take note of what my hon. and learned Friend has said.

Will the right hon. Gentleman in general ignore what his hon. and learned Friend has told him? Will he bear in mind that the Channel Islands are just one of many havens, and that the Opposition will move amendments to the Finance Bill on Tuesday which, if the Chancellor of the Exchequer will agree to alter the resolution, will allow the Prime Minister to do what he has always wanted, namely, to eliminate the horrid face of capitalism?

I have no doubt that we shall have the opportunity to discuss the general issues relating to this matter during what I understand is to be a wide-ranging debate on Tuesday.