asked the Chancellor of the Exchequer which Common Market regulations prevent the zero-rating of the theatre for VAT.

asked the Chancellor of the Exchequer if he will now zero-rate the living theatre for the purposes of VAT.

asked the Chancellor of the Exchequer what consideration has been given to relieving the performing arts of value added tax.

There are no EEC requirements relating to the application of VAT to the theatre. My right hon. Friend is considering representations for relief from VAT for the performing arts, including the theatre.

I am obliged to my hon. Friend for that reply. I was glad to hear the latter part of his answer. Will he tell his right hon. Friend that in Belgium the theatre is zero rated? I hope that we shall be able to follow suit.

I take note of the representations of my hon. Friend. I pay tribute to the delegation that she brought to see my right hon. Friend the Chancellor of the Exchequer, whose representations are at present being considered.

Is the Minister aware that many of our regional theatres are facing the problems of deficits, despite the help given by the Arts Council? Generally speaking, the amount that they are in deficit is roughly the same as the VAT which they have to pay. If the Chancellor is able to give this relief to the living theatre it will benefit regional theatres throughout the country.

That is a problem, as my hon. Friend pointed out. That is why my right hon. Friend the Chancellor is considering these matters sympathetically.

Does the Minister agree that no progress has yet been made on the Government's renegotiation objective relating to VAT?

As the right hon. Gentleman will understand, this is a much more limited matter. Within the EEC there are wide discrepancies in the treatment of the theatre.

asked the Chancellor of the Exchequer what proportion of the Government banking is conducted through Giro.

I regret that the information asked for by my hon. Friend is not readily available centrally.

Is my hon. Friend aware that many of us are concerned that the proportion is not great enough in view of Labour's "Programme for Britain" of 1963, which pledged that the Giro system would be used as extensively as possible by Government Departments and by nationalised industries? Will my hon. Friend tell the Paymaster-General that it is ridiculous that there should be duplicate banking facilities going through the computers of the Paymaster-General's office, and that Giro should be used in the public service?

I support the contention of my hon. Friend that there should be a much greater use of Giro. I echo what my hon. Friend says in that respect. I would point out that the Treasury has recently reminded all Departments to consider making greater use of Giro and to offer it to the public as a way of making payments.

Does the Minister not agree that it is rather extraordinary that the Government should not know what proportion of their banking is conducted through the Giro system? Do the Government not know how they conduct their banking?

These are matters for the individual Departments. The task of the Treasury is to make recommendations regarding the most useful methods, and it has done so in this respect.

Is my hon. Friend aware that the housing departments and the treasury departments of many local authorities are having to deal with huge sums of arrears because people are not using the Giro system to make regular payments of rents and rates? Will he give his attention to this matter and advise local authorities about the value of Giro?

I am more than happy to support what my hon. Friend says. I am sure that his question will draw the attention of local authorities to the need to make greater use of the Giro system.

Is it not the case that Giro is still losing money and costing a substantial amount of public money? In those circumstances, would it not be sensible, so long as the institution is there, for the Government to undertake aggressive marketing policies for those Departments under their control, and at least conduct the kind of marketing survey that my hon. Friend the Member for Wycombe (Sir J. Hall) has suggested? What are the Government doing to diminish the loss?

My right hon. Friend the Secretary of State for Industry is considering these and other matters and, I am sure, will be informing the House in due course.

asked the Chancellor of the Exchequer if he will place a copy of the manual on the Treasury Macroeconomic Model in the Library.

A copy of the manual on the Treasury Macroeconomic Model was placed in the Library on 6th December 1974.

I am grateful to my hon. Friend, but is he aware that Conservative Members left forecasting in the Treasury in a bit of a mess? Will he ask the Civil Service Department to look into the organisation of forecasting in the Treasury and ensure that the Treasury uses the best programmes and methods available in this country and the United States? Further, will he ensure that he is not diverted by the current theories of Lord Kaldor and Mr. Godley from serious work on the development of the model?

I hope that my hon. Friend will not object if I do not comment on the many theories that we have available to us, but the organisation and methods of Treasury forecasting are already being looked at, and the Civil Service Department is wholly involved in this inquiry. Up-to-date methods are used, incorporating refinements of procedure which have been developed both here and abroad. Where there is room for improvement we remain keen to consider such moves. A vast amount of technical expertise is now at our disposal. With all these resources available there would be no question of abandoning serious analytical and modelling work.

asked the Chancellor of the Exchequer what consideration he has given to the question of VAT assessment on the restoration of historic buildings.

I have taken note of representations for relief from VAT for restoration of historic buildings.

Is the Chancellor aware that the VAT on the repair work on Ely Cathedral is £35,000, which has severely affected the material position of one of the most beautiful cathedrals in the country? Does he realise that there will have to be a further financial appeal, and if it is not the right hon. Gentleman's intention to tax the public's generosity will he consider making an exception in this case?

The problem arises from the difficulty of discrimination which is inherent in the value added tax system. I recall full well when this tax was introduced as an comprehensive, broad-based and free-from-anomalies tax. The trouble is that the Government are having to live with the anomalies. Of course, the hon. Member will be aware that any grants which are made take account of the VAT.

While there may be some possibility of reclaiming some VAT in cases like this, may not the time be coming when some public contribution in support of private generosity may be inevitable for historic cathedrals and churches such as Ely Cathedral if they are to be properly preserved? Will the Government keep an open mind on this subject in the future?

Obviously the Government are very concerned about the preservation of historic buildings. We are prepared to consider doing anything which can be done within the context of what I have said.

The Minister will be aware that the Government have announced that they are to make £1 million available for historic churches, for which we are grateful. In view of that, will he not look again at the speeches which he and certain of his colleagues made on the subject two years ago and remove this absurd anomaly, bearing in mind that everything that was said by the hon. Member for Isle of Ely (Mr. Freud) applies to many of the country's most important historic buildings?

The grants take account of the VAT that is included within the grants. The hon. Member is right about the problems of the tax. There are anomalies, and the Government have to live with the results of the inflation that was created by the previous Conservative Government.

asked the Chancellor of the Exchequer when he next intends to meet the other Finance Ministers of the EEC.

The next meeting of the Council of Ministers (Finance) will be on 18th March.

Will the Chancellor confirm that it was the backing provided through our membership of the EEC that enabled him to persuade the IMF to adopt his scheme for recycling petrodollars? Is not this a classic example of the reason why we should remain in the EEC if we are to have an important influence over world events?

The agreements reached in Washington were due to prior agreement among European Finance Ministers, but I am glad to say that the Finance Ministers of European countries outside the EEC also adhered to our common policy. This is a lesson which proves what can be achieved by European unity in seeking co-operation on urgent matters of practical interest where the Governments concerned recognise the need for a collective policy. I found the same situation in the Eurogroup when Britain was outside the EEC and I was Secretary of State for Defence.

Will my right hon. Friend draw to the attention of the EEC Finance Ministers and any other financial experts the fact that the continuing use of tax havens, particularly the Channel Islands, has now developed to such an extent that already, even before the petroleum revenue tax has been introduced, oil companies are registering in Jersey? I have the names of the companies, and possibly my right hon. Friend has some, too. Surely this means that the expected revenue from PRT, which I regard as derisory, will be even less as a result of these activities. The matter needs to be dealt with immediately.

If I can remember everything that my hon. Friend said I will draw the attention of my colleagues to it. As for the use of the Channel Islands and other islands in the world as tax havens, my hon. Friend will be aware that I closed most of those loopholes—where they were open to British residents—in last year's Finance Bill. I am glad to say that the capital transfer tax will apply as much to the Channel Islands as to anywhere else in the United Kingdom.

asked the Chancellor of the Exchequer what representations he has received from the National Association of Widows concerning tax allowances; and what reply he has sent.

asked the Chancellor of the Exchequer if he will appoint a working party to study the personal taxation of widows.

In common with other right hon. and hon. Members, I have received a letter from the association's general secretary asking that widows should no longer be taxed as single women. On 11th February my hon. Friend the Minister of State, Treasury, had a meeting with a deputation from the association accompanied by my hon. Friend the Member for Walsall, South (Mr. George) and the hon. Member for Staffordshire, South-West (Mr. Cormack) at which various matters affecting widows were discussed. Naturally I shall consider all the various representations I have received, but I do not think that a working party is called for.

I am grateful for that reply, and I am grateful to my right hon. Friend for meeting the deputation. Will he be more forthcoming? Does he accept that it is a basic injustice that a widow seeking to earn a family income should be more harshly treated by the tax system than a married woman who seeks to do the same? Is it not an injustice that a married couple with one child qualify for a tax allowance of £1,730 per year when both are working, while the widow receives a tax allowance of only £1,065 in the same circumstances? Will my right hon. Friend examine these injustices and anomalies and give an assurance that he will make some changes in the system?

I am aware of some problems affecting widows, but my hon. Friend is not correct in saying that the widow is treated worse than the married woman for tax purposes. What many widows bitterly complain about is that if they are working they pay more tax than the married woman who is not a widow, but that is because the widow's pension is counted, like all pensions, as part of income, and widows are taxed on that as well as on their wages.

Would it not be more appropriate to leave people with more of what they earn?

In some circumstances, yes; in others, no.

Will my right hon. Friend consider the curious situation in which a widow whose aggregated income, including her pension, may be as low as £25 per week, pays the same standard rate of tax as a Member of Parliament on £4,500 a year, or a headmaster on £6,000? Is there not a case now for a reduced rate of tax at the lower end of the income bracket, offset, of course, by higher tax on the wealthy?

Of course there is a case for a lower rate of tax at the bottom end of the earnings scale. On the other hand, it would be a great mistake to imagine that that could be offset simply by increasing tax on the wealthy. The number of those at the lower end of the scale is so great that if there were to be a reduced rate for them there would have to be an increase in the standard rate as well.

As the Chancellor said, many widows who are working feel wrongly that they are paying more tax than the single person working alongside them. Will the right hon. Gentleman ask the Board of Inland Revenue to look at the pay-as-you-earn forms, since these, I believe, mislead widows into believing that they are paying an extra amount of tax. The forms could be changed to clarify the situation.

I shall bear that in mind, but no doubt I should get the same reply from the Revenue as the hon. Member got when, I hope, he put the same question when he was a Treasury Minister.

Does my right hon. Friend remember that taxation is specifically excluded from the forthcoming anti-discrimination legislation and that many of the problems of taxation which are faced by many women, especially widows, need urgent attention? May we hope that he will deal with those as soon as possible?

I am very much aware of that aspect of the problem. I assure my hon. Friend that I have it under continuous review.

Is the Chancellor aware that a possible solution might be to implement a householder's allowance for single women who are maintaining a house and a family, along the lines suggested by the Financial Secretary? Will he consider that very seriously, because of the heavy burden of expense on those widows who maintain separate establishments for themselves?

That is one of the ways of dealing with the problem at which we are looking. The problem to which the hon. Gentleman referred must also be seen as a specific one, in the general context of what help should be given to single-parent families, of which widows form only one example. The Government hope to announce conclusions in that regard in the context of forthcoming legislation on child benefits.

Is the Chancellor aware that the Financial Secretary, in a letter to me last October, stated—

Order. The hon. Member must not quote at Question time.

Is the Chancellor aware that the Financial Secretary stated that widows deserved special consideration? In view of the Chancellor's answers so far, what does "special consideration" mean to him?

Widows already receive special consideration. There was an increase of 30 per cent. in their pension in July 1974. They will receive another £1·60 increase in April and a further increase later in the year.

asked the Chancellor of the Exchequer whether he can now state whether he intends to grant relief on inflationary increases in the value of work in progress to professional firms as well as traders.

No, Sir. I cannot anticipate my right hon. Friend's Budget proposals.

May I point out that this is a question of principle? If it is correct in principle to give relief to trades as a result of inflation, because their work in progress is hit, exactly the same principle must apply to professional firms hit equally badly. Can the right hon. Gentleman deny that the principle applies equally to both?

I would not care to deny that. I am very much aware of the problem. However, I cannot anticipate my right hon. Friend's Budget proposals.

Surely this is a matter for the last Budget on November 12th and the present Finance Bill, and not for the next Budget and the next Finance Bill, whenever those will be? Does not the Chief Secretary recall a number of arguments in Committee on this subject, and would it not now be wise to bring forward a Government amendment to add to the other 120 or so Government amendments to the Finance Bill, which we shall discuss during the next few weeks, to make this necessary and worthwhile change?

No, Sir.

asked the Chancellor of the Exchequer what studies he has made of the effects of negative fiscal drag on future tax levels in the light of projected central Government and local government expenditure and forecasts of growth of gross national product.

The effects of negative fiscal drag—that is, the effect on tax levels of not increasing specific duties in line with inflation—are kept under constant review.

Have we not reached the point of accelerating inflation which makes increases in tax rates inevitable, and is not the position aggravated by sticking to an outdated property rating system which makes it politically impossible to increase local revenues in line with the increase in local government expenditure?

As the hon. Gentleman knows, the whole question of local revenue is under review in another committee. We must await that report.

asked the Chancellor of the Exchequer if he will consider favourably the representations made to him to grant the equivalent of the married man's allowance to widows with children.

Widows with children already receive the additional personal allowance as well as the single person's allowance. We shall certainly continue to keep their position under review, but, as I said in answer to a question from my hon. Friend the Member for Sheffield, Heeley (Mr. Frank Hooley) on 18th December, we are not persuaded that it would be justifiable to make up the full difference between the single and married allowances.

Will it not help these women to help themselves, if they are left with all the household bills to be met out of one income, if their income for tax purposes is treated the same as the breadwinner's income in a two-parent family?

I understand the point that the hon. Gentleman is making. We have sought to do quite a lot in that respect, as the hon. Gentleman will know. Last year, we increased the additional allowance from £130 to £180 to assist those widows with one child. If there are more children, there will be more tax allowances. However, from conversations with many of these widows, I realise that it was not sufficiently understood that, with the personal allowance and the additional allowance, and the allowance for one child only, a widow had to earn over £1,045 a year before she became liable to income tax. That is not a great amount. But there have been some misconceptions about this which it might be better to allay.

Does not my hon. Friend agree that the taxation system as applied to widows struggling to bring up children compares unfavourably with the tax immunity enjoyed by some well-known residents of this realm?

I can do nothing but agree with my hon. Friend.

asked the Chancellor of the Exchequer what steps he is taking to implement the Government's commitment to protect the less well off from the effects of inflation.

Since entering office, we have approved a record uprating of pensions and associated benefits and have increased the maximum amount of family income supplement. We gave a £10 Christmas bonus in November and are committed to a further uprating of pensions and related benefits in April with another uprating later in 1975. Family allowances will also be increased. The poor have been particularly helped by our food subsidy programme and the further reductions we have secured in the prices of basic items through the voluntary agreement. We have also imposed a freeze on rents and given selective rate and rent rebates.

Will my right hon. Friend accept that although that progress is good and useful, there is a real chance that the poor will in fact become poorer in 1975 and that there is now a need for a comprehensive poverty programme, bringing together the different Departments concerned, so that one Department does not subsidise food while another pushes up the price of another essential product? Will he also accept responsibility for co-ordinating such a programme because, at the moment when I ask him Questions about it, he tends to transfer them to the Prime Minister, yet when I ask the Prime Minister, he tends to transfer them to my right hon. Friend?

I assure my hon. Friend, whose concern and interest in these matters is well known, that I shall try to see that that buck stops passing, even if it means that it stays with me.

A poverty programme.

The co-ordination of policies on poverty adds up to a poverty programme. I have accepted responsibility within the Government machine for such co-ordination.

According to the right hon. Gentleman's Department, there are between 27,000 and 31,000 people in receipt of family income supplement who are nevertheless paying tax. Does not that make nonsense of the system?

The problem of the poverty trap, which is well known to those hon. Members on both sides who are concerned in these matters, is a very difficult one, with which no Government have yet found an adequate means of dealing. We take offsetting measures, for example, through the FIS, to help those who pay tax but are nevertheless below the poverty line.

asked the Chancellor of the Exchequer what further proposals he has to encourage company liquidity.

An estimated £1,800 million will be made available to the company sector in 1975 as a result of measures taken by the Government last autumn. I am, of course, keeping the situation under close review.

Does not the Chancellor appreciate that these measures will do nothing for those companies which have large investment programmes and little or no corporate tax liability? Is not the situation that the only way to achieve success in reducing the great pressures which are now placed upon corporate liquidity is to abolish price and dividend control, because, if they are not abolished the unemployment rate will rise much faster than it has done already?

I have been interested to discover that many of those in business who pressed me to relax dividend control, as I did last November, have since complained that I removed the one excuse which they were able to quote to their shareholders for not increasing dividend distribution in the past year. Very much the same is true of price control. Many companies have been unable to take advantage of the relaxation of price control because of increased competitiveness inside industry. But one of the major reasons for the problems facing companies is the very rapid inflation, which I am sure the hon. Gentleman will agree is due largely to the insensate increase in the money supply under the last Government.

Will my right hon. Friend take steps to see that companies which are in a satisfactory liquidity position increase their investment?

That is certainly a problem. The House will be aware that during the periods when there was no dividend control and a high level of corporate profits, investment in the company sector was very much lower than last year, when there was dividend control, when there was price control and when severe tax controls were put upon the company sector. The question of how to encourage, cajole and otherwise persuade companies which have money to invest that money is one with which the Government are dealing. In so far as they are unable to do so on their own or cannot be persuaded, the National Enterprise Board and the planning agreement system should assist.

Does the right hon. Gentleman recognise that developments and extensions of Government control of that kind are the very instruments designed to discourage the investment which he seeks? In his first answer, when he was explaining that in present conditions competition renders the provisions of the Price Code and price control unnecessary, was not the right hon. Gentleman demonstrating the extent to which my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) was right to press for further relaxation and ultimate abolition of price control?

As to that last point, all that the right hon. and learned Gentleman is saying is that what his hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said showed that this was irrelevant to the problems which we are now discussing. The right hon. and learned Gentleman suggested that the National Enterprise Board and assistance to industry under the Industry Act would damage investment. However, that was not the view which he held when he was a member of a Government who nationalised the Rolls-Royce company and injected a great amount of additional money into its aero-engine activities.

asked the Chancellor of the Exchequer what proposals he has for intensifying the battle against inflation.

Since the money supply is now under control, and import prices are moderating, stricter adherence to the guidelines laid down by the TUC for wage bargaining is the key to reducing inflation. We must therefore all intensify our efforts to secure that the guidelines are observed more strictly in the spirit as well as in the letter.

Does not the right hon. Gentleman agree that the £2,000 million reflationary package being urged upon him by the TUC would be just as disas trous as excessive pay rises, about which he has warned so eloquently on a number of recent occasions and has reiterated today? Despite the right hon. Gentleman's self-satisfaction about the money supply, does not he agree that no anti-inflationary package can work unless there is a marked reduction in the public sector borrowing requirement to well below the official figure of £6,300 million at which it stands at present?

For me to give a view now on how much inflation, reflation or otherwise is required by Government action would be to anticipate a judgment which I must make and reveal to the House in my Budget speech, which I assure the House will be either before or after Easter.

Public sector borrowing.

The hon. Gentleman will be glad to know that there are two later Questions on that matter.

Does my right hon. Friend accept that the concern which exists about the present level of inflation is widely shared on the Government benches? Many of us are concerned about its possible effect in the near future on our balance of payments as well as on the level of unemployment. We welcome the strong views which my right hon. Friend has expressed about this, but has he seen the results of the opinion poll published today showing that the great majority of the population have no idea what the social contract means—[Interruption.] For those who believe that this should be the basis of our policy—

Order. The hon. Gentleman must ask a question.

Does not my right hon. Friend agree that this shows an urgent need for an intensive public relations campaign to make the population aware of what this policy represents?

It is desirable that all those who are concerned to reduce the present unacceptable level of inflation should do their best both in public and in private to persuade people to maintain the guidelines set down for bargaining. I hope that I can count on my hon. Friend to give up at least two nights a week for that purpose.

Does the right hon. Gentleman agree that his recent rather good speeches on this subject imply that he sees unemployment as the only possible alternative to the success of the social contract in dealing with wage inflation? If so, will he say how much unemployment he believes is needed to cure how much inflation?

I am sorry to say that I am so overcome by the generosity of the hon. Gentleman's compliments that I scarcely feel like being unkind to him in answering the second part of his question.

My right hon. Friend referred to the social contract. If he hopes to succeed in winning over the trade unions and the employers to the social contract, is he aware that justice must be seen to be done as between all those making claims on the economy?

That is the case, but we also have to pay regard to justice to the people of Britain. Settlements made outside the guidelines laid down by the TUC are damaging to each and every one of us, no matter what occupation we follow.

Further to the point raised by my hon. Friend the Member for Blaby (Mr. Lawson) about the right hon. Gentleman's response to the TUC's suggestion for a very substantial increase in public spending, is it still his view that if wage rates rise beyond the level recommended in the social contract—to which he attaches such importance—he will, as he said in his Budget speech last year, be compelled to take offsetting steps to curtail demand?

I have repeated that statement many times since making that Budget speech.

On a point of order. Mr. Speaker. It will be within your recollection that my hon. Friend the Member for Blaby (Mr. Lawson) asked the Chancellor whether he would comment on the problem of the public sector borrowing arrangements, which now stand at about £6,300 million. The Chancellor refused to answer that question on the grounds that there was another Question on the matter later on the Order Paper, so he deferred his reply until then. You will agree that this is a matter of grave and growing concern, not only to hon. Members but to the country. It is clear either that the Chancellor wished to reply to this Question and give more information about this important matter or, alternatively, that he was abusing the procedure of the House. May I suggest to you that the Chancellor be asked to seek your consent to reply to that Question?

These are not matters for the Chair, and I have received no such request.

asked the Chancellor of the Exchequer what has been the rate of inflation over the last three months for which figures are available expressed on an annual basis.

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

I would refer my hon. Friend and the hon. Member to the answer which my right hon. Friend the Paymaster-General gave on 14th January to the hon. Member for Derbyshire, South-East (Mr. Rost).—[Vol. 886, c. 230.]

Since he has ministerial responsibility, will the Chancellor say what he is prepared to do to secure stricter adherence to the TUC guidelines on wage settlements, apart from simply making speeches about them?

The essence of the TUC guidelines is that they are guidelines for voluntary collective bargaining. Therefore, influence on those who negotiate is the only means which can be used by the Government to secure adherence to them. I must point out that the exceptionally high increase in the rate of inflation in recent months was due in large part to 11 threshold payments, totalling £4·40, to over 10 million workers, for which legislation introduced by the previous Conservative Government was responsible. The increase in the rate of inflation was also due to various groups in the public sector catching up on the unfair discrimination against them, imposed by the statutory policy.

Is not one of the major worries of the TUC the rate at which service industry manpower has gone up and the way in which the percentage of those in Government service has risen from 5½ per cent. to 6½ per cent.? In these circumstances, will he get some of the most critical men in the Treasury to look at the inflationary aspects of new forms of bureaucracy in Scotland?

There are many critical men in the Treasury, and I hope that I am one of them. My hon. Friend will know, because he will have read the best White Papers, that the Government are planning to halve the increase in local government expenditure which took place during the past three years under policies introduced by the previous Government. I do not deny that effective control both of spending and of recruitment of manpower in local government is a difficult problem for any administration.

In the view of the right hon. Gentleman, what would be the consequences either of a fall in the rate of inflation, or the expectation of a fall in that rate, upon the level of unemployment?

One certainty is that if there were a fall in the rate of inflation, or the expectation of one, many investment decisions now being held up would go ahead. That would lead to an increase in employment.

asked the Chancellor of the Exchequer if he will take steps to ensure that working wives, paying income tax separately from their husbands, shall receive, without reference to their husbands, all tax refunds due to them as a result of overpayment on either their earned or unearned income.

A wife who is separately assessed to tax from her husband already receives repayment of any tax overpaid on her earned or investment income without reference to her husband's tax position. Where a married couple elect for separate taxation of wife's earnings any tax overpaid by the wife in respect of those earnings is also repaid to her. But, since the husband remains responsible for any tax on the couple's joint investment income any repayment due on this investment income is normally made to him.

Does not the hon. Gentleman regard is as faintly Victorian for his inspectors to require a signed consent from a husband before agreeing to make a repayment to his wife of tax overpaid on her small savings investments—tax paid by her and on her own private income? Is not it time that the Treasury began to accord equality of treatment to all taxpayers irrespective of their sex?

The hon. Gentleman is correct in saying that this just refers to wives' investment income, because there can be separate assesments for tax and, in addition, there is a separate taxation system known as the wife's earnings election, as the hon. Gentleman will realise. He will also understand that it is the intention of my right hon. Friend the Chancellor of the Exchequer to reintroduce aggregation. As a result, there will be the aggregation of the investment income necessary for this purpose.

asked the Chancellor of the Exchequer if he is satisfied with the anticipated levels of investment in industry for 1975–76; and if he will make a statement.

The prospects for investment this year are obviously uncertain, and depend on a large number of factors, but the measures taken last November, the expansion of FFI facilities, and the proposals for planning agreements and the NEB, should all help to sustain the industrial investment which is needed to maintain our standard of living.

Does my right hon. Friend agree that a curtailment of investment in the private sector could, in certain circumstances, be construed as a strike of capital? In such a situation, does he agree—I am sure he does—that it is vital for public bodies such as the National Enterprise Board to provide the urgently-needed levels of investment? Is he therefore concerned at the latest diktat from the European Commission that the levels of public investment in such areas as Yorkshire and Humberside are to be limited to 20 per cent.? Is not the solution for us to get out of Europe, so that we may have the freedom to invest?

The nub of that question lies in the last remarks of my hon. Friend. I do not believe that the European Community will effectively seek to limit the activities of the British Government in regional policy, investment or the location of industry, in ways to which we would not wish to submit.

Is not the phrase of the hon. Member for Keighley (Mr. Cryer) about a "strike of capital" unusually fatuous and meaningless? Is not the Chancellor's real problem the fact that while public investment will rise considerably in the coming year—the figure I have is about 13 per cent. but perhaps the Chancellor may have a more up-to-date one—intentions for private investment are still abysmal? Does not the Chancellor now have a duty to tell the House, even before his next Budget, what he intends to do to revive profitability and investment in British industry, because that is the problem?

I cannot recall whether the hon. Member was a member of the previous Government. He will recall that when the rate of profitability was very much higher than it is today, when dividends and Stock Exchange activity were very much greater, the rate of investment was far below the levels to which it is expected to fall this year. In the first three-quarters of last year there was an increase in manufacturing investment of 10 per cent.