asked the Chancellor of the Exchequer if he will introduce a system whereby spending Departments report to him monthly whether each sub-programme is costing more or less than budget.

Under the Public Expenditure Survey system Departments already report changes in public expenditure estimates by sub-programme as they become known.

Does the Chief Secretary agree that, in these times of galloping inflation, annual accounting is not good enough and that Peter Vinter's suggestion that there should be monthly reporting would allow the Government at least to know to what extent public expenditure was out of control?

I shall not go too deeply into the hon. Gentleman's supplementary question. As I indicated in my first answer, we are already receiving every month a considerable amount of information.

asked the Chancellor of the Exchequer if he will make a statement on the progress of his investigation into the possibility of setting cash limits for public expenditure.

asked the Chancellor of the Exchequer whether he will make a statement on the progress made towards achieving a more effective control of public expenditure, for example by imposing cash limits on each sector.

My right hon. Friend said in his statement on 1st July that cash limits would be fixed for wage bills in the public sector. The Government will employ the system of cash limits more generally as a means of controlling public expenditure in the short term. The intention is that in appropriate cases the existing system of control in real terms should be reinforced by cash ceilings on expenditure in the year ahead.

Does the Chief Secretary agree that it is essential to include strict cash limits on local authority expenditure, over and above the rate support grant, if we are to ensure that this control is adhered to? Will he guarantee that this will be included in the system to be announced?

On local authority expenditure, I am sure the hon. Member appreciates that it would be as well to wait for the White Paper tomorrow. On the monitoring system, we are constantly looking at the best way to improve this system. I shall certainly take note of what the hon. Gentleman has said.

Do not cash limits mean that there will be cuts in public expenditure? These are taking place now. Is my right hon. Friend aware that this is not acceptable to many Labour Members?

I do not think my hon. Friend appreciates that cash limits are another means of controlling public expenditure. Excessive public sector wages, of course, must inevitably have an effect on public expenditure.

Does the Chief Secretary accept that the Consolidated Fund figures published yesterday have strengthened the fear of people who believe that public expenditure is still out of control? Does he propose to publish, for each part of the public sector, the cash limits which are now to be imposed? Is not that the only way of reassuring people on this vital point, which is far more important than what the right hon. Gentleman proposes to do in the private sector?

The figures published yesterday can be very misleading. It would be quite wrong to draw conclusions from figures for so short a period. I am sure the hon. Member will recognise that it is not helpful to draw such conclusions.

Will the Chief Secretary accept that Conservative Members welcome the Government's recognition of the need to impose cash limits as a means of controlling public expenditure? Will he assure the House that the proposal to fix limits for wage bills in the public sector will not only fulfil the Chancellor's pledge to prevent the growth of subsidies or borrowing but will prevent the excess costs of wage settlements being loaded on to the public through increases in prices and charges? In other words, will he so apply the sysem as to prevent a recurrence of what appears to be happening in the Post Office?

The right hon. and learned Gentleman has made precisely the same point as my hon. Friend made the other week. I am sure that the right hon. and learned Gentleman will be able to wait patiently for the White Paper tomorrow.

asked the Chancellor of the Exchequer whether he will now announce further proposals for the control of public expenditure.

asked the Chancellor of the Exchequer what progress he has made towards a more effective method of controlling public expenditure, in particular by the imposition of cash limits; and whether he will make a statement.

I would refer the hon. Members to the answer that would have been given earlier today to similar Questions by the hon. Members for Norfolk, South (Mr. MacGregor) and Mid-Oxon (Mr. Hurd).

On a point of order. Mr. Speaker—

Order. I did not hear what the right hon. Gentleman said.

I would have been referring to the Question that I would have answered earlier if it had not been for your ruling, Mr. Speaker.

rose—

Order. I have not prevented the right hon. Gentleman from answering any Questions.

The Questions that were answered were asked by the hon. Members for Norfolk, South and Mid-Oxon.

On a point of order, Mr. Speaker. I am not questioning your ruling, but if Ministers at the Dispatch Box are to be protected in some way from answering certain Questions that would have been put to them when they come to Questions that are legitimately being put to them, is it not treating the House with contempt and frivolity that they should be answered in the way the Chief Secretary has answered them? Cannot he now be required to answer the Question seriously with the gravity which should attach to it?

In reply to the point raised by the right hon. and learned Member for Surrey, East (Sir G. Howe), may I say that I have no wish for protection to be offered. I should have been more than delighted to answer all the previous Questions. This Question' I answered with Question No. 3.

Order. The right hon. Gentleman did answer Question No. 3.

May I now ask my supplementary question, Mr. Speaker? Do the Government attach more importance to controlling capital expenditure on construction work or reducing unemployment in the building industry?

We pay attention to all these matters. We intend to ensure that unemployment is brought down, and the way to ensure that it is brought down quickly is by bringing down the rate of inflation.

Without revealing anything in the White Paper, does the right hon. Gentleman agree that public expenditure as a proportion of gross domestic product has increased, is increasing and ought to be diminished?

I agree that the growth of public expenditure must be restrained if we are to find the resources for new investment and to repay the very large debt which we have at present.

Does the enormous increase in the Consolidated Fund expenditure for the first quarter of the current year relative to the corresponding period a year ago fall in line with the expectations of the Chief Secretary, and is it consistent with a public sector borrowing requirement no greater than that indicated at the time of the Budget?

As I said earlier, it is far too early to draw conclusions from those figures during the course of a year. I am sure that the hon. Gentleman, with his great knowledge of these matters, will understand that.

Does my right hon. Friend agree that the massive and drastic cuts in public expenditure recommended by Opposition Members would not only enormously increase unemployment but, as they would not have effect for 18 months, would have no real relevance to the present economic situation?

I agree with much that my hon. Friend has said.

To help in countering inflation, will the right hon. Gentleman clear up one area of confusion before tomorrow? Does he accept that if the Gov- ernment's incomes policy is to succeed the primary responsibility must rest on the Government to persuade and compel wage and salary earners to observe the 10 per cent. limit, and that there can be no question of the Government sheltering behind employers?

I am sure that the hon. Gentleman has been reading Press reports about the contents of the White Paper to be published tomorrow. Being the patient man he is, I know that he will be able to wait until then to find out what it contains.

With prices likely to rise at least 20 per cent. to 25 per cent. this year, if the cash limits on public spending are to be applied at 10 per cent. will the Chief Secretary make clear to his hon. Friends—some of whom are confused, including some of his right hon. Friends—that this must necessarily mean major cuts in all public spending programmes? Will he give us an assurance that the details of those cuts will be set out in the White Paper tomorrow?

The hon. Gentleman must wait until the White Paper is published.

How can the Government's declared intention of controlling public expenditure be taken seriously unless the Government abandon the irrelevant nationalisation programmes?

I simply do not agree with the hon. Gentleman that they are irrelevant.

asked the Chancellor of the Exchequer whether he will make a further statement on his plans for reducing the rate of inflation.

asked the Chancellor of the Exchequer if he will make a further statement on his plans to reduce the level of inflation.

asked the Chancellor of the Exchequer by what means he proposes to halve the rate of inflation in the coming year.

asked the Chancellor of the Exchequer if he will announce measures before the end of July to reduce inflation.

asked the Chancellor of the Exchequer what further steps he intends to take to control inflation.

asked the Chancellor of the Exchequer when he expects to announce measures to deal with inflation.

asked the Chancellor of the Exchequer what progress he has made in preparing new measures to deal with inflation; and if he will make a statement.

I must ask hon. Members to await publication of the White Paper.

In view of the fact that there is to be a statement tomorrow, I hope that I shall be allowed to go on to the next Question.

On a point of order, Mr. Speaker. I appreciate, of course, the difficulties facing the Chancellor—

Order. I am sorry to interrupt the right hon. and learned Gentleman but may I ask whether this is a point of order arising out of Questions?

It is, Mr. Speaker. I appreciate the difficulties facing the Chancellor. We know that a statement is promised for tomorrow. I wonder whether you would agree to reconsider your suggestion that Government Ministers should not be exposed to questioning on any of the many Questions on the Order Paper about their plans for combating inflation.

Further to that point of order, Mr. Speaker. Is it not a harsh doctrine that the rights of back benchers should be curtailed in this way because of the imminence of a White Paper? Many of us feel that it is still not too late to try to influence right hon. and hon. Gentlemen concerning the contents of the White Paper. That is precisely the reason why we placed such Questions on the Order Paper.

The Chair has some rights. The Select Committee which deal with Questions entrusted the Chair with this discretion. I am told that there is to be a statement tomorrow. There should be ample time for hon. Members to put questions then. There are 45 Questions tabled to the Chancellor today. I must be allowed to decide whether the House goes on.

Further to that point of order, Mr. Speaker. I accept your point that the Chair has rights, as I am sure does every other hon. Member, but back benchers have rights as well. The Chair's duty is surely to ensure that the rights of back benchers are upheld. If my hon. Friends feel that, even at this late stage, they can influence the White Paper, surely they have the right to seek to do so.

If they think or believe that, it must be a triumph of optimism over experience.

Further to that point of order, Mr. Speaker. If the Chancellor is still closeted with his colleagues and is discussing this matter, surely it is not too late or insensible for hon. Members to request you to reconsider your decision, which deprives back benchers of the chance to influence what may be contained in the White Paper.

In my view there are plenty of other Questions on which hon. Members can put forward their views. I must be entitled to exercise my discretion, which was specifically preserved by the Select Committee which considered this matter.

On a point of order, Mr. Speaker. It arises from your ruling earlier this afternoon, which was quite different from the point of order put to you by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). The situation, as the House will recall, was that a number of back benchers on both sides, who a fortnight ago correctly anticipated the situation in which the Government would find themselves and therefore put down Questions on measures to curtail inflation, were blocked from putting Questions to Treasury Ministers in anticipation of the statement which is promised for tomorrow. In protecting the rights of back benchers, would not it be equitable if those back benchers who had their Questions to Treasury Ministers blocked in anticipation of a statement tomorrow were well placed to catch your eye, Mr. Speaker, in putting supplementary questions when the statement is made?

I think that is a very relevant and pertinent point of order and I shall watch carefully to see how many of them are here tomorrow.

On a point of order, Mr. Speaker. Since the Treasury Bench promised the statement that is to be made tomorrow within a week of Monday last week, surely the Table Office should have allowed the Question which it blocked for today on the ground that the statement was promised for two days earlier.

That is a recondite point into which I shall not go now.

asked the Chancellor of the Exchequer whether he will make a further statement on his latest plans for combating inflation.

asked the Chancellor of the Exchequer what steps he now intends to take to combat inflation.

I would refer the hon. Members to the reply which was given earlier today to my hon. Friend the Member for Southampton, Test (Mr. Gould)—but it was not given because he was not here.

rose—

I am afraid that I must stand by my previous decision.

asked the Chancellor of the Exchequer what is the current rate of inflation; and if he will make a statement.

The index of retail prices for all items for 13th May 1975 showed an increase of 25 per cent. on May 1974.

I wonder whether my right hon. and very intelligent and sharp Friend would pay some attention to the recent statement he made about conquering inflation and thereby reducing unemployment. Would he not agree that there have been many examples, including some recent ones in West Germany, which indicate that a reduced rate of inflation has of itself increased unemployment—the exact opposite of what my right hon. Friend has said previously and many times this afternoon? Will he also express some sympathy with those of us here who, along with him, fought tooth and nail when we were in opposition against all forms of incomes policy, who marched through the Lobby with him and who now refuse to stand on our heads and do the opposite because we are in power?

I have great sympathy with my intelligent and sympathetic Friend. I am sure he will recognise that there is no way in which we can solve our problems unless we reduce the rate of inflation. That is what we are doing and that is what will be made clear in the White Paper tomorrow.

Has the right hon. Gentleman noticed that the Post Office is promising swingeing increases in prices to the general public in a few weeks' time? Has he checked to find out whether it will do this without cutting back on its expenses, its staffing and so on before passing this on to the public, to increase inflation even more?

I cannot understand the hon. Gentleman. I am sure that he, like many of his hon. Friends, is opposed to the idea of subsidies in these industries. That is what is being done. At the same time we are making certain that all our attention is given to cutting costs wherever possible.

Will the right hon. Gentleman state the rate of inflation by the Chancellor's own patent mathematics on the basis of which he arrived at an 8½ per cent. rate nine months ago, at the time of the last General Election? Will he give us the figures for the past three months at an annual rate? Will he also say whether in tomorrow's White Paper there will he a public apology to those of us who said that the rate of inflation nine months ago was 20 per cent?

I am sorry that the hon. Gentleman is so sensitive that he needs apologies all the time. I am sure he will be able to restrain his impatience until he reads the White Paper tomorrow.

asked the Chancellor of the Exchequer whether he will make a statement about the working of multi-rate VAT.

The transition has gone reasonably well and I should like to thank those in the trades affected for the way in which they have co-operated.

Has the Minister any idea of the trouble, difficulty and expense which has been placed upon businesses as a result of multi-rate VAT? In the light of experience, does he not think that a single rate was better? Is he prepared to hear representations from Epping Forest traders on the issue?

I am always pleased to listen to any representations. I must remind the hon. Gentleman that the problems in the retail trade are nothing like the problems that existed when VAT was first introduced. I also remind the hon. Gentleman that out of the nine member countries in the Community we were the only one without multi-rate VAT in operation.

asked the Chancellor of the Exchequer what recent representations he has received on tax relief on mortgage interest payments.

Representations have been received on several aspects of this relief. As the hon. Member will know, the relief was discussed on 26th June in Standing Committee on Clause 27 of the Finance Bill.

Is the Minister still able today to give a categoric assurance to the millions of people buying their homes on mortgage and the thousands budgeting to do so to the effect that the Government have no intention of withdrawing the tax relief on the interest content of mortgages, upon which so many of them rely?

The position is quite clear. Mortgage relief stands. We have discussed it recently and we have no intention at present of changing it.

What is the Government's justification for continuing relief on the higher rates of tax, which represents a subsidy towards higher rate taxpayers who can take on large mortgages?

This is another matter. I would remind the hon. Gentleman that the Labour Party was instrumental in bringing about a limit on the extent of the mortgage. This limit, we believe, is realistic and those with ordinary-priced houses have been helped. Although we do not make changes to take account of inflation, these are matters that are obviously kept under review.

asked the Chancellor of the Exchequer when he next plans to meet the STUC.

My right hon. Friend has contact with representatives of the STUC at various times, and it has many opportunities of making its views known to him. But he has at present no plan to meet the STUC.

Will my right hon. Friend tell Scottish workers and their families, many of whom are obliged to struggle along on wages less than one-tenth of the Chancellor's salary, why the Chancellor considers wage increases to be the major cause of inflation when over the past five years the precentage of gross national product taken up by wages has increased by less than 1 per cent.? Will my right hon. Friend also urge the Chancellor to introduce a price freeze to shield lower-paid workers from wage restrictions caused by collaboration between the Treasury and the CBI?

Whatever may have been the situation in the past five years, I doubt whether anyone would disagree with the fact that in the past 12 months wage inflation has been one of the major causes of price inflation.

No.

No.

That is my view. I am sorry if my hon. Friend disagrees. May I say to my hon. Friend that tight control on prices without wage restraint is the sheer, certain way of creating massive bankruptcies and the loss of thousands of jobs.

Is the right hon. Gentleman aware of the serious concern among Scottish trade unionists about the shortage of police manpower in our Scottish cities? Can he give us today a clear and categoric assurance that the Chancellor's statement tomorrow will not prevent the police pay settlement, recently agreed with the Police Council, from being honoured on 1st September?

The hon. Gentleman will not have to wait too long to see what is in the White Paper.

While I agree, contrary to some hon. Members, with the analysis made by the right hon. Gentleman, may I ask whether in drawing up his proposals for tomorrow the Chancellor will bear very much in mind the regional differences in the country and the entirely different economic circumstances as well as, in some places, great problems with labour?

All these matters will be taken into account.

The hon. Member for West Stirlingshire (Mr. Canavan) spoke of wage restriction and, as the Chief Secretary knows, the Chancellor spoke about a cash ceiling on pay in the public sector. May we have an indication of when these will commence? Will it be from 1st August with other pay norms, or from the next financial year? If so, how will that affect the Chief Secretary's figure of a £3 billion to £4 billion increase in public sector pay in the current year?

I know that the hon. Member is a patient man. He will not have to wait too long. He will have all the answers tomorrow.

asked the Chancellor of the Exchequer what further steps he proposes to take to stimulate industrial investment.

The best way of encouraging investment is to get the rate of inflation down, and in our discussions with representatives of the management side of industry my right hon. Friend has emphasised that the Government will expect companies to seize the opportunity to invest as we bring inflation under control.

Is not my right hon. Friend being somewhat naive in supposing that we will get investment merely by bringing down inflation? Does he agree that there have been periods of no inflation, gross inflation and moderate inflation and investment has still not taken place? Docs he further agree that the question of industrial investment is far more fundamentally important to the economy of the country than inflation?

It is a fact that one of the major reasons why companies do not invest is the uncertainty created by high rates of inflation. It is that uncertainty that causes a fall in investment. [Interruption]. There is no point in directing investment if the investment does not produce goods than can be sold.

Would not the Chief Secretary agree that we already have some of the best investment incentives in the world? Would he not further agree that with present production capacity under-utilised and likely to be further under-utilised in the coming months, any investment incentives given in addition to the existing ones should be directed towards growth industries?

Investment incentives are already at a pretty high level. The important consideration is that during the next 12 months it should be clear to industry that the opportunities for investment are there. We have done a great deal to provide finance for industry to creat that investment.

Will my right hon. Friend forgive me, because I am a personal friend of his—

You were.

Would not my right hon. Friend agree that he is talking absolute nonsense? Is he aware that we had three and a half years of a Tory Government with the then Prime Minister trailing the country to CBI lunches and everywhere else saying "Look, we have given you all the incentives you need. Please invest in industry." Industry did not invest. That argument is absolute rubbish.

May I tell my personal friend that I would not dare to accuse him of talking nonsense, even if he does so from time to time. I have constantly said that investment incentives of all kinds would not of themselves be sufficient to create the necessary increase in manufacturing investment. What is needed is the right climate.

Is the right hon. Gentleman aware that in the opinion of many British business men it is the lack of continuity between one Government and another over major economic policies and aims which is undermining investment intentions? Will he give reasons why investment has been so much higher in West Germany, where there is continuity of Government policy from one Government to another, than in the United Kingdom?

I could give the hon. Gentleman a great many reasons why investment in West Germany is higher than ours, but it would take far too long to answer now. I doubt whether it has anything to do specifically with continuity. It has to do with bad policies throughout the years.

Does the right hon. Gentleman agree that the greatest incentive to investment will be provided if the Government drop their threats of nationalisation and that this will create a climate of certainty for which industry is waiting?

No, Sir.

Does my right hon. Friend agree that the best stimulus for investment, both private and public, is confidence among the business community, both overseas and at home? Does he agree that the Chancellor's statement last week was the best stimulus to that confidence that there has been for a long time, and that that confidence will continue only if the Chancellor's new policy is rigidly enforced?

I entirely agree with my hon. Friend's sensible statement.

Does the Chief Secretary agree that the greatest possible disincentive to industrial investment at this time would be a tightening of price controls, and that if the public sector pre-empts major proportion of our national financial resources it will be impossible for them to be available to the private sector?

If the hon. Gentleman is saying that there should not be any kind of price controls, I disagree with him. As to how much there will be, I am sure he will be able to wait until tomorrow.

asked the Chancellor of the Exchequer whether he is satisfied with the law relating to the treatment for tax purposes of business expenses.

I should be grateful if the hon. Gentleman would tell me what aspects of the tax law he has in mind, and I shall gladly look into them.

Is it not a wholly unacceptable anomaly that unions have been able to obtain tax-free allowances in respect of meals taken by their members while away on their jobs while the self-employed have to pay tax on them? Is it not an even more unacceptable anomaly that trade union officials such as Mr. Scargill can be provided with large Volvo cars and pay no tax on the benefit which they receive?

The Government are looking into the taxation of certain benefits in kind. The hon. Gentleman will be aware of the incredible anomalies which exist throughout the whole of the private sector whereby large benefits are being obtained and the due rate of tax is not paid on them.

Does my hon. Friend agree that it is a far more grievous anomaly that ordinary working people are not allowed to charge against their tax the cost of travel to work, in contrast to self-employed and business people generally who are allowed tax concessions?

This has been looked at frequently in the past. A concession of that kind has not been possible because of the amount that it would involve and the repercussions which would result. We are aware of the anomalies involved in the taxation of benefits in kind, some of which my hon. Friend referred to, and the matter is being examined at present.

Does the Minister accept that one of the most powerful pressures towards the achievement of legitimate expenses for tax purposes arises from the extremely high and recently increased marginal rates of taxation? As long as there is a Government which is obsessed by the pursuit of egalitarianism at all times and in all circumstances, it will be impossible to restore sanity to the tax system and promote economic growth.

The right hon. and learned Gentleman is entitled to his point of view. But these problems were with us long before the rates of tax attained their current levels. I suspect that they will remain with us irrespective of what happens to the levels of taxation.

asked the Chancellor of the Exchequer whether he is aware that VAT is being charged on building materials used to extend, improve or build village and other halls for public or charitable uses in cases where the work is being done by voluntary labour; and whether he will reconsider the charging of VAT in such cases.

Yes, Sir. Under Schedule 4, Group 8, to the Finance Act 1972, supplies of building materials and certain other goods are zero rated when, and only when, they are supplied by a trader who is registered for VAT purposes in connection with supplies of zero-rated building construction or alteration work. However, it is sometimes possible under the law as it stands for bodies of the kind mentioned by the right hon. and learned Member so to arrange their affairs that they can benefit from zero rating. It is not possible to generalise as each case must be considered individually. I suggest that the right hon. and learned Member might let me have details of any particular case he has in mind.

When there would be such obvious justice in not charging VAT on people who are providing voluntary labour for public purposes, why must those who are concerned with this play a cat-and-mouse game with the Customs and Excise? Can the Minister simplify the procedure and draw attention to the advantages which can be obtained, and make those advantages easily available?

I agree with a great deal of what the right hon. and learned Gentleman says, but these anomalies were inherent in the original legislation. We intend to improve that as we go along.

Will the Minister consider whether the self-built provisions in this respect in the previous Finance Act can be extended in the manner suggested by my right hon. and learned Friend?

Those matters will obviously form part of any consideration of the kind which I have outlined.

As the Government have indicated that it was never the intention to impose VAT on that kind of labour, why do they not make exceptions in cases such as those mentioned by the right hon. and learned Gentleman and also in other cases of VAT on do-it-yourself houses, and make them retrospective to the time when the tax was brought in, which was not very long ago?

It is not for me to say what was the intention of the previous Government in bringing in the legislation which they introduced. Certainly it is our intention to reduce the anomalies as they come to light.

Is the Minister aware that it is not only village halls which suffer, as was pointed out by my right hon. and learned Friend? Many village churches are also suffering, as the devoted efforts of congregations to raise money are being considerably hampered by the imposition of VAT on the restoration of historic buildings.

I understand those points. I think that there are a number of cases where assistance can be given. If the hon. Gentleman will write to me about specific cases, I shall gladly look into them.

asked the Chancellor of the Exchequer what recent representations have been received in respect of VAT collection by small businesses.

We have received representations that some form of payment should be made to small businesses to compensate them for the cost of collecting VAT, but I am afraid it is not possible to meet that request.

Is the Financial Secretary aware of the fact that my constituents are sick and tired of VAT forms, and having to act as unpaid tax collectors for the Government, and would like some financial assistance to compensate them for the hours spent completing their VAT returns?

Although we have received representations, the position is as it was when the legislation was introduced in 1972. We drew attention to the problems which would be caused by that legislation. That has proved to be the fact. As time goes on we hope to be able, by means of schemes and such like, to reduce the incidence and the burden upon the traders concerned.

Will the Financial Secretary consider raising the level at which employers start paying VAT, bearing in mind the high rate of inflation?

This matter is under review, but it must be remembered that the level at which firms become registrable for VAT is high compared with the level which operates in other Community countries. That factor is not directly involved here but it is nevertheless one of which we have to take some account.

Does not the Minister recognise what is manifest, namely, that the problems of collecting VAT have already been greatly increased by the introduction of the multi-rate structure? Will he give a pledge that the Government will take no further steps down that road?

The Conservative Government, to which the right hon. and learned Gentleman belonged, introduced VAT as a broad-based, comprehensive tax, free from anomalies. It never was that and it is never likely to be. We have improved it in some ways. In difficult circumstances we have produced £300 million extra revenue which is necessary to reduce the borrowing requirement, and we make no apology for so doing.

asked the Chancellor of the Exchequer whether he will now simplify the coinage by withdrawing from circulation the old sixpenny piece and the present halfpenny.

No early decision on the 2½p coin is likely; the position is being kept under review. There is no intention whatever of abolishing the ½p coin.

Is my right hon. Friend aware that the sixpenny piece has become unnecessary? If it were called in the Government would make a profit, because most people use the sixpenny piece for necklaces and bracelets. In addition, the ½p coin has become useless.

I am afraid that I do not agree with my hon. Friend. The facts do not bear out what he says. The 2½p coin is still found useful by many people, particularly elderly people.

Is the right hon. Gentleman aware that the Government will be renowned, among other things, for the complete demise of the old "tanner" that used to buy so much? Now it buys nothing, not even an ice cream. The right hon. Gentleman might as well do away with it because the Government's inflation has eroded its value.

If it only gives an opportunity for the hon. Gentleman to ask what he considers to be funny questions, it is of some value.

What would be the cost of abolishing all the parking meters throughout the country to allow for the abolition of the sixpence?

I need notice of that question.

asked the Chancellor of the Exchequer what are the latest figures for contributions to the two index-linked personal savings schemes; and what plans he has for the introduction of further such schemes.

In the period to 21st June 1975, net sales of the index-linked national savings certificate are estimated at just over £45 million. Save As You Earn—third issue—commenced on 1st July 1975 and a highly provisional estimate of monthly inflow from contracts accepted so far is £0·5 million. On the second part of the Question, I would refer the hon. Member to the reply by my right hon. Friend the Paymaster-General to my hon. Friend the Member for Preston, North (Mr. Atkins) on 8th May.—{Vol. 891, c. 513.]

Does the Minister accept that the opportunity to invest in inflation-proof schemes is an act of belated social justice to millions of people who have seen their savings irreversibly damaged during the recent rapid rise in the rate of inflation? Will he make recompense to many of them by easing up on his vindictive attacks on the principle of savings embodied in the capital transfer tax and the wealth tax?

The hon. Gentleman has put his supplementary question at the wrong time, because National Savings are rising very well at present. I am sure he will be delighted to hear that. As to what he called "belated social justice", I am sure he will pay due attention to the fact that the scheme was introduced by a Labour Government and not by a Conservative Government.

Is the Chief Secretary confident that a further extension of index-linked schemes—which are welcome to savers—will not cause a diversion of funds away from deposits with building societies, leading to a rise in the mortgage interest rate?

We are, indeed, aware of those problems. That is precisely why we introduced the scheme in this limited way.

asked the Chancellor of the Exchequer whether he is proposing to meet with the International Monetary Fund for discussions on Great Britain's economy.

No, Sir.

When the Chancellor next meets the IMF, which if the Tribune Group has its way may be sooner than expected, will he explain to the IMF why, having deceived the nation last autumn by saying that inflation was running at a rate of 8·4 per cent., he should now carry any credibility when he says that he will have the rate of inflation down to 10 per cent. by next year?

I think that my right hon. Friend will have credibility when the people at home and abroad see the White Paper tomorrow.

Will my right hon. Friend give an assurance that the conditions that would be laid down by the IMF if we went to it for a loan will not in any case be applied by the Government if they do not go to the IMF for a loan?

I am sure my hon. Friend recognises that we have a better chance of avoiding having to go to the IMF if he and everyone else on our side and on the Opposition side support the proposals which are due to come out in the White Paper tomorrow.

asked the Chancellor of the Exchequer what income is now necessary to give a married man with two children the equivalent purchasing power, after tax, of an income in 1970 of £2,500 a year on the basis (a) that the whole income is earned, (b) that the whole of the income is from investments and (c) that half the income is earned and half from investments.

On the basis of the latest information about the retail price index, and assuming that the children are both aged under 11, the figures are:

Do not these figures show why there is a need to bring pressure for wage rises? Would we not reduce inflation more quickly if the Government were to face the situation and took account in their proposals of the effect of inflation.

The hon. Gentleman is wrong. In order to take account of inflation it has been necessary to increase the tax rates. My right hon. Friend the Chancellor of the Exchequer, both in his Budget Statement and after, pointed out that it would be necessary to increase taxes to allow for the inflation that had been induced.

What conclusions does the hon. Gentleman draw, bearing in mind what he has just said, from the American experience of reducing taxation and inflation simultaneously?

One can run into many problems if one tries to compare two different economies at two different phases in the way the hon. Gentleman is trying to do. We recognise the problems that we face, and they will be dealt with in the statement tomorrow.

asked the Prime Minister when he next expects to meet the TUC and the CBI.

asked the Prime Minister when he next intends to meet the CBI and the TUC.

asked the Prime Minister when next he intends to meet the CBI.

Later this afternoon, Sir.

Does the Prime Minister agree that even if the TUC General Council agreed unanimously to a voluntary policy on pay, it would not have the power to ensure compliance with it? Does he recognise that the people of this country face a reduction in their standard of living over the next months and that if they are to accept this they must have the confidence that a statutory policy will ensure that all bear the sacrifice equally?

My right hon. Friend the Chancellor of the Exchequer and I have frequently stressed that what is important is not only the guidelines, or whatever the right phrase is, but also compliance. On the latter part of the hon. Gentleman's question, I would advise him to wait for the statement I make in the House tomorrow and the White Paper supporting that statement.

is my right hon. Friend aware that the bedrock of any effective economic policy is the consent of the Trades Union Congress? As he has been effective in securing that consent, he therefore deserves the congratulations of the whole House. However, as it would be fatuous to pretend that a minority of mavericks does not exist, is my right hon. Friend aware that reserve statutory powers are vital to protect the interests of the trade unionists, whose word is their bond and who are realistic enough to recognise that if this policy is smashed the living standards of all trade unionists will be smashed?

I am sure my hon. Friend will be prepared to wait another day to see what the White Paper has to say about the question to which he has referred. I agree with him entirely that it was worth while spending the time which was needed to obtain that extremely forward-looking statement by the TUC yesterday, which goes much further than the TUC has ever gone in peace time or in war time on these matters. [Interruption.] Although Conservative Members may laugh, this is essential to secure a successful attack on inflation.

Mr. Baker.

Does the Prime Minister agree—

rose—

Order. It may be that there are too many "Ls" about, but there was not one there.

Thank you, Mr. Speaker. Does the Prime Minister appreciate that if the system of pay research for the Civil Service continues during this statutory policy, civil servants will be able to catch up retrospectively? If this breach of the statutory policy occurs, will he, as Minister for the Civil Service and, therefore, the employer in this case, bear the same sanctions as other rogue employers?

Although recognising the deep solicitude which the hon. Gentleman always shows for my well-being in every way, I must still ask him to wait for the White Paper tomorrow. I do not envisage the likelihood of any kind of sanctions being applied to the administration of the Civil Service, about which he is so worried.

Does my right hon. Friend recollect the time when he came to the House and explained that it was necessary to relax the application of the Price Code because it was creating serious difficulties in industry by way of cash flow problems? Will he, therefore, confirm that when he meets the CBI this afternoon he will explain why it is the Government's intention to go ahead with a much more severe restraint on prices when it was not so long ago proved to the Government by the CBI, apparently, that continuation along that road was not possible?

What I shall explain to the CBI is the relevance, so far as it affects the CBI and its members, of the general line of the proposals we shall be making—though anything I say to the TUC or the CBI this afternoon will be governed by the prior requirements of the statement to be made to the House tomorrow, and it is to the House that this statement should be made.

Does the Prime Minister recall that the Secretary of State for Employment said in the BBC "Newsday" programme on 16th September last that any Government who introduced a statutory wage policy in any form whatever would not have him as a member of it?

Now I understand, Mr. Speaker, why you wanted to get the "L" out of it when the hon. Gentleman rose earlier.

When the Prime Minister meets the CBI later, will he disregard the speculative Press reports about the Labour Government providing money for strike breaking? Will he resist introducing any policies which would give employers powers to break strikes by their unions against pay policies? Will he tell the CBI that the Labour Party insists that this is just not on?

What will be in the White Paper is what will be in the White Paper, on this and all other matters. I ask my hon. Friend to wait. I am sure that we shall have his comments quite quickly after the White Paper is published.

Is the Prime Minister aware that hon. Members have found it very difficult to get any information about what has been going on during this eight-or nine-day period, and that it would have been very much more for the convenience of the House if the White Paper had been published and the statement had been made today, when more hon. Members are present? As we learn today for the first time that the Prime Minister is to make the statement tomorrow, will he also give us some other information about when the Boyle Report is to be published and who will make the statement on that?

Yes, Sir. I myself join the right hon. Lady in regretting that it was not possible to make the statement today. She has been very patient on this over the last week or two. But she will know from her own experience the great importance of proceeding in agreement, as we have succeeded in doing, with the TUC. The TUC's General Council took place yesterday. It was right to take full account of the implications of the TUC's decisions in the White Paper. I wish that it could have been presented today, which is a more normal day, or that we could have waited until Monday. I think it is for the greater convenience of the House, which will wish, of course, to debate the White Paper, that we get it out before the weekend so that right hon. and hon. Members in all parts of the House can study it. I think that it would be the general practice in this case—it has been in the past, under successive Governments—that the Prime Minister makes the statement.

Does the Prime Minister realise that the great majority of the country will support the toughest measures necessary to get the country through? Does he agree that any hon. Members who cannot support these necessary measures should stand down and put themselves to the electorate, whereupon we might well be shot of the rot of them?

Even my hon. Friend's unrivalled diction seems to have got into trouble as well. I think he meant "the lot", and not "rot", as he said. [Interruption.] Well, obviously I cannot speak for what right hon. and hon. Members of the Opposition will say because we have not heard their policies on these questions. When my hon. Friend, who I know will wait—

You want to say something about Andrew Faulds' presence for a start. He is never here.

From my own experience in answering Questions, I know that that is certainly not the case. But my hon. Friend the Member for Warley, East (Mr. Faulds) will be waiting for the White Paper tomorrow, I know. I believe he will find that it has the right degree of what he called toughness. I hope that when he reads it he will also agree that what is important is not toughness for the sake of toughness; it must be effective and workable, and that is what we are aiming at.

On a point of order, Mr. Speaker. Can you tell me what comeback an hon. Member has to accusations such as were made earlier this afternoon by my hon. Friend the beast for Bolsover—[Interruption]—since most of us on the Government side spend every day of the week in the interests of our constituents rather than plotting in the Tea Room and in the House against the Government?

rose—

Order. There are some occasions when my wig falls conveniently over my ears. I did not hear the exact description the hon. Member applied to his hon. Friend the Member for Bolsover (Mr. Skinner), nor did I hear his hon. Friend say anything about him, so there is nothing for me to rule upon.

In relation to the last point of order made by the hon. Member for Warley, East (Mr. Faulds), perhaps you would convey to him, Mr. Speaker, that one of the ways in which he could get round the matter would be by writing expensive articles for The Times explaining what he wants to say. Perhaps the hon. Member might also assist in the matter, smashing the next incomes policy in the process, by getting more money than he did for the last one.

Order. This sounds very much like a Tea Room argument.

asked the Prime Minister if he will pay an official visit to the Border.

As the House knows, I was in Scotland on Tuesday in connection with the State visit of the King of Sweden. I have no immediate plans for a further visit to Scotland but hope to be there later in the year.

If and when the Prime Minister comes to the Borders, as I hope he will, is he aware that he will find an area which produces a very high level of exports and has a very low level of industrial disputes but which, sadly, has below the national level of income? For that reason, may I ask the right hon. Gentleman whether he is aware that my constituents are very concerned that the Government should take really effective measures to control inflation? What assurance can the right hon. Gentleman give them that the Government will act resolutely, take the necessary powers and not be found guilty of cowardice in the face of their friends?

I think the hon. Gentleman will be able to judge that, and I hope that with his customary fairness he will be able to give full support to the White Paper when he reads it. I am aware of the problems in the area he has described, including, of course, a lot of anxiety on the textile and clothing question, which he has raised previously.

asked the Prime Minister whether the public speech by the Secretary of State for the Environment at Brighton on 25th June on expenditure levels represents Government policy.

Yes, Sir.

What would be the Prime Minister's attitude to councillors who increase wages and salaries above the 10 per cent. norm? Will he support them just as he supported the Clay Cross councillors?

The hon. Member will, I hope, await the White Paper tomorrow, because in the attack on inflation the question of local authority employment is obviously important. Local authority employment has increased considerably over recent years, under successive Governments, and of course inflation affects them particularly hard because they are so labour-intensive and have a high employment ratio. The hon. Gentleman will recognise that these are problems which must be tackled. I hope that he will approve what is suggested in the White Paper.

If my right hon. Friend should go to the Borders, Brighton or anywhere else, would he care to explain to the electorate how it was that in the election manifesto of the Labour Party in October last year we said that we would not introduce any forms of legislation to deal with incomes? If to-tomorrow the White Paper indicates a back-up or any other type of system which means legislation would he then explain how this fits in with our manifesto policy? Would he also explain to the electorate whether during the election campaign my hon. Friends and his hon. Friends in the Government were knaves or fools?

My hon. Friend also will be awaiting the publication of the White Paper with anxiety. With his knowledge of the manifesto—and I think my knowledge is equal to his—he will remember that the important and key section of the manifesto said that the Government's highest priority would be the attack on inflation. [Interruption.] I think my hon. Friend was referring to the October manifesto. Even with his highly developed critical faculties, I think that he will feel that what we are proposing is of the highest relevance to that. Some of the other things he quotes or purports to quote from the manifesto are not exactly as he quotes them.

Given that in local government and in nearly every industry there are agreed wage levels, but given also that regrettably there is bound to be considerable unemployment in the near future among school leavers, would the right hon. Gentleman say that it was better that schools leavers should remain unemployed or would he advise employers to employ them below agreed wage levels?

No, Sir, I do not give that advice. I agree with the hon. Gentleman that unemployment is a very serious problem which arises for school leavers at this time, as it did three or four years ago. He will again, I think, —I am sorry to have to give this answer once again—find it interesting to see what we say on this matter in the White Paper.

If the TUC are voluntarily to restrain wages, will the Prime Minister say in what way the Government will control the incomes of those who are not members of or affiliated to the TUC, and in particular will he give an assurance to the House that this policy will not result in an expense account bonanza?

This Question refers to Brighton, and I am glad to be able to tell my hon. Friend that I shall be visiting his constituency tomorrow—the part that used to be in my own. [An HON. MEMBER: "Is that a promise or a threat?"] As far as they are concerned, it is a promise. They seem to like having me in Kirkby. My hon. Friend will, I am sure, also be prepared to wait for the White Paper, which will have been published by the time I arrive in his constituency.