asked the Chancellor of the Exchequer what steps he is taking to tax the perquisites given in British industry.

The perquisites of an employment which are in cash or can be converted into cash are already taxable and there are special rules governing benefits provided for company directors or employees earning £5,000 a year or more. As my right hon. Friend said in his last Budget Statement, it is his intention to take further action on fringe benefits.

Is my hon. Friend aware that we receive many loud complaints from wealthy Conservatives shouting through the windows of their Rolls-Royces about abuses of the tax system by people on unemployment pay and social security benefits? But is he aware of the abuses of the tax system by a large number of upper management who receive "perks" worth millions of pounds, including interest-free loans, housing, entertainment and a variety of other things? Does he realise that while the Chancellor does nothing the broadest backs get the biggest gift packages? Will he now stop acting as Santa Claus to these people and don the robe of Robin Hood?

As my hon. Friend says, there are abuses throughout the tax system and people at the higher levels have a better opportunity to reduce their tax burden than people at the lower levels. As I said, my right hon. Friend is looking at these matters urgently, but I could not anticipate his Budget Statement.

Would the Minister note that, if the Chancellor is to cut fringe benefits in future, he will have to consider lowering the higher rates of tax or even the middle rates of tax, especially for management, since holding management in this country is becoming increasingly difficult because of the competition with similar groups in Europe paying lower rates of tax?

The hon. Gentleman should appreciate that people at the lower levels of income also pay high marginal rates of tax and do not have the benefit of the fringe benefits available to people on the higher rates. One must consider the total picture.

asked the Chancellor of the Exchequer whether he is satisfied that he is collecting the appropriate amount of revenue under the provisions of Part VIII of the Income and Corporation Taxes Act 1970 in so far as the taxation of loan, mortgage or overdraft facilities provided by employers at less than market rates of interest is concerned; and whether he will now collect information on this topic.

The provision of loan, mortgage or overdraft facilities at less than market rates of interest which does not involve the employer in any expense is not taxable under the provisions of Part VIII of the Income and Corporation Taxes Act 1970. But, as my right hon. Friend said in his last Budget Statement, it is his intention to take further action on fringe benefits.

Is my hon. Friend aware that one cannot conceivably say that when someone gets, as many tens of thousands do, a loan or a mortgage at perhaps 2 per cent. or 3 per cent. interest instead of the going rate of 11 per cent., 12 per cent., 13 per cent. or 14 per cent., that does not constitute a fringe benefit? Is my hon. Friend satisfied with the way in which tax authorities interpret these arrangements? Moreover, is he satisfied with the arrangement, which I understand that many merchant banks have in the City, whereby their directors and senior employees draw on overdraft accounts with their own banks and pay no interest on the money that they borrow?

I do not think that it is a case of the tax authorities applying the law, or the way in which they interpret it: it is a loophole in the law. It is extremely difficult to prove that there is an expense to the employer in providing these facilities. This is one fringe benefit among a number. We are looking at this matter closely.

Will the hon. Gentleman tread a little carefully in this matter? There are, as he is aware, a number of nationalised enterprises which provide preferential rates on mortgages for their employees.

Yes, I do not doubt that. This practice is not confined to the private sector, but it is confined in the main to persons with very high incomes. People on high incomes—and those on lower incomes—suffer high marginal rates of tax.

asked the Chancellor of the Exchequer what saving he would obtain if tax relief to owner-occupiers were restricted to the standard rate of tax, to mortgages of under £10,000 or £15,000 in Greater London and to those in both these categories.

If tax relief to owner-occupiers were restricted to the basic rate the saving would be approximately £60 million for 1975–76. I am afraid that the information on which to base reliable estimates for the remaining part of the Question is not available.

Will my hon. Friend consult the Secretary of State for the Environment about introducing these limits and transferring a substantial benefit—several hundreds of millions of pounds—to poorer people to help them to overcome their far more serious housing problems, particularly since a 25–year mortgage of £15,000 at 11 per cent. means that those on the standard tax rate get no less than £28,840 in tax relief at present?

As my hon. Friend knows, an inquiry into housing finance is being conducted by the Secretary of State for the Environment. Taxation matters wilt be taken into account—not only the subsidy for owner-occupiers, but subsidies to council tenants. It will take some time before that inquiry is completed, but we shall take all these matters into consideration.

Is the hon Gentleman aware that the private housing market is closely knit and that to undertake any such suggestion as the hon. Member for Salford, East (Mr. Allaun) has made would have an absolutely disastrous effect on the whole market?

These matters will be taken into account during the review of housing finance.

Will the Minister further take into account the fact that 80 per cent. of first-time house buyers buy second-hand houses at the lower end of the market and that any attempt at selective withdrawal of mortgage interest relief at the upper end would only increase demand at the lower end and reduce supply, so shoving up the price that first-time buyers would have to pay? Therefore, would he counsel the Secretary of State for the Environment to reject this kind of suggestion?

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

The retail price index rose by 25·2 per cent. over the 12 months to November compared with October's figure of 25·9 per cent. The year-on-year rate of increase has now fallen in three successive months, and substantial further slowing down in the rate of inflation will follow if the £6 pay limit is observed as completely in future as it has been so far.

In view of the OECD report published today, which forecasts a rate of inflation in 1976 of some 15¼ per cent. combined with a zero growth rate and with 1½ million unemployed, will my right hon. Friend abandon his policy of attempting to use unemployment to beat inflation? Does he realise that his statement yesterday was like a Christmas gift from Scrooge? Will he now try a policy of full employment combined with public ownership of the economy in order to beat inflation?

My hon. Friend has misquoted the OECD report on both the rate of inflation that it predicts for the coming year and on the increase in output. On the other hand, the report projects an increase in unemployment to nearly 1½ million by the end of the year, a greater rate of increase than I believe will take place. My hon. Friend must accept the view that I hold, which is held by the General Council of the TUC, that the cause of unemployment at present is primarily the international recession and that unemployment has been increased by excessive wage increases earlier in the year. I hope that we shall have his support, like that of the overwhelming mass of working people, in our fight to reduce the rate of inflation so that unemployment can also be reduced.

Would it not be better for the Chancellor to come clean and admit that the reduction in the rate of inflation is a consequence of the recession? Will the tell the House what in his view is the cause of the rate of inflation? When he talks of the past rate of inflation, he tends to ascribe it to the money supply and the public sector borrowing requirement. When he is talking about the present rate of inflation, it seems to be the incomes policy. Can he reconcile his rather schizoid analyses?

Some day the hon. Gentleman may learn that major economic phenomena have more than one cause and that the mixture of causes varies from time to time, certainly from year to year and sometimes from month to month. Among the factors responsible for the current rate of inflation are the big increase in import prices over recent years, notably the increase in the price of oil, the excessive increase in the money supply, which was engineered by the previous Conservative Administration in 1973—on that element at least I think he and I are at one—and the excessive wage increases earlier this year. However, the hon. Gentleman's understanding of these matters will never advance unless he is prepared to recognise that complex phenomena have complex causes.

Will my right hon. Friend accept that an important part of his strategy for the next 12 months is the price restraint scheme? How does he propose to sell that scheme to private industry if, as appears to be the case, he has allowed the nationalised industries to escape it?

My hon. Friend is completely mistaken about the nationalised industries. Their price increases are as severely controlled by the Price Commission as those of any private firm. It is true that some nationalised industries' prices and charges have risen faster than those in the private sector, because the Government have set themselves on the path of phasing out the subsidies given to the nationalised industries by the previous Conservative Administration. However, I am told from time to time that we now have the support of the Opposition Front Bench.

Although we appreciate that the Chancellor's analysis of the causes of inflation varies from day to day to suit his arguments and those of the Labour Party, nevertheless can he quote the retail price index on a more consistent basis? At the time of the last General Election, he quoted it on a three-month basis to give him a rate of inflation of 8·4 per cent. Yesterday, he quoted it on a six-month basis in order to support his argument for a fall in the rate of inflation. Can it be given on a consistent basis so that the country can understand his policies and their degree of success?

I am always happy to be lectured on consistency by the hon. Gentleman who presided as a Minister in the Treasury over precisely that increase in the money supply which since the General Election he has stigmatised so fiercely. He says that he is concerned about the rate of increase in inflation and whether it is on a three-month, a six-month or a 12-month basis. I have given him the 12-month figure. The annual rate of increase over the past three months was only 14·8 per cent.

asked the Chancellor of the Exchequer if he will seek to arrange the setting up of an advisory group of Socialist economists whose function would be to show how both unemployment and prices can be reduced simultaneously.

No, Sir. My right hon. Friend already receives a range of advice from Socialist economists. However, our policies are perfectly clear. The key to reducing inflation and unemployment lies in the policies set out in our July White Paper, "The Attack on Inflation" (Cmnd. 6151). The route back to full employment must be through higher exports and improved investment.

With the greatest respect to the right hon. Gentleman, this Question was intended for the Chancellor and it is obvious that he has ducked it. Therefore, I have no desire to put a supplementary question to my right hon. Friend.

asked the Chancellor of the Exchequer what was the exchange rate between the £ sterling and the Norwegian kroner at the latest available date and what was the exchange rate at comparable dates in 1974, 1973 and 1972.

£1 equalled 11·243 kroner on 17th December this year and 12·275, 13·075 and 15·46 at comparable dates in the years in question.

Is the Minister aware that the happy revaluation of the Norwegian kroner in the past few years is precisely the sort of thing that will happen to the oil-backed Scots pound of a self-governing Scotland? Will he not agree that a self-governing Scotland will benefit much more from a strong £ Scots than it does at present from the paltry piece of green paper that passes for the £ sterling? Is he not further aware that one of the first duties and responsibilities of a self-governing Scotland will be to assist its friends and neighbours in England to regain their prosperity, too?

Scotland will benefit most from an integrated United Kingdom economy. An examination of the experience of many industrialised countries since the war shows that success in achieving greater prosperity does not rely upon the availability of raw materials, welcome though that is. We should do better to continue to improve our manufacturing industry in Scotland and in England.

Will the right hon. Gentleman remind the hon. Member for Perth and East Perthshire (Mr. Crawford) that last night he voted for £162 million worth of the currency he despises?

asked the Chancellor of the Exchequer if he will take steps to aid manufacturers of television sets and boat builders by reducing the luxury rate of VAT from 25 per cent. to 8 per cent.

I am sure that the measures announced yesterday to relax hire-purchase and hiring restrictions will greatly assist the television and boat industries.

Where is the sense in increasing the price of home-produced sets and then worrying about the import of television tubes and setting up an elaborate system to monitor imports?

As has been repeatedly said, the recession in these industries is due mainly to the world recession. No one would deny that. It could be argued that the increase in the rate of VAT to 25 per cent. has had some effect, but we are monitoring the situation and when those results are at hand, we shall reconsider the matter.

Although I accept my hon. hon. Friend's answer in relation to luxury items on the higher rate schedule, will he accept that the items in Schedule I, to which his right hon. Friend the Chancellor referred as less essential, such as washing machines and refrigerators, are in part the essential working tools of working women? Will he undertake to give preference and an early relief to those items over the other luxuries to which he has just referred?

The 25 per cent. rate is not a tax on luxuries. It is a tax in a difficult economic situation on what most people would consider to be non or less-essential goods. We are monitoring the effects and we shall consider the matter.

Does the hon. Gentleman believe that a tax of £250 on the sale of a Thames barge which costs £1,000 is necessary? These barges are used for the transportation of goods and those who work on them are self-employed and cannot afford to pay this kind of tax.

We shall take these matters into account.

Has my hon. Friend noticed that all the suggestions from the Benches opposite today would further increase the public sector borrowing requirement?

Will the Minister first correct his right hon. Friend the Member for Battersea, North (Mr. Jay) and point out that the Opposition view has always been that VAT at 10 per cent. is better than the absurd 25 per cent. high rate and would have increased not reduced the revenue? The right hon. Gentleman should face that fact.

Perhaps I may remind the hon. Gentleman that he and his colleagues also voted to reduce the rate on television hiring contracts, thus increasing the public sector borrowing requirement.

Answer the question.

asked the Chancellor of the Exchequer what steps he is proposing to take in order to improve the monitoring of the public sector borrowing requirement.

I am happy to be able to reassure the hon. Member. As my right hon. Friend the Chief Secretary to the Treasury told him on 30th October, my officials are working continually on the improvement of information about developments in the public sector financial position.

Does the Chancellor remember that on 15th April, from that Dispatch Box, he told the House that a borrowing requirement in excess of £10,000 million would involve unacceptable risks? Does he also remember that on the same occasion he told the House that it was his intention to reduce the public sector borrowing requirement below that figure of £10,000 million by well over £1,000 million? Does he not now agree that to accept a PSBR for this year in excess of £12,000 million is to gamble recklessly with the finances of the country?

I certainly agree that in April I made the statement and the prediction to which the hon. Gentleman has referred. However like all my fellow Finance Ministers in every country which I have been able to check, I was mistaken about the depth of the recession this year. This has increased the PSBR beyond what I then expected, though it is too soon to say by precisely how much. However, I am happy to confirm what I told the House in the last debate—that, comparing like with like, our general Government deficit is substantially lower than that of West Germany at present and in the same range as that of most other Western countries.

How much of Scottish oil has been staked as collateral against the PSBR?

None, Sir.

Will my right hon. Friend note that the Opposition particularly in defence debates, are always calling for increased expenditure, which would mean an increased PSBR? Will he further state that at the present level of unemployment it is necessary to maintain the PSBR at its present level, but that in the long term if we are to get the investment which my right hon. Friend requires and which we all need, it is necessary to reduce the PSBR?

Yes, Sir, I agree with every word my hon Friend has said. My views on this matter are in line with those of all my colleagues in the Western World.

Will not the Chancellor recognise that there is an important difference between the position in Germany, on which he continues to rely, and his own position? Whereas he has overshot his forecast for the PSBR by £3,000 million, the Germans appear to have managed to get their borowing requirement under expectation by £1,000 million.

The right hon. and learned Gentleman is totally mistaken about Germany. The German public sector deficit is now estimated at almost twice the percentage of GDP at which it was estimated six months ago. It is true that a statistical mistake was made in Germany, according to German authorities, which has led to a recalculation of the deficit, as 7½ per cent. of GDP rather than 8 per cent. However, as I told the right hon. and learned Gentleman the other day, calculated by the same formula, even if the PSBR were as high as £12,000 million this year—which I do not believe it will be—our deficit will still be only 6½ per cent. of GDP.

Does the Chancellor agree that if he is to get long-term investment in industry and by industry, in adidtion to short-term he ought to be talking about long-term package deals? Is he aware that both employers and trade unions in the textile industry have this morning totally condemned as unrealistic and unhelpful the proposals that he made for the textile industry yesterday? I stress that it is trade unions as well as employers. What long-term plans does he have for this industry?

I am always ready to read debates and I always read with admiration the speeches of my right hon. Friend the Secretary of State for Employment. Last night I was also able to listen to that speech with admiration. However, textual criticism of speeches by my colleagues does not arise on the Question of the hon. Member for Eastbourne (Mr. Gow).

asked the Chancellor of the Exchequer what progress the Interdepartmental Committee on Industrial Democracy in the Public Sector has made.

As I told my hon. Friend the Member for Basildon (Mr. Moonman) on 16th December, in the first stage of the Government's study of industrial democracy in the nationalised industries we are finding out the views of all the interested parties. We discussed the study yesterday with representatives of the chairmen of the industries. We shall be consulting the TUC, and the individual unions concerned will be asked to give evidence.

Is it not ironic that individual unions have not yet been consulted? Will the Minister ensure that that is done as quickly as possible?

As I said in my main Answer, I assure my hon. Friend that unions will be consulted.

Which does the Paymaster-General think is the better exponent of good industrial democracy—Marks and Spencer or the Central Electricity Generating Board?

The nationalised industries have a very good record in this respect, and so does Marks and Spencer. Why should we not try to improve both?

Will my right hon. Friend assure the House that he will take into account the development of industrial democracy at Chrysler by utilising the excellent report which the shop stewards have produced about the development of that company? Will he assure the House that the future of Chrysler will be bound up with the intimate working of industrial democracy and decision-making by the work people at the plants?

It is always open to companies to promote industrial democracy, and I hope that that happens at Chrysler. As my hon. Friend will know, an inquiry is now in progress into the promotion of industrial democracy in the private sector, and no doubt in any event, whatever happens in Chrysler, that will in due course have influence.

asked the Chancellor of the Exchequer if he will take steps in his next Budget to introduce a negative income tax.

The hon. Member will not expect me to anticipate the Budget Statement.

In view of the plethora of means-tested benefits and the inertia which often works against those who most need help from the welfare systems, does not the right hon. Gentleman agree that a negative income tax, properly geared, with the right rates, would help to ensure that there was an effective safety net to help those most in need?

We have tried to improve the position of those most in need by improving a number of current means-tested benefits, and we propose to introduce others. One of the ways of helping people in need is in relation to the current very low threshold of the income tax system. These are all matters which my right hon. Friend must consider.

Until such time as we can introduce a negative income tax, will the right hon. Gentleman consider urging his right hon. Friend the Secretary of State for Social Services to make far greater use of the family income supplement, which has the outstanding advantage of paying people while they remain in work?

Family income supplement was upgraded in July, and other means-tested benefits have been upgraded recently. All this helps people who are most in need.

Does not the fact that the Minister acknowledges the serious implications of the low tax threshold, the fact that people on social security benefits are now paying tax, and the fact that widows on the standard rate of widow's benefit are now above the tax threshold, powerfully underline the case that we continue to make against the overall impossibly high burden of taxes imposed by this Government, and the overriding necessity, therefore, to get public spending under control?

My right hon. Friend has announced on many occasions what he intends to do about public expenditure in the next financial year, and there is further consideration of the years beyond, to help bring the problem of taxation under control.

asked the Chancellor of the Exchequer if he will seek to introduce a substantial tax on pornography.

No, Sir.

Why does my right hon. Friend the Chancellor impose crippling taxes on Beethoven, Mozart, Bernard Shaw and Shakespeare while many people who are making fabulous profits out of pornographic literature get off scot-free? Why does he tax virtue and not vice? Although I am no Mary Whitehouse, may I ask my hon. Friend whether, as pornography is apparently here to stay, it would not net him a tidy sum if he made those who want their sexual appetites titillated pay for it through the nose?

I was not aware that people who made vast profits out of pornographic literature and films were getting away scot-free. If one wants to take action, the right and possibly courageous way is to do it through social legislation, not fiscal. I do not think that the Chairman of the Board of Inland Revenue would take kindly to having to watch films such as "Last Tango in Paris" to decide whether they were pornographic.

Would this be a tax on men only?

asked the Chancellor of the Exchequer whether, in respect of State pensioners without employment, he will require Government Departments to operate PAYE procedure in order to spare pensioners the procedure of direct assessment to income tax.

The arrangements for paying State pensioners differ in a number of important respects from the arrangements under which wages, salaries and occupational pensions are normally paid, and they do not readily lend themselves to the operation of PAYE. Consideration is currently being given to the possibility of devising a scheme for deduction of tax under PAYE from State pensions, including those where a direct assessment to tax on the pension would otherwise be necessary.

Will the hon. Gentleman undertake that the inquiry will go ahead and be implemented with all possible speed? Is he aware that, as a result of the abominable way in which income tax falls upon low incomes at present, people who are in receipt only of pensions not only have them taxed, but have all the worry and anxiety of receiving a sheaf of forms to which they have never been subject in their lives?

I entirely accept that there is a problem. The Inland Revenue calculates that 200,000 out of the 2½ million people who have to be taxed in respect of pensions and other income suffer from direct assessment. The majority are retired people with fairly large investment incomes. Despite that, it is a problem, and the Inland Revenue is putting into operation an extended instalment scheme whereby tax can be paid by more than four instalments during the year.

Does my hon. Friend agree that if an income tax debt arises through no fault of the pensioner, the Inland Revenue should be kind and dismiss it?

The Inland Revenue tries hard to be kind, and I think that in most circumstances it is. The normal arrangement is to pay by four instalments in the year. As I said, we are considering a scheme whereby tax can be paid more often, and therefore with smaller sums in each instalment.

asked the Chancellor of the Exchequer if he will take steps to ensure that the tax liability of widows over 50 years of age is especially protected against the effects of inflation.

The rate of inflation is one of the factors which is taken into consideration in fixing the level of tax thresholds.

Will the Minister consider introducing extra tax relief in the first year of bereavement, the most crucial time for widows? Will he also urgently look at tax thresholds, which affect all these minority groups to such a great extent? Why do not the Government get their priorities right?

The problems of tax thresholds affect other taxpayers as well as widows. I accept that there is a problem, but I should correct a mistaken impression that the right hon. and learned Member for Surrey, East (Sir G. Howe) has given today, and before outside the House, that a widow who receives nothing more than the basic widow's pension in this tax year pays tax on it. She does not, because her pension is less than the single person allowance which she receives for the year 1975–76.

Is my hon. Friend aware that it would be wrong to help widows without helping other single-parent families and that the Treasury should help both? I have always found the Treasury to be unimaginative and ungenerous in considering these groups. It is always prepared to give money to a dubious project involving motorways, motor cars or airports, rather than such groups. Will my hon. Friend ask my right hon. Friend to reconsider his values?

We have this problem very much in mind. There is a great difficulty within our tax system about giving relief to people at the lower end of the scale without giving it throughout the tax system. For instance, an increase of £100 in both the single allowance and married allowance costs more than £800 million a year. That goes to all taxpayers, not just those at the lower end of the scale. It is a problem that we have very much in mind.

As the Minister challenged what I have been saying, does he accept that women receiving the standard rate of widow's benefit from the age of 60 over a full year are now receiving an income which takes them above the tax threshold? Does not the very problem which the hon. Gentleman has just identified, the expense of raising the tax threshold by even a modest amount, demonstrate beyond doubt that this Government are now taxing the poor to pay benefits to the poor? Does not that underline that we have reached the limit of the nation's taxable capacity and ram home the case for getting public spending under control? There are no more taxes to be raised.

A widow receiving the basic widow's pension in this year receives £637, if she has no other income. [Interruption.] I am talking about 1975–76. I said that in this year she will pay no tax on her income if her only income is the basic widow's pension. That is the mistake the right hon. and learned Gentleman has been making.

asked the Chancellor of the Exchequer if he will now slow down the phasing out of subsidies to the nationalised industries.

No, Sir. I still intend to phase out price restraint subsidies by the end of this financial year.

Is not my right hon. Friend aware that the phasing out of subsidies to the nationalised industries, coupled with inflation, has forced up coal prices and gas and electricity charges so much that many of the lower-paid cannot afford to pay their bills? Is he aware that, as a result of increased transport charges and Post Office charges, there is now massive customer resistance in those areas? I ask my right hon. Friend to reconsider the matter.

I recognise that this is a difficult problem. It is a priority, especially in respect of the energy industries, to cease the subsidies. It is particularly wrong that we should be subsidising them now. The proper way to deal with this difficult problem is through the social security system. I draw my hon. Friend's attention to the recent improvements in retirement benefits, supplementary benefit rates and the discretionary extra heating allowance.

Does the right hon. Gentleman agree that one of the difficulties the Government face is that on the whole employers in the nationalised industries and throughout the public sector have disregarded the Government's advice and treated the £6 as the minimum as well as the maximum? Will he confirm the figures that were given yesterday by my right hon. Friend the Member for Worcester (Mr. Walker), which suggested that these increases, as a result of a disregard of Government policy, have amounted to £2·1 billion this year?

I did not hear the right hon. Member for Worcester (Mr. Walker) give those figures. It is true that the £6 has been used as the increase almost entirely throughout both the public sector and the private sector, with a few exceptions in the private sector. That in no way detracts from the essential point that we need to phase out subsidies to the energy industries.

Does my right hon. Friend agree that to continue these subsidies would be a regressive policy as it would subsidise the wealthier users of nationalised industry services? Does he also agree that to keep these subsidies going would compound losses in the nationalised industries by encouraging customers to use subsidised services, leading to greater and greater losses as the years go by?

There is a great deal in what my hon. Friend says. We have considered how far the problem may be resolved by reforms of tariff structures. There is no practical way of dealing with this problem except through the social security system.

Does the right hon. Gentleman agree that one of the problems consistently pointed out in the Price Commission's report has been the increase in costs within the nationalised industries, quite apart from pricing and subsidy policies? What will the Government do to ensure that costs within the nationalised industries are brought under stricter control?

That is part of the objective of the counter-inflation policy. We expect that the increase in nationalised industry prices next year will be substantially lower than the increase this year.

asked the Chancellor of the Exchequer what recent consultations he has had with the Chairman of Finance for Industry.

None, Sir.

Does my right hon. Friend agree that both Finance for Industry and the National Enterprise Board have complementary rôles to play? Does he agree that it helps no one, least of all British industry, to have the chairman of one of those bodies making vicious public attacks on the other?

I agree with my hon. Friend.

asked the Chancellor of the Exchequer what representations he has received concerning road fund tax payable on tractors used to haul fishing boats; and if he will make a statement.

I have received one such representation, from my hon. Friend. I will be replying to him in due course, and in view of this I do not see that a statement is necessary.

When considering this matter, will my hon. Friend note that the lower concessionary tax is still being applied in certain other ports and that there is a serious anomaly? I have little doubt that when the regulations were framed it was not appreciated that tractors were used for this purpose. I feel that if their use had been recognised, they would have been included in the exceptions that were granted.

As my hon. Friend knows, these matters are now being litigated. He will not expect me to comment on the litigation. I shall consider the matter carefully. If he has any evidence to show that there is a serious problem for the industry, it will be considered sympathetically.

asked the Chancellor of the Exchequer by what amount the level of capital transfer tax would need to be increased to raise the same revenue envisaged for the wealth tax as proposed in the Green Paper.

The increase in rates which would be required to secure a yield equivalent to a wealth tax on illustrative Scale A would be about two-thirds, with a maximum rate of 100 per cent. applying to slices of capital over £150,000. For scale B the rates would need to be more than doubled with a similar maximum above £80,000. Both calculations are on the basis of the present capital transfer tax threshold and rate bands.

Does my hon. Friend agree that both economically and socially the capital transfer tax is fundamentally more important and significant than the wealth tax? In view of the results of the Select Committee that considered wealth tax, does he think that the opportunity should be taken in the Budget to raise capital transfer tax levels significantly and to make them more progressive at higher rates?

I do not agree with my hon. Friend entirely. The two taxes are complementary. The capital transfer tax is a tax on the transfer of capital. The wealth tax is a tax on the accumulation and aggregation of capital. To that extent I do not think that they can be equated. However, we shall take into account their inter-relationship in framing our proposals.

Is the hon. Gentleman aware that we must regret that the Chancellor has not taken the opportunity of this Question to lash the Select Committee that considered wealth tax for its five reports? Will he confirm that the committee produced good value for money for the House? Will he undertake to tell his right hon. Friend that we do not want him to hide his reaction to the Select Committee in a Written Answer before the Christmas Recess?

Having served on the Select Committee and having seen how some Opposition Members tended to use it as if it were a Standing Committee, I am not sure how much value we can draw from the evidence of the Select Committee.

When giving further thought to the capital transfer tax, will the hon. Gentleman and his colleagues bear in mind that the provisions relating to small or medium-sized discretionary trusts can bear very harshly on family properties which are not endowed with funds for periodic payments?

These are matters that we shall consider, but in the main discretionary trusts are used as vehicles for very wealthy people to avoid paying taxes.