asked the Secretary of State for Energy if he will discuss with the Central Electricity Generating Board a proposed programme of measures required to raise the thermal efficiency of electricity generation in the United Kingdom to average European standards.

As I indicated to the hon. Member on 5th April, it is extremely difficult to make meaningful international comparisons of thermal efficiency. The CEGB is continually seeking ways of increasing the thermal efficiency of its system, and over the past 10 years has achieved an improvement of about 3·3 percentage points. It is confident that by a programme of continuous plant monitoring and modification it will be able to achieve further improvements in the future.

Does the Minister not accept that meaningful comparisons have been made—particularly by the EEC—on a strictly comparable basis, which show that the CEGB is bottom of the European league on thermal efficiency? Will he not at least instigate an inquiry into the reasons for this, as there would be savings in fuel and electricity bills to the consumer if we got up to the average European standards?

There are reasons, as the hon. Gentleman knows, for this situation, principally because the CEGB system contains a smaller proportion of hydroelectric plant than systems in other EEC countries. That is a fact. This type of plant is capable of a more flexible mode of operation than are conventional steam-fired plants and can meet demand peaks more efficiently. As the hon. Gentleman knows, there is also the question of age. I should tell him and the House that the highest thermal efficiencies in 1974 were achieved by the Fawley oil-fired station and the Ratcliffe coal-fired station, which both achieved efficiency in excess of 37 per cent.

Does the Minister not agree that our electricity supply industry could have no conceivable reason whatever for maintaining a low thermal efficiency if it could attain a higher one? The difficulty is the nature of our system as against, say, the French or German system.

As my hon. Friend knows, there is an investigation going on about this at the present time. The subject is currently being considered by a study group under the chairmanship of the Department's chief scientist.

Will the Minister not admit that he himself has published figures that do not take into account hydro-electric power, and that the figures are therefore on a comparable basis? Furthermore, the Plowden Committee has criticised the CEGB for using its fuel inefficiently. Will the hon. Gentleman not instigate an inquiry in his Department?

The hon. Gentleman is talking about figures that I supplied to him in answer to a Question. I did say that those figures were accurate. I am not questioning the accuracy of the hon. Gentleman's question. However, the CEGB has clear responsibilities—which have been recognised by Plowden and by the CEGB—for improving performance in this area, and it is accepting that responsibility. Different factors apply as between this country and the EEC countries, and hydro-electric power is one of them.

In view of the relatively low thermal efficiency in some power stations, of all kinds, including coal-fired power stations but mainly oil-fired power stations, would it not be a good idea to introduce the two new coal-fired power stations—Drax B and Burton B—in order to raise the overall level of efficiency for all the others?

I could not agree more. This whole question is being examined, as my hon. Friend knows. The question of extra coal-fired power stations is being discussed by the various sub-groups. However, the fact remains that we are talking about the age of our power stations, and that is a fact that the House and the country cannot ignore.

asked the Secretary of State for Energy what methods of finance his Department proposes to encourage in order to develop discoveries of offshore oil up to 1980.

My Department recognises the importance of financing considerations. It is not for me to encourage any particular method of raising finance for Continental Shelf development. The Department will take what action it properly can to facilitate the provision of finance, as the recent Claymore and Tricentrol transactions show.

As between £8 billion and £10 billion will probably be needed to finance development up to 1980, will the hon. Gentleman give an undertaking that his Department will do everything possible to encourage private financing as well as other forms of financing in the North Sea? Further, will he look favourably on such imaginative developments as the idea of syndicates of insurance companies and pension funds to provide finance for offshore oil?

Yes. My Department keeps in close touch with the financial community in order to play a constructive rôle in transactions where consent is needed and to ensure that Government policy is not misunderstood. The hon. Gentleman will be aware of considerable funding of finance coming from United States bankers to help oil companies at present.

As the Government now have a borrowing requirement in excess of £12,000 million, will the Minister give an assurance that he will not encourage the BNOC to commit public funds in any future financing and that he will give every incentive to the private sector?

I shall most certainly not give that assurance to the House. The BNOC has an important rôle to play. Indeed, it is empowered to give loans and guarantees, subject to Government consent. Occasions could arise when the BNOC could fruitfully make use of its powers and considerably assist the development of British oilfields.

Will future participation agreements follow the pattern of the Gulf-Conoco agreement?

The House must await a statement on that matter.

asked the Secretary of State for Energy whether he has plans to meet with his colleagues from the OPEC countries.

I have discussed matters of mutual interest with representatives of OPEC countries on a number of occasions and will continue to do so as opportunity offers. I have, however, no specific plans for such meetings in the near future.

Now that Britain is an exporter of oil and is to be an exporter of liquefied petroleum gas, has the Secretary of State given any thought to the possibility of our seeking to join OPEC at some stage in the future? If we were to do so, and if our membership were to be accepted, would we not be able to play a very useful part in forming OPEC's future policies?

There have been a number of rather jocular references to British membership of OPEC, which subject has certainly highlighted Britain's entry into the world oil producers' league, and by 1980 we shall be the tenth largest oil producer in the world. The Government have no plans to join OPEC. On the other hand, it is a fact that our common interests and the common experience that we can offer, world-wide, in the export of equipment and in other ways indicate that our voice will be listened to—and I think that it is already listened to with some interest in other oil-producing countries.

Will the Secretary of State bear in mind that an independent Scotland will be a net exporter of oil and that England never will be, and that Scotland will therefore he eligible and England never will be?

I am sure that Sheikh Yamani and others will note with interest what the hon. Gentleman said.

When my right hon. Friend meets some of the leaders of these ex-colonial territories, will he tell them that the recent arrangements that have been made in respect of the Gulf-Conoco deal are not an example of what he intends to do in the future about further participation plans and that not only shall we have the ability to purchase the oil, which at present we have got only from the Gulf-Conoco deal, but we shall also, under the new participation plans, control it as well as own it?

My hon. Friend will remember that, in the case of the Gulf-Conoco agreement, the National Coal Board—the NCB (Ex)—was a one-third full partner in the operation, and therefore the participation deal with Gulf-Conoco reflected that public participation to the full extent of the one-third. In the case of the arrangements with Burmah, the BNOC is acquiring the Ninian field and it has been agreed that Burmah Overseas Development Limited will have a majority BNOC stake. I think that as my hon. Friend observes the development policies he will see that there is some merit in flexibility, though our intention to acquire a right to 51 per cent. of the oil is one that is embedded in Government intentions.

Has the Secretary of State forgotten that the former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), said that Britain would be seeking to join OPEC, and specifically said that he did not make his reference jocularly? Has Government policy changed, or is the Secretary of State indulging in yet another demonstration of his interpretation of collective Cabinet irresponsibility?

I can only say that no ministerial consideration has been given to an application to join OPEC—though as to the presidency of OPEC it would be open to my right hon. Friend the Member for Huyton (Sir H. Wilson) to apply for that individually.

asked the Secretary of State for Energy if he will make a further statement on the progress of his energy-saving campaign.

The Government's energy-saving campaign is continually being developed. My right hon. Friend will have no new announcement to make until we have completed our study of the reports of the Select Committee on Science and Technology and the Advisory Council on Energy Conservation.

I congratulate the Minister on his translation to this important post and wish him an enjoyable but short tenure of it. Will he consider whether enough is being done to bring home to individual members of the public the urgency of this whole problem, for example, through local energy-saving campaigns? If not, is it not time that the Government did more in that direction?

I thank the hon. Gentleman for his kind remarks. I know that my stay will be enjoyable. I hope that it will be long as well.

It cannot be over-emphasised how important this campaign is, not only to the temporary position with regard to energy but to the whole of our future energy policy. One of the recommendations that we are looking at is for local committees.

In any publicity in this regard, will the Minister ensure that the elderly, the sick and those with young children are reminded of the importance of proper heating provision? Despite the departure of the former Under-Secretary Lord Lovell-Davis, from the Department of Energy, may I be assured that the inquiry that he is heading is continuing with all speed?

Yes. I have taken that over from my noble predecessor, and a report will be produced for the House before the end of this month. As regards the "Save It" campaign in general, one of the important aspects of energy conservation is the way in which people can be kept warm enough and yet at the sane time energy can be saved. That can be done by proper insulation, and so on.

Has the Minister studied the wide range of positive financial incentives that many EEC countries are implementing, many of which were recommendations in the Select Committee's Report? What is he going to do about them?

We are looking at them, together with the recommendations in the Select Committee's Report that deal with conservation policies in Europe.

Will the Minister bear in mind the need for helping the elderly and the categories of people referred to by my hon. Friend the Member for Sowerby (Mr. Madden) in the matter of insulation, equally as in the matter of tariffs for energy charges?

Yes. That is certainly one of the things that we are looking into, particularly in the case of advice, because people need advice on how to conserve energy.

The Minister referred to the Select Committee's Report. That Report has been before him for months. When will he report on it? Why has he been so dilatory?

Because there were over 42 recommendations in the Report. They were recommendations of the sort that concern not only my Department. They go right across the board and concern nearly every Department of State. Therefore, we want to get the package right when it is produced.

Will my hon. Friend consider the basic question of competition between gas and electricity in relation to the energy-saving campaign, and especially in relation to new housing estates where local authorities have a responsibility to ensure that the maximum amount of energy is saved, but not by competition between two different sources?

That matter is likely to be raised at the National Energy Conference that my right hon. Friend is proposing later in the year.

asked the Secretary of State for Energy whether he remains satisfied with the proposed output of oil from the North Sea during the next four years.

I am satisfied with the progress made, and the prospects remain good.

If the right hon. Gentleman remains satisfied and if we are to become an oil-exporting nation, why does he not consider it necessary to become a member of OPEC?

I have dealt with that matter in answer to an earlier Question. [HON. MEMBERS: "No".] I did not speak about the future, I said that we had not applied to be considered for membership. However, if the House feels that this matter merits special consideration I feel sure that the Government will listen to all proposals which are made. That had not been our intention, but we shall be the tenth largest oil producer and a very important oil exporter as well.

Does the right hon. Gentleman agree that output depends a great deal upon price? Does he really think that it will be possible for the OPEC price ring to maintain the present high price level for oil at a time when there is a world glut of oil, as there will be for a long time to come?

The world price of oil and the forecasts are a matter of great concern to all oil-consuming countries as well as oil-producing countries. Like any Minister in my position, I try to find out what the prospects are. There are many factors, some of which are being discussed at the CIEC conference which is taking place between oil producers and oil consumers, and there are other factors bearing on the strength of recovery of the world economy. I should not like to give a forecast, but I should like to reassure the House that this is a matter which we are keeping carefully under review.

Will my right hon. Friend take into account that it is essential that we should maintain greater contact with the OPEC countries, not only for the purpose of discussing oil but because in those countries, especially Kuwait, there is a demand for equipment and technical know-how? Will my right hon. Friend, together with the Secretaries of State for Trade and for Industry, bear in mind that in combination they can work for the benefit of trade between the OPEC countries and this country?

I agree strongly with what my hon. Friend has said. In fact, one of the first things I did when I was appointed to my present position was to invite the OPEC ambassadors to come and see me in my Department to discuss this and other matters. The Department of Trade has pursued these possibilities. The Offshore Supplies Office is very much concerned. I referred in my first supplementary answer to the importance of developing the opportunities for exports of oil-related equipment, and I share the view which my hon. Friend has expressed.

asked the Secretary of State for Energy what is his latest estimate of the amount of subsidies payable to the gas, electricity and coal industries during the current financial year; and what were the actual figures for the year ended 5th April 1976.

The information which my right hon. Friend gave to my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) on 31st March in respect of payments in 1975–76 and 1976–77 stands, except that the latest estimate for compensation for price restraint to the electricity industry—England and Wales—for 1975–76 is now £11–6 million, not £21·6 million.

Will the Minister accept the congratulations of hon. Members on this side of the House on the policy of the Government to phase out these subsidies to nationalised industries? Will he also confirm that there is no danger of the Government weakening in their resolve to face this matter?

I note the hon. Gentleman's congratulatory remarks, but I ought to point out to him that the legacies from his Government are still carrying on for some considerable time. For example, payments to the Central Electricity Generating Board for accelerating investment in the power stations are likely to continue until 1980–81.

Does my hon. Friend agree that the subsidies to the gas and electricity industries were introduced by the Conservative Government against the wishes of those industries?

Yes, and I particularly remember my hon. Friend and myself taking part in some of those debates. It is fortunate that there is a certain rapport between the Opposition and the Government in trying to deal with this problem.

Does not my hon. Friend acknowledge that the congratulations of the Opposition are indictment enough on the phasing out of these subsidies? Is not the effect of the cuts in public expenditure that pensioners, single-parent families and people in real need are having to pay higher prices for gas and electricity, and is it not time that the Government reversed the policy, retained subsidies and kept prices down?

I think that my hon. Friend and I are at one on this point, but I do not think my hon. Friend would want to support the policies inaugurated by the previous Government. I agree with him that there is a problem of severe fuel bills for pensioners, but I think he will agree that by means of pension provision and social security payments the Government have tried to grasp this nettle in order to assist pensioners and people to whom he has referred. Indeed, it was my right hon. Friend the Secretary of State who faced this problem recently and tried to assist pensioners by preventing their fuel supplies from being cut off.

asked the Secretary of State for Energy what are the latest estimates of United Kingdom coal production in the years 1980, 1985 and 1990.

The National Coal Board's estimate for 1980 is 130 million to 135 million tons, and for 1985 at least 135 million tons. These figures include licensed mines and opencast coal. Production in 1990 is expected to be on a substantial scale but it is not possible to make specific forecasts at the moment.

While recognizing the problem which the Minister has described, may I say that the figures he has mentioned are large and are encouraging? However, in spite of the good financial figures given to us by the chairman of the board last week, does not the hon. Gentleman agree that there is now a real worry about the ability of the industry to finance the capital projects which are necessary to bring the coal to the surface without additional heavy borrowing, once again crippling the industry with an unmanageable debt?

The hon. Gentleman has to some extent underlined the terrible problem and dilemma which the Government face in their tremendous commitment to coal. As I have said before, we are attempting to do in 10 years what should have been done in 25 years. The hon. Gentleman knows from the speeches made by my right hon. Friend and myself from the Dispatch Box that we have given a firm commitment to coal, not simply from compassion but because we believe that the nation urgently needs the coal. To this extent we are trying to overcome the financial problems of the board.

Is my hon. Friend aware that if the figure of 135 million tons is to have any realism he has to get something done about establishing markets to sell the coal that he hopes will be produced in the years mentioned in the Question? Does he not agree that one of the first things to be done is to tell our so-called partners in the Common Market that they have an obligation to assist in getting rid of the 30 million tons of coal stocked in this country, in the same way as we are expected to absorb their mountains of butter and goodness knows what and other surpluses that they keep on creating on the Continent?

I do not underestimate in any way what my hon. Friend has said about the coal and energy requirements of the Community. This problem exists not only in this country but also within the EEC countries. My hon. Friend has expressed a view which is probably spreading throughout the House when he suggests that it would be helpful if we could export coal to Europe to the extent that we would like. I have no doubt that the market exists for coal, and the National Coal Board in particular is doing all it can to find new export outlets. My right hon. Friend is also looking into the question of additional means of coal-burning in this country.

asked the Secretary of State for Energy what progress has been made towards the introduction of legislation to encourage domestic energy savings in the United Kingdom.

Enabling legislation exists in the Fuel and Electricity (Control) Act 1973. Similar powers have been proposed in the Energy Bill, recently introduced in another place. But the Government are not at present contemplating the introduction of statutory controls of domestic energy use. We prefer to rely on voluntary effort related to realistic pricing and helped by the provision of information on the financial advantages of energy saving.

Is the hon. Gentleman aware that a great opportunity has been missed in the new Energy Bill, in that measures are not introduced aimed at achieving a solution to the major cause of energy wastage, which is the lack of proper building insulation in this country? Is he aware that Britain is bottom of the European league in measures designed to achieve a solution to this great problem?

Building insulation is one of the many matters that we are examining, but we have no immediate intention to introduce legislation on it. With refer- ence to what happened in the other place in regard to the powers that we were taking to control the use of energy, perhaps I may add that I hope that we shall have the hon. Gentleman's support, and that of his hon. Friends, when we seek to put those powers back in the Bill when it reaches this House.

Does the Minister agree that the public and all concerned are perfectly capable of adapting themselves to variations in price and can be hindered in doing this efficiently only by attempts at legislation and bureaucratic interference?

The legislation, as contemplated, does not deal with that aspect of the matter. I repeat that when the Bill reaches this House we shall seek to put back those powers with regard to energy conservation which were taken out.

Does my hon. Friend realise that he has just given an answer that appears to suggest that the Government have already rejected one of the recommendations of the Select Committee on Science and Technology for energy conservation legislation? In these circumstances, is it not imperative—I ask this as Chairman of the Select Committee—that we have the White Paper fairly soon?

I hope that I have not misled the House. I assure my hon. Friend that it is not the case that we have so far rejected anything that the Select Committee has put before us. I was asked whether immediate legislation was envisaged. As I think I said in reply to another supplementary question, we are looking at the recommendations of the Select Committee, together with other recommendations, and I hope that my right hon. Friend will soon be in a position to make an announcement.

asked the Secretary of State for Energy whether he expects an increase in coal exports in the year 1976; and what steps he has taken to increase such exports.

This is primarily a matter for the National Coal Board. The board is seeking to expand exports to existing outlets and to secure new ones in anticipation of new export opportunities when economic activity picks up. But the market remains weak, and I understand that on present trends the board is unable to predict an increase in 1976.

I accept that in the first place it is a matter for the National Coal Board, but does the hon. Gentleman not agree that he, too, can be helpful in discussions with his colleagues in Europe in terms of promoting coal technology, especially the new technologies? Does he further agree that the National Coal Board and the miners themselves can make a contribution towards this important part of the coal industry's future by producing coal as competitively as possible and settling down to good productivity agreements in order to produce the coal that we need and also the rewards to miners for getting it?

I could not agree more with the hon. Gentleman on the question of aiding coal exports. We are very good at the introduction and development of coal technology. Certainly, this is a matter that must be examined. In my view, it is a question of exporting coal plus the technology alongside it, and I welcome what the hon. Gentleman said about that. As for what he said about the rôle of the miners, I am sure that he will agree that they are very conscious of the rôle that they have to play. I think that one can fairly say that there is a peace and stability within the industry now which we have not experienced for many years, and I believe that, as a consequence, we shall be able to achieve the aim which the hon. Gentleman has expressed.

Will my hon. Friend keep in mind the need not only to encourage productivity but to ensure safety? There have been a number of deaths in the South Wales coalfield recently. Secondly, will my hon. Friend direct active attention to the concern felt by miners who see coal stocks building up when they know at the same time that other nationalised industries are still importing coal from abroad? I realise that long-term contracts are involved here, but will he look at that matter again?

I assure my hon. Friend that both my right hon. Friend and I were seriously concerned about the trend of accidents which took place, notably in the South Wales coalfield. Because of my own technical and practical experience, I personally examined the trend of these accidents. I cannot say that I am pleased to tell my hon. Friend this, since the toll was unduly high, but I should say that there is nothing specially significant about it, although, of course, we must all be distressed at what happened. I give my hon. Friend the assurance—since he asks about the getting of coal in relation to safety considerations—that safety will come first and the mining of coal second.

We are looking at the whole question of imports. My hon. Friend will know from previous answers that I have given him that the amount of coal imported will be substantially reduced this year. He will recollect that it was previously 2½ million tons, but it will be reduced. [HON. MEMBERS: "Too long."] I apologise, Mr. Speaker.

Does the Under-Secretary recall that 30 per cent. of the coal imported into the EEC is coming from Iron Curtain countries? Will he and his right hon. Friend try to persuade our EEC partners to stop importing subsidised Polish coal at the expense of the British coal miner?

The hon. Gentleman puts to me a concern, which has been expressed also by some of my hon. Friends, on the question of coal being imported—not only from countries behind the Iron Curtain but from elsewhere—at below the cost of production. This was not something that we envisaged happening within the EEC, and I agree that the point certainly should receive attention.

asked the Secretary of State for Energy what was the average price per therm of gas in Scotland and England, respectively, at the most recent date for which figures are available.

Such figures based on current tariffs are not available. However, in half the English gas regions most elements of the tariffs are now the same as in Scotland.

How can the hon. Gentleman say that these figures are not available when I have had such figures provided by Ministers in each of the past 10 years? Why cannot we have a British gas industry supplying gas at British prices? Does not the hon. Gentleman realise that it makes it difficult for unionists such as myself to argue a fully convincing case against the Scottish nationalists if we cannot at least have a British price for British gas?

The supplementary question that the hon. Gentleman puts, with some humour, does not really arise from his main Question. It is a fact that landings of gas in Scotland are at exactly the same price as for the rest of Britain, but, as I have explained to the hon. Member in various previous answers, the increased cost arises from distribution costs and problems of geography. As he put it himself at one time, the reason for this is that we have some independence in relation to gas.

Will my hon. Friend confirm that two-thirds of the gas in Scotland comes from England? Can he say what will happen about that when Scotland gets its independence?

That would be rather difficult, because there will not be any gas available for the system from Scottish waters before late 1977, and this does not affect the current gas tariff.

Will the Minister confirm, from his great knowledge in these matters, that in terms of total reserves there is three times as much gas in the Northern sector—the Scottish sector—as in the Southern sector?

The hon. Gentleman must examine some of the figures that he has given to the House. Anticipation and landing are two different aspects.

asked the Secretary of State for Energy what consultations have so far been held with oil companies to encourage the placing of orders for oil platforms in British yards; and what the results of those consultations have been.

My hon. Friend the previous Minister of State has had talks with a number of oil companies about their development plans for their fields in the United Kingdom sector of the North Sea and the possibility of their advancing orders for oil production platforms. These talks have been very useful in providing a full understanding of the technical considerations which play a very important ô in the companies' field development thinking. It is my intention to follow up these exploratory talks with detailed discussions with some of the companies.

Is the Secretary of State aware that the Government have produced precisely nothing so far and that all the time that they are dithering over this matter the loom of unemployment becomes more real for those who are affected by it in the platform industry? What is the Secretary of State going to do to reassure those who work in that industry that there will be positive steps instead of just the talk that has taken place so far?

As usual, the hon. Gentleman has got it wrong. The Government are not dithering at all. Each of the platforms costs about £150 million, and the ordering of them is for the companies. We have been in continual contact with them and the construction companies. I personally got in touch with all the oil companies last summer and my hon. Friend the former Minister of State took this up again. There are technical factors in the shift from steel to concrete. Studies are taking place to see whether the fields can be drained with fewer platforms, because of the cost involved. It is wholly false to imply that the Government are responsible for the present difficult position and its employment implications.

Is my right hon. Friend aware that some of the most highly skilled labour that can be used on the production of these platforms is in the areas with the highest unemployment, such as shipbuilding areas and in the construction industry areas, such as Merseyside? Will my right hon. Friend take that into consideration, because the work can be done and the skill is available? During the war the Mulberry harbours proved that the technical abilities were there. It is a question of getting on with the job and persuading companies to use existing labour.

I share my hon. Friend's hopes on this subject. We considered the possibility of off-the-peg orders, but the design of platforms depends upon their sites being precisely known. There was a technical report, which I made available to the unions so that they could check from their own knowledge whether the recommendation that they could not be made off-the-peg was correct. I recently spent one and a half hours with the oil liaison committee of the STUC in Perth, and there will be further discussions on the matter. We are hopeful that orders will come, but there is nothing that the Government can do to place £150 million orders at this time.

Will the Secretary of State encourage oil companies to place orders for the semi-submersible rig that is being developed and built on Clydebank, an area of high unemployment? Does he agree that such a move would prevent rising unemployment and encourage technological advance in Scotland?

I appreciate the hon. Lady's concern. The Offshore Supplies Office in Glasgow has been engaged in vigorous activities on behalf of British firms building a whole range of platforms, including semi-submersibles. Attempts are being made to get the building of them directed in a way that will provide jobs in this country.

asked the Secretary of State for Energy whether North Sea oil will be freely available for export in the 1980s.

We have always envisaged that North Sea oil that we do not need for our own purposes will be exported, and the amount could be substantial in the 1980s.

Does the Secretary of State agree with the statement by Mr. Willmott that two-thirds of the North Sea oil must be refined here? Does he agree that that is tantamount to putting a qualification on the amount of oil that can go abroad? As the refinery mix is 25 per cent. low sulphur and the remainder lower-grade oil, would it not be advantageous to the balance of payments to export more than was first anticipated?

It is unusual to refer in the House to statements of civil servants, but the reference made by the civil servant in the United States followed precisely the statement made in the House in December 1974. We are anxious to maximise the benefits for this country from North Sea oil. It follows, from the type of oil coming from the North Sea compared with the needs of this country, that we shall be trading in oil by exporting and importing. That is the broad thinking behind the policy that we have announced, including our desire that up to two-thirds of the oil should be refined in the United Kingdom.

asked the Minister for Overseas Development whether he will make a statement about UNCTAD IV.

asked the Minister for Overseas Development what consultations Her Majesty's Government have had with the Ministers of the EEC in respect of issues likely to be raised at UNCTAD IV.

My right hon. Friend the Secretary of State for Trade will be addressing the conference in Nairobi next week. I can say now that the Government are approaching UNCTAD IV in a positive spirit, and we hope that progress can be made in the various important issues under discussion. Commodity trade will undoubtedly be a very important issue in Nairobi, and we expect that debt problems, resource transfers, institutional reform and transfer of technology will also figure prominently. Amongst other things, the Government hope to achieve at Nairobi a wider recognition of the need of the poorest countries for an increase in the volume and an improvement of the terms of aid. These matters were discussed by the EEC Council of Ministers on 5th and 6th April and 8th April, and my right hon. Friend the Secretary of State for Trade is taking part in a final Council meeting today which will, amongst other things, consider the Community position.

Will the Minister be supporting the creation of a common fund to finance an integrated programme of commodity agreements? Bearing in mind the recent White Paper, which says that in the current financial year we propose to spend 10 times as much on defence as on overseas aid, where would our contribution to such a fund come from? Would it come from our already inadequate overseas aid programme, or from some other source?

It is a difficult matter. The conference does not start until next week. It is a global conference, with a wide agenda, and it is not possible for any Government to set out their policy in detail, because it will be negotiated over a few weeks. I hope progress will be made on international guidelines or commodity trading that can be complemented by appropriate specific arrangements on a case-by-case footing.

The Dutch Government are sending two Ministers to the conference. Will the Minister say why only his right hon. Friend is going to Nairobi and he is not?

On present plans my hon. Friend will go to Nairobi for the latter stage of the conference. This has been the pattern at previous conferences, under both Governments. The Secretary of State for Trade takes the lead at the beginning of the conference and, generally, the Minister for Overseas Development goes later.

Does my right hon. Friend recognise that that reply will be disappointing? I should like both Ministers to be there all the time. Will our representatives be meeting representatives of the Commonwealth prior to UNCTAD IV, to follow up the initiative of my right hon. Friend the Member for Huyton (Sir H. Wilson) in Jamaica? Would it not be appropriate for them to meet representatives of the Commonwealth before meeting EEC representatives?

I should like to go to the conference, but other things intervene, including matters concerning the House. There will not be any formal Commonwealth meeting to determine a joint Commonwealth approach prior to UNCTAD IV.

I agree with much of what the Minister has said in answer to the first question, but does he agree that it is important to support Dr. Kissinger's proposals for endeavouring to finance least-developed countries? Does he agree that economic development could be achieved more rapidly if a larger rôle were given to foreign direct investment?

We shall study Dr. Kissinger's proposals with care. Direct private investment may be the quickest way forward for some countries, but for others, including the poorest countries, there is no substitute for a more relevant trade programme, because such countries do not always attract private investment.

asked the Minister for Overseas Development when he expects to receive the report of the Fay Committee dealing with the Crown Agents.

The best estimate that I can give the House is that I expect to receive the report at about the end of the year.

It is a little late now. Will my right hon. Friend give a categorical assurance that the Fay Report will be published in full detail, including all those references to circumstances in which civil servants in both the Treasury and the Ministry for Overseas Development failed to give Ministers, of varying hues and descriptions, the correct position regarding the Crown Agents at the appropriate time? Will my right hon. Friend also ensure that in the report a full list will be included of those Members of Parliament who were involved in companies which had borrowings from the Crown Agents during the period when all these sleazy enterprises were indulged in by the Crown Agents?

I do not think that my hon. Friend does any service to the House by making insinuations, couched in vague terms, against people who are in no position to reply. It is and always has been my intention that the report should be published. I made that clear in my statement last October—my hon. Friend was present at the time—and it will be published, as I said, subject to any editing to protect the interests of developing countries or information given on a strictly confidential basis. That was the intention of my predecessor, my right hon. Friend the Member for Lanark (Mrs. Hart), as she made clear, and I have repeated it on more than one occasion as my intention, too.

Another cover-up.

Will the right hon. Gentleman assure us that it will be the Government's policy that the massive and unique value of the Crown Agents to the economy will not be damaged?

Yes, Sir. I am grateful to the hon. Gentleman for that supplementary question. Inevitably and rightly, there has been a lot of concern about unfortunate developments over the last few years, but that should not obscure the fact that the ongoing work of the Crown Agents has been of great value to the country and very significant overseas.

Pending the production of the Fay Report, will my right hon. Friend clarify the position of those cases that have been reported to the Director of Public Prosecutions? Is the Director still actively considering some such papers? When can we expect the outcome of his consideration?

The Director of Public Prosecutions is considering two or three cases. I do not know when we can expect the outcome of his consideration.

asked the Minister for Overseas Development when he expects that the United Kingdom will be able to achieve the Pearson target of 0·7 per cent. of gross national product in official aid to the developing countries.

The Government have always made it clear that, while we accept the 0·7 per cent. target in principle, we cannot set a date by which we shall reach it. Our progress towards it must be determined by the pace of our own economic recovery and by the other calls on our resources.

In view of the commitment in the Labour Party manifesto, is the right hon. Gentleman not rather ashamed of the rather poor progress so far on official aid? In view of the rather pious statements in the recent White Paper on overseas development, would it not be better if more aid rather than less was going to rural development and projects for rural advancement?

I agree that more priority should be given to rural development. That was one of the cardinal points of the White Paper published a few months ago. I am disappointed with the progress made on the volume of aid under both Governments over the last 12 years. The percentage of the gross national product devoted to aid has declined from 0·52 per cent. to 0·38 per cent. On the other hand, the House should recognise and acknowledge that, against the background of having to make very severe cuts in public expenditure, the overseas aid programme was practically the only programme not affected by those cuts.

Since it is very unlikely that any Western nation, still less the United Kingdom, will fulfil its target of 0·7 per cent. of the gross national product, why did not my right hon. Friend show enthusiasm for the suggestion made earlier in the supplementary question by my hon. Friend the Member for West Stirlingshire (Mr. Canavan)? Is it not the case that, with the failure to hit this target, the only other means of helping the Third World is by an international commodity bank of the nature that, I understand, Dr. Kissinger is to suggest in Nairobi in a few days' time?

The only reason for my caution in reply to my hon. Friend the Member for West Stirlingshire (Mr. Canavan) was, as I explained at the time, that in a negotiating conference it is difficult to be positive before the conference has opened. I think that we should not regard a better deal on commodities as an alternative solution to a greater flow of development aid. The developing world needs more of both.

asked the Minister for Overseas Development if he will make a statement on the meeting of EEC Ministers responsible for overseas development held on 8th April 1976.

I apologise for the length of the reply, but I was asked for a statement on the meeting.

So far as progress in the Community's own programmes is concerned, this was a disappointing meeting. No agreement was reached on spending the 20 million units of account for the non-associated developing countries provided in the 1976 Community budget, in fulfilment of the decision in principle which was taken in July 1974. There was no agreement on a Community contribution to the International Fund for Agricultural Development, nor on spending 2·5 million units of account provided in the budget for collaboration between the EEC and nongovernmental organisations, nor on the forward planning of food aid. The Commission will make further proposals on harmonisation and co-ordination of member States' bilateral policies for consideration at the next Development Council this summer.

The Council did, however, agree on the member States' common position on major aid issues for last week's discussion of the transfer of resources by the Conference on International Economic Co-operation. These include undertakings of progress towards better harmonisation of aid terms for each developing country and improved terms for those countries whose needs are greatest, and the idea of an agreement among donors to devote aid increases principally to those experiencing the worst difficulties and the greatest needs.

Will my right hon. Friend give an assurance that our own aid policies in relation to food and rural development will not be held back because of the obscurantist attitude of certain members of the EEC? Will he take note of the excellent behaviour of the Netherlands Government, who have taken an intiative with regard to UNCTAD without waiting for the Commission to pronounce at all?

The policies contained in the Government's White Paper and expressed to the House on several occasions will not be adversely affected by any ideas to the contrary on the part of other member Governments of the EEC. Meanwhile, we shall press for a more outward-looking policy by the Community as a whole, particularly an aid policy for the Community that is world- wide and gives more priority to the poorest countries.

Is the right hon. Gentleman aware that the attitude of the EEC towards the question of the price for the importing of 1·3 milion tons of cane sugar is both selfish and inward-looking? The Government should stand up for our old partners in the Commonwealth Sugar Agreement, who looked after us so well—as we did them. Is the right hon. Gentleman going to let this happen?

That is a matter for my right hon. Friend rather than for me, but I hope that I have made it clear that the Government are not satisfied with the stance taken by the Community on overseas development matters and are pressing for a number of fundamental changes.

Will my right hon. Friend say what action the Government propose to take on the sugar negotiations, which apparently have now reached a deadlock?

I cannot. As I made clear, that is a matter for my right hon. Friend.

Is the Community making progress towards the idea of a European export-import bank, which would be of assistance in financing commodity stabilisation schemes and new mineral deposits in less-developed countries?

That is not primarily a matter for me, but I shall look into it and see that I or or my colleagues write to the hon. Gentleman about it.

Is my right hon. Friend aware that many of us will find that statement disappointing? May I revert to the question of the common fund and the attitude taken in Holland? Is it not a fact that the Netherlands Government have indicated that they are in principle prepared to contribute to a common fund? What is the Government's attitude to this matter, in particular, to the point of view of the Netherlands—a view that, I understand, is shared by Norway?

As I explained in answer to an earlier Question, my right hon. Friend the Secretary of State for Trade is attending a Council of Ministers meeting today which will be discussing the Community's attitude to this problem and other problems that will come up at the UNCTAD conference.

I should like to inform the House that I propose to call the amendment in the name of the right hon. Lady the Leader of the official Opposition.

I beg to move, That the Bill be now read a Second time.

In previous years the Finance Bill has normally embodied in full the tax proposals made in the Budget speech. The House has, in some cases, discussed and voted on such proposals in relative isolation from other elements of economic policy—and sometimes it has subsequently been necessary to reverse or modify certain provisions to take account of shifts in the economy.

This Finance Bill is different. In a sense it is incomplete, because, as the House knows, it makes no provision for my Budget proposal to link tax reliefs to the acceptance of a pay limit for the next round which is consistent with a further halving of our inflation rate during 1977.

This conditional element in my Budget triggered a fit of instant opposition from the Conservative Front Bench. It argued that the Government's approach to getting a voluntary agreement on pay cut across the prerogative of Parliament to determine our affairs.

This argument was conclusively demolished by my right hon. Friends the Leader of the House and the Secretary of State for Trade during the Budget debate. It may still show a timid flicker from time to time in the correspondence columns of Conservative newspapers, but the country as a whole takes exactly the opposite view. The overwhelming majority of British men and women, whether they are themselves trade unionists or not, recognise that our approach, which accepts the crucial rôle of wage settlements in influencing the management of demand, gives Parliament and people the opportunity to take a more balanced and informed view of our judgment than if I had introduced a conventional unconditional Budget.

When the House comes to vote on the amendments to this Bill, which I shall move at an appropriate stage after we have published a White Paper on the pay agreement, it will be voting in the full knowledge of how those amendments relate to what will be a major factor in determining our economic progress for the next two years.

The level of wage settlements will determine not only how far and how fast we can reduce our rate of inflation to levels at least comparable to those of our competitors. It will determine also how rapidly we can bring down the level of unemployment and how soon the whole community can once again benefit from higher living standards.

The Government, unlike their predecessor, have based their strategy on the assumption that co-operation and not confrontation is the only way forward. This has enabled us to help the trade unions by guaranteeing that, through reduced income tax, the working population as a whole is no worse off by accepting a low rather than a high pay limit. Furthermore, it has enabled trade unionists, who must reach a decision on the new pay limit, to do so in the full knowledge of all the advantages of making it as low as possible.

There were those, of course, both inside and outside the House, who believed that my proposals were too complex to be generally understood. If so, I trust they have read the results of the National Opinion Poll published in last Thursday's Daily Mail. They confirm the evidence of earlier opinion polls that my proposal for linking tax cuts to a low pay limit is fully understood and overwhelmingly supported.

Similar support is quite clear from the vast amount of correspondence which I have received since presenting my Budget. It is not difficult to see why. The experience of the last 18 months can have left nobody in any doubt about the automatic link between pay, prices and jobs. It is an immutable fact that high pay increases are self-defeating unless there is a corresponding increase in national productivity.

If we insist on wages higher than the economy can support, people will be priced out of jobs. In the short run some people may be a little better off—but only at the cost of making others worse off or actually causing them to lose their jobs. Within a few months the advantage of higher wages, even for those who receive them, will be wiped out by the higher prices which must follow.

As I have often reminded the House, the increase in oil and other import prices in 1973 and 1974 reduced our real national disposable income by nearly 5 per cent. Our standard of living was not reduced by nearly as much. Overseas borrowing has helped us to cushion the impact of import prices on our living standards. In the meantime, we have to adjust to the new situation.

Most of the necessary adjustment has now already taken place and the outlook over the next 18 months is for living standards to decline by perhaps 1 or 2 per cent. This is part of the unavoidable price we have to pay for getting unemployment down.

The universal acceptance and observance of the £6 limit has been a striking demonstration of the extent to which these basic economic truths have been accepted by working people. There is now conclusive evidence that their common sense is bearing fruit. Last week's report from the Price Commission, for example, shows that in the last nine months we have halved the rate of inflation.

Moreover, it is now generally recognised that if we had not had the £6 limit, our exports would not have performed so well, our balance of payments would have become much worse, and unemployment would still be on a sharply rising trend. The £6 limit also guarantees that our rate of inflation will continue to fall for the rest of 1976. But there will still be a long way to go before we close the gap between our rate and that of our major competitors.

In the OECD countries as a whole inflation averaged 8 per cent. in the second half of last year compared with 14 per cent. in the United Kingdom. Changes in wages, prices and the exchange rate take time to work through the economy, so prices in 1977 will be influenced by recent movements in the exchange rate and by the impact of pay increases during the current round.

There will, therefore, continue to be a good deal of upward pressure on prices in 1977, and to reduce the rate of inflation further we must ensure that pay increases during the next round are much smaller than in the present round. We must use the benefits of higher productivity as the economy expands to reduce the inflationary pressure, not to increase it.

Hon. Members will not expect me to anticipate today the outcome of the current discussions on pay policy. All of those who are involved in the discussions are agreed on the objective—to halve the rate of inflation once again in 1977. That means, as I told the House in my Budget speech, that earnings must rise in the next pay round by under half as much as they rose in the current pay round. We understand well enough that unless we achieve this objective we shall not get the industrial recovery which, at the end of the day, is the only guarantee of higher employment and living standards.

Our necessary preoccupation with these domestic matters should not blind us to the international dimensions of many of the problems which confront us. In my Budget speech I said that the United Kingdom was taking the lead in international discussions of the common problems of the industrialised economies so that we can develop coordinated strategies for dealing with them.

I suggested to my colleagues in the EEC that we should make a fundamental examination of the question of unemployment, covering not just the short-term measures appropriate to the present situation but also the scale and nature of the problem in the medium term—up to 1980 and beyond. We made a very valuable start at our meeting in Luxembourg a week ago.

The most interesting point to emerge was that we were all agreed that the key problem is the management of overall demand and output in relation to production and potential—rather than what are sometimes called the structural problems of technological change, or regional and sectoral differences, important as these may be. Moreover—I hope the Opposiiton Front Bench will note this—we all agreed that it will be impossible for any of us to achieve the level of output required for full employment without some sort of incomes policy. On this basis we shall be carrying forward our discussions both within the Community—where a tripartite conference involving employers' organisations and the trade unions has been arranged for the end of June—and in other international bodies

Will my right hon. Friend say whether at this conference there are papers which indicate that rather than making cuts in public expenditure, one way of dealing with the problem of unemployment is by an extension of public expenditure?

No, Sir. I am not aware of any such papers. Papers were circulated by ourselves and by the Commission which suggested that one way of dealing with the immediate problem was by adopting the type of package of micro-economic measures which the Government introduced last September, in December and February. I am glad to say that some other Governments have followed that example. There was no suggestion that the answer to the problem was a vast increase in public expenditure. On the contrary, the point I am making is that demand and output must be increased at a level which is related to the national increase in productive potential if unemployment is to fall. The important conclusion, with which we all agree, is that that is the central problem, rather than the structural problem, as it is sometimes described, of technological change or regional differences and the other factors which I mentioned.

The meeting of European Community Finance Ministers took place a week ago when sterling had just been under serious pressure. Both my German and French colleagues agreed that there was no justification for that pressure in the recent performance of the British economy. Indeed, Chancellor Schmidt has just paid an important tribute to the success of our economic policies. Indeed, ever since I presented the Budget less than a month ago all the statistics have confirmed the continued improvement of our economy. The March increase in the retail price index was the smallest monthly rise since the summer of 1974. The March surplus on our current balance of payments, £101 million, was the biggest monthly surplus since September 1971 The March figure for the money supply showed an increase of ½ per cent., bringing the growth over the last year to 8½ per cent. And we have just begun to export North Sea oil.

My right hon. Friend indicated in the House a week a that conditions in the exchange markets were already quietening down after the pressure in the immediate post-Easter period. As hon. Members are aware, this calmer atmosphere has continued, and I am hopeful that the improved conditions we are now seeing will be sustained.

We intervened substantially during last month and this has undoubtedly had a significant cumulative effect in helping sterling. Apart from this and the rise in minimum lending rate, reinforcement has come from the market's realisation that there will be a satisfactory pay deal and that sterling is now very competitive. But we must maintain this competitiveness from now on through keeping up the momentum of progress in beating inflation.

I will now turn to the substance of the Bill, and I hope that the House will find it convenient if I deal in detail only with those clauses which have caused the most controversy or stand in need of some clarification.

No provision, perhaps, has generated more heat and less light than that contained in Clause 48 and Schedule 6 which gives the Inland Revenue additional powers to obtain information—information which is necessary to uncover illegal tax evasion. From the way in which some sections of the Press have conjured up Kafkaesque fantasies over these provisions, an uninformed observer might be excused if he assumed that the sanctity and tranquillity of family life were about to be disrupted all over the country by the midnight knock on the door in pursuit of an overdue tax return. This is, of course, a ridiculous fantasy.

It is the thin end of the wedge.

The thin end of the wedge was introduced by the Conservative Government many years ago. I am very glad that it was, and so are most taxpayers and the overwhelming majority of hon. Members.

The vast majority of people pay their tax automatically through the pay-as-you-earn system. Their income is revealed as a matter of course to the Inland Revenue and the necessary tax is deducted at source. There is nothing which offends their sense of justice more, or which poses a greater threat to the equity and credibility of the tax system, than the scope which a small minority currently enjoy for evading taxation because there are limitations in the power of the Inland Revenue.

Let me be precise about the nature of the problem. Evasion is, quite simply, tax dodging which is outside the law. It is a criminal offence, and the loss of revenue from those who indulge in evasion has to be made up by ordinary taxpayers who bear their proper share of tax through PAYE. Of course it is not possible to put a figure on the amount of revenue that is lost through evasion. If the tax authorities knew how much was involved they would probably be in a position to identify the culprits.

Have a guess.

I am about to make a guess.

There are, however, many signs that the sums involved are substantial and that they are growing. In the year to March 1975 the amount of evaded tax in major cases which the Inland Revenue was able to uncover amounted to some £17 million. As a proportion of the total tax yield this was only about one-fifth as much as the Revenue secured 15 years earlier. I am afraid, and I believe most hon. Members will agree, that there is little reason to suppose that the standard of compliance is now much higher than it was. Right hon. and hon. Members on the Tory Benches always talk about a great erosion of tax morality over recent years. The fact is that the amount of tax evasion uncovered by the Revenue has fallen by 80 per cent. in recent years, although according to the Conservative Party, the degree of tax morality is now much lower than it was.

My right hon. Friend will surely make the point that the most noise coming from the Opposition concerns fraud with supplementary benefits and not fraud with wealthy taxpayers, with which this part of the Bill is concerned.

The whole country will have noticed the extraordinary discrimination exercised by the Conservative Party in pursuing the widow or unemployed worker for minuscule amounts of tax while raising a major campaign in the national Press to protect the millionaire who is defrauding the Revenue of millions of pounds.

It therefore seems, from the figures, that there has been a significant decline in the ability of the Revenue to detect and counter illegal evasion.

I hope the House will forgive me if I explain my proposals in some detail. The amount of misinformed comment about them makes it necessary that I should do so. They fall under two headings. The first concerns the power of a tax inspector to issue a notice calling for documents which relate to an individual's tax liability. For the overwhelming majority of tax payers this is automatic because they pay under PAYE. There is nothing in this provision which will empower the Inland Revenue to interrogate people or to require anyone to testify against anybody. Anyone who fails to comply with such a notice to call for documents may, however, attract a financial penalty.

If it is found necessary to approach any person other than the taxpayer, this can be done only with the consent of a General or Special Commissioner of Income Tax, and the Commissioner can give such a consent only when he is satisfied that in all the circumstances of the case the inspector is justified in seeking to issue a notice.

The second part of my proposals concerns the power to enter premises with a warrant. The relevant section provides that, where a justice of the peace is satisfied by information which he has received on oath that there are reasonable grounds for suspecting an offence involving tax fraud, he may issue a warrant to an officer of the Board of Inland Revenue. The officer will then be authorised to enter premises, search for and seize documents and other evidence which might be needed for proceedings relating to such an offence.

The House and the country should be quite clear what this means. In this provision we are concerned only with the suspicion of a criminal offence involving deliberate dishonesty. We are concerned with nothing else. The Inland Revenue will not be able to obtain a warrant merely on the grounds that a taxpayer has omitted something from his tax return through negligence or carelessness—because, of course, that is not a criminal offence.

It is wilful nonsense to pretend that tax inspectors will be walking into all sorts of people's premises and homes. There is nothing new for the Inland Revenue in the procedure for entering premises and searching them. It happened under the last Conservative Government. Under the existing law it is possible for the Revenue to apply for a search warrant in connection with tax investigations, for example under Section 26 of the Theft Act of 1968 or under Section 16 of the Forgery Act 1913.

The sort of circumstances in which it might be necessary to use the power of entry we now propose are those where the Revenue, if it tried to obtain documents under other powers and without a search warrant, would run the risk of the documents being destroyed or conveniently mislaid before it could get hold of them. On this basis, I envisage that the powers will be used at the most in only a handful of the most serious cases each year.

It has been suggested, Mr. Speaker, that a Treasury Minister should countersign every search warrant issued to the Inland Revenue by a justice of the peace. If hon. Members think about this, particularly Tory Members, they will recognise that it would run completely contrary to the traditions underlying the administration of direct taxation in this country to involve Ministers of the Crown in decisions on particular cases

. Ministers stand apart from the detailed operation of the tax system, and it is important that they should, so that we can avoid any claim that important decisions affecting individual taxpayers are influenced by political considerations. I am sure right hon. Gentlemen on the Tory Benches will agree that that should remain an essential part of the administration of tax in this country. I do not think they want, any more than we do, Ministers to be able to form a view on the tax circumstances of their political opponents, interesting as on occasions that might be.

No one on the Conservative side of the House, or, I am sure, elsewhere in the House, is in favour of tax evasion. I am sure that the Chancellor will agree that there is an important balance to be struck. Why has he decided to take powers in the Bill which go considerably beyond those powers recommended by the Royal Commission on Taxation of 1955?

The reason is as I have said, that there is a great deal of evidence—not conclusive I admit—since 1955 that the amount of undiscovered tax evasion has enormously increased. One reason for this is the fact that our tax authorities do not have the same powers as the tax authorities in nearly all other democratic countries. I will give chapter and verse for this in a moment. I agree with the hon. Gentleman that in managing our tax system it is important to balance the requirements of effectiveness and equity with the proper regard for the privacy of the citizen.

I am as concerned as anyone that the individual should be properly protected. The safeguard for him in these proposals is the necessity for a justice of the peace to be satisfied that there are reasonable grounds for suspecting a criminal offence.

Justices, in our legal system, are empowered to issue warrants under a wide range of statutory provisions. There are over 50 such provisions including the two I have mentioned—the Theft Act and the Forgery Act—both of which are sometimes made use of by the Revenue now as they were under the last Conservative Government. The experience and independence of magistrates means that they are ideally placed to look after the interests of the individual. I hope no one will dispute that.

Most people realise that the tax man is not seeking to invade their homes. They realise, too, that it is in their interests to ensure that the authorities are in a position to deal with the special cases of those who are adept at defrauding the State and who—because of the Inland Revenue's present limited powers—manage to do so with impunity.

Some people have chosen to see this issue in terms of civil rights. They should reflect that the ordinary taxpayer, too, has a fundamental right—the right to be protected from the need to pay more tax because of the dishonest and fraudulent few, whom I think Conservative Members would not seek to protect. Other democratic countries have moved further towards securing that right than we propose to do in the Bill.

The powers available to the tax authorities in Canada, Australia and the United States are a good deal wider than those proposed in this Finance Bill. Those countries give tax authorities wide powers of access to premises in the ordinary course of administering the tax system and, where force is needed, they can obtain warrants as we propose the tax authorities should be enabled to do in this country. Anyone who reflects on the facts will agree that it is high time that we caught up with those other democratic, English-speaking countries, in which many of us have relatives and friends and in which they have been operating this system for years without a hypocritical outcry such as we have had from some Tory Members.

Does the right hon. Gentleman agree that Schedule 6 provides for one spouse to be called upon to give evidence against the other spouse? Is that not contrary to the law of this country as it now stands?

No. I think that perhaps I spoke more quietly than normal. I made it absolutely clear that there was no provision to require spouses or relatives to testify, but where they possess documents which are relevant—the hon Gentleman will not require to use much imagination, as I have no doubt that he has great experience of these higher tax matters, to recognise that there are many situations where individuals—

On a point of order, Mr. Speaker. The Chancellor, in response to my hon. Friend's intervention, spoke words which could only be interpreted as suggesting that my hon. Friend was in some way skilled at or had even practised tax evasion. There was no doubt that the Chancellor's reply firmly cast my hon. Friend with the group of people whom he is trying to chase in the Bill. I suggest that he should be asked to apologise to my hon. Friend and to withdraw that remark.

Order. I was listening carefully, and I made no such interpretation. Perhaps the Chancellor will make his position clear.

Of course, Mr. Speaker. I suggested nothing of that nature. If the hon. Gentleman wants to wear the cap and feels that it will fit him, he may do so. The point that I was making was that the hon. Gentleman must be aware of the ways in which companies, particularly family companies, operate. There are often many cases in which a spouse or a son possesses documents which are relevant to the tax situation of a taxpayer and where the Revenue must have the right to obtain those documents, as in other countries. Lest there be any suggestion in what I said that I intended anything else, I should make it clear that I did not. I think that my hon. Friends are clear that I had no intention of making such an imputation.

On a point of order, Mr. Speaker. Is it in order for the Chancellor to suggest that an hon. Member is not honourable, which is precisely what he suggested when he said that, if the cap fitted, my hon. Friend should wear it?

Order. It is not in order for any Member to suggest that anybody else in this place is not honourable, because it has officially been ruled that we are all honourable.

The Chancellor said that if I thought that the cap would fit, I should wear it, the implication again being that my hon. Friend the Member for Wycombe (Sir J. Hall) and I have in some way been connected with tax fiddles. I request that the Chancellor be asked to desist from casting personal aspersions.

Order. The hon. Gentleman concerned has made no protest, and he is listening to the debate.

rose—

Order. I am on my feet. I thought that the reference was to the hon. Member for Wycombe (Sir J. Hall).

Further to that point of order, Mr. Speaker. The reference made by the Chancellor, in his inelegant withdrawal of what he previously said, was to my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) It was to him that the right hon. Gentleman said that, if the cap fitted, he should wear it. My hon. Friend suggested that that was an attack which should be withdrawn.

Order. We want to get on with the debate. I thought that the Chancellor had made it clear that he intended to cast no slur on anyone.

Perhaps I can dispose of this ridiculous rigmarole which is being raised by hon. Gentlemen opposite. I state clearly and frankly, on a personal basis, that in my opinion the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) would be quite incapable of wearing this cap or any other of which I can easily think.

I come now to Clauses 51 to 62—

Before the right hon. Gentleman leaves that point, may I ask whether entry with a warrant to obtain documents would extend to entry into the taxpayer's legal adviser's office?

Not without notice. I am ready to confess my fallibility as a guide on all these detailed tax matters. I will ask my right hon. Friend the Chief Secretary to answer that question in winding up the debate.

The right hon. Gentleman, in referring to those who were likely to be tax evaders as opposed to legal avoiders, said that family businesses were particularly prone to that practice. I hope that he will make it plain that that does not apply to all family businesses, many of which are respectably conducted.

I thought that I had made that point crystal clear. I am a little surprised and shocked at the sensitivity of right hon. and hon. Gentlemen opposite on this matter. I made it absolutely clear that there were only a handful of cases in which these powers would be likely to be sought in a full year. Of course I do not suggest that all family businesses come into that category. However, it is the fact that some sections of the population, which do not declare their income or pay their tax automatically to the Inland Revenue, do evade tax. We have evidence of that.

The powers of the Revenue, inferior as they are, compared with those of tax authorities in other democratic countries, require to be increased to reduce the amount of tax evasion. The hon. Member for Blaby (Mr. Lawson), I hope on behalf of the Conservative Party, agreed that nobody in that party wishes tax evasion to continue on any scale which can be avoided by sensible action such as that which has been taken in other countries.

I come now, at long last, to Clauses 51 to 62 which contain the revised rules for the taxation of fringe benefits. The proposals follow an undertaking which I gave last year to review the legislation in this area. They are of two kinds.

First, we are extending the scope of the existing rules by bringing in employees and office holders earning over £5,000 a year in the public sector and in other non-trading concerns, and by applying the rules of benefits provided for an employee by a third party as well as by his employer. We intend that in future there should be no difference in treatment between the public and the private sectors. I should imagine that the Opposition would at least agree so far.

Thus, for example, the use of official cars by Ministers of either party—should the Conservative Party ever acquire office again—will be subject to the same rules as the use of company cars.

I suspect that hon. Members will feel cheated if I do not refer in this context to recent stories in the Press about the treatment of official residences, which seem to suggest that I have committed a form of fiscal hara-kiri. It is true that the tax changes I have introduced in the last two years have hurt me and my colleagues as much as anyone else on the same salary or in similar circumstances. This Finance Bill is no different in that respect. But I should take this opportunity of making it clear to the House that no change is intended in the rules governing the provision of accommodation either for Ministers or for anyone else in the public or private sectors. The legislation which governs the provision of benefits, including accommodation, goes back to 1948, and this is being re-enacted in the Bill.

Employees and holders of office in the public sector are already subject to tax on accommodation made available by their employers. The tax treatment in each case depends on the same criteria as apply under the benefits legislation. They will now, for the first time, be brought specifically within a statutory provision. I hope that right hon. and hon. Gentlemen opposite will also welcome that change.

There is no intention to distinguish the treatment of Ministers and others in the public sector from that of those in the private sector—for example, bank managers living over banks and others in a similar situation, such as lock keepers, as The Sunday Times pointed out yesterday.

Nor do we intend to change the present treatment, which has applied for many years, under which official premises provided for occupation by Ministers and other holders of public office are not regarded as taxable. The Committee will, of course, have its usual opportunity of examining the wording of the clause. If it takes a different view from that of the Government, it will have a chance of expressing that view, and, if it has a majority, of amending the legislation.

The second set of changes in these clauses deal with the value placed on certain benefits for tax purposes where the present rules are unsatisfactory—as in the case of company cars—or ineffective, as in the case of cheap loans.

Perhaps the Chancellor could clear up this point. If a company director is a representative occupier, why is that director taxed? Why should directors be treated differently from Ministers? Why should a company director be chargeable, when Ministers are not chargeable?

The reason is the one which commended itself to the Treasury when the hon. Member was himself a member of the Treasury team. He did not try to change it then. Whereas bank managers in the private sector have no power to change the circumstances in which they live, company directors in close companies have the power to buy themselves enormously expensive houses at the taxpayers' expense. Examples of that were widely publicised in the newspapers recently. The hon. Gentleman knows this very well from when he was a Minister in the Treasury. I wish he would not keep fouling the nest which he recently occupied so cosily for four years.

I am sorry, but I rose on a question of fact arising from the Chancellor's legislation. I cannot understand why the Chancellor cannot give a straight answer to a straight question.

In his excitement the hon. Member for St. Ives (Mr. Nott) did not listen to the reply I gave. My hon. Friends heard me and they understood it well.

The new rules for taxing the benefit derived from a company car by reference to a scale rather than individual mileage will bring a much-needed simplification into the tax system. No one can claim that the scales are unduly severe. The amounts are based on 1975 costs and they are not being brought fully into effect until 1978. This will minimise any adverse effects on the British motor industry with which we shall be having consultations about the provisions.

The proposal that cheap or interest-free loans provided for employees should be taxable as a benefit, unless the interest would have been eligible for relief, fills a gap in the existing law. We are allowing those with existing loans an extra year to rearrange their affairs before they become liable to tax on the benefit.

What about free travel for British Rail employees from their place of residence to their place of work? They have had this privilege for many years. Many live in outside areas believing that this privilege will continue. What is the position with that?

It may have escaped the hon. Gentleman's attention, but these employees are neither directors, nor are they living on incomes of over £5,000 a year, so they are not included.

I now turn to the Opposition amendment. I will give it all the attention it deserves—about two minutes. There can be no more final and conclusive answer to the claim that the Finance Bill is

"profoundly discouraging to skill and enterprise"

than the views of those in British industry whose professional concern is, above all, with skill and enterprise.

The Confederation of British Industry, representing the employers' side of industry, has expressed itself in words which allow no argument—Sir Ralph Bateman, its president, in Tokyo last week, and the noble Lord, Lord Watkinson, a distinguished former Conservative Minister, in London. The Retail Consortium, in its Economic Newsletter this morning, has been even more explicit. Its leader is another distinguished ex-Conservative Minister, the noble Lord, Lord Redmayne. This morning's survey by the Financial Times of business opinion reports a further rise in industrial confidence, based on growing evidence of a revival in industrial activity and a promising outlook for exports. No doubt there will be a further expression of confidence in the CBI survey which is due to appear tomorrow.

I think all of us on this side of the House well understand and deeply sympathise with the difficulties of right hon. Members opposite. Even their own party's supporters in the newspapers regard them as the most incompetent group of leaders the Conservative Party has had in living memory. But I must tell them that they should not expect to revive their fortunes by fouling their own nest. I hope they will resist the temptation to sell Britain short as they have done in recent weeks, notably the Shadow Chancellor in a speech he made—very aptly—to the Toy Manufacturers' Association.

Right hon. Members on the Front Bench opposite and their acolytes on the Back Benches, should heed what Lord Watkinson pointed out last week—that those who do sell Britain short face a united Government, TUC, CBI and people. That is a formidable combination to confront the sort of Tory Trotskyism which is spawning so rapidly in the damp cellars of the Carlton Club and Annabel's.

The Conservative Party has proved once again in its amendment today that it is unfit to present itself to the country even as the official Opposition, and still less as a potential Government. I ask the House to reject their amendment and to give the Bill a Second Reading.

beg to move, to leave out from "That" to the end of the Question and to add instead thereof:

"this House declines to give a Second Reading to a Finance Bill which attempts to meet the cost of spendthrift Government by increasing the real tax burden upon rich and pool alike, and is profoundly discouraging to skill and enterprise."

The Chancellor's closing passage was entirely in character with the quite unjustifiable and monstrous attack he made a moment ago on my hon. Friend the Member for St. Ives (Mr. Nott). My hon. Friend asked a straightforward question of fact, which immediately provoked a barrage of the trailer of abuse from the Chancellor which he had been reserving for his peroration.

For us to have to listen to lectures on patriotism from the Chancellor is absolutely intolerable. The performance of my party in Opposition is that we support the Government when that support is justified. We supported them against their hon. Friends below the Gangway on defence, and we supported them on an incomes policy. If the Chancellor's party had given us the same support and understanding for our policies when our Government were in office, this country would not be in the mess it is in today. Imagine the irresponsibility of the Leader of the House throughout that period when he was actually saying that a victory for the miners was a victory for the nation. The Labour Party is not a party from which we are prepared to take lessons in patriotism—or in anything else

The Chancellor tends to repeat his curious little phrases—"Tory Trots", for example. All I can say is that people who live in Marxist glasshouses should be careful before they throw epithets like that around. The right hon. Gentleman knows more about Trotskism, Leninism and Communism than I would ever hope to know. The Chancellor and his Government should take lessons in fair play and democracy regarding the constitution of Committees of this House.

The motion for committal of this Bill arises from agreement between the Chief Secretary to the Treasury and myself and it was entered into in good faith, but until we have clarified beyond doubt questions about the Standing Committee on the Finance Bill or any other Bill the Government cannot count on our support for that committal motion or any other. We are entitled to know the position before we send the Bill upstairs.

What justification can there be for the speech of the right hon. and learned Member for Hexham (Mr. Rippon), which even the Director-General of the CBI called utter rubbish and which I call inflammatory rubbish?

There is a good deal of justification for the encouragement which he gave to everyone in a position to do so to speak out loud and clear against the disastrous policies of this Government.

I am glad that the right hon. and learned Gentleman had a word to say about the speech of the right hon. and learned Member for Hexham (Mr. Rippon). Will he clear up one thing which is puzzling my right hon. and hon. Friends and myself? The right hon. and learned Member for Hexham attributed the behaviour of British employers to a mixture of idleness, greed and self-seeking. The Sunday Telegraph suggested that it was stupidity. Will the right hon. and learned Gentleman tell us on which side of this argument he stands?

The Chancellor is trying to be a great deal too clever. He has been praying in aid as though they were the archangels themselves the authority and evidence of the very people about which he is seeking to question me.

They were attacked by the right hon. and learned Member for Hexham.

The right hon. Gentleman cannot have his argument all ways by seeking to support them, to attack them and to call them in aid in his own support.

rose—

Sit down.

I want to say something now about the strategy that the Chancellor is following in his approach to a bargain with the trade unions. I wish him to listen to the measured way in which the Opposition approach this matter. I begin at once by saying that one aspect of this approach to Budget-making, and only one part of it, is welcome—that is, the movement towards great openness in the making of that part of fiscal policy. Public expenditure is still worked out on secret figures not disclosed to us and with a refusal to disclose many key assumptions. However, some progress has been achieved if we have moved in the direction of openness as regards the Budget. I hope that we shall move in this direction over a wider area of consultation with a wider range of people.

As regards the rest of the Chancellor's approach, I noted with interest his statement that his colleagues in the European Community do not think it possible to get by without some sort of incomes policy. If that is any form of description of the situation which prevails in West Germany, I am content to go along with that as a description of an incomes policy.

It is not a subject on which we should be wholly dogmatic—

Oh!