asked the Chancellor of the Exchequer how many extra civil servants will be required to carry out the extra rights of entry into taxpayers' premises as intimated in the current Finance Bill.

None, Sir. As my right hon. Friend said in the Second Reading debate on 3rd May, the proposed powers of entry would be used at the most in a handful of cases annually.

Is the hon. Gentleman aware that this snoopers' charter is deeply resented throughout the country? Will he say whether calling for these powers is part of the preparation for the introduction of a wealth tax?

No. I am surprised at the hon. Gentleman trying to seek any connection of that kind. My right hon. Friend the Chancellor of the Exchequer has said that he envisages the powers being used at most in a handful of the most serious cases each year.

Am I right in thinking that any taxpayer who keeps within the law has nothing to fear from these proposals?

My right hon. Friend is correct. There are expected to be only a handful of cases. The measure is a means of achieving equity between taxpayers who pay their taxes each year and those who seek to evade their responsibilities.

Can the Minister deny my hon. Friend's suggestion that there is a connection between these snoopers and the wealth tax?

I have made it clear that the problem is that of increasing evasion of Inland Revenue taxation and that as a result we are taking the measures. required. It is the minimum that ought to be acceptable in view of the problems that are often raised with us.

Does my hon. Friend agree that the enormous cost to the nation

My hon. Friend is right. There is increasing resentment at the disparity of treatment between those who claim in excess of what they should receive in social security benefits and those who claim very large sums of money at other taxpayers' expense. Our measures are intended to rectify that wide difference.

Will the Minister bear in mind the vast army of moonlighters, to which the hon. Member for Tottenham (Mr. Atkinson) rightly drew attention the other day? Is he aware that we find this clause in the Finance Bill deeply objectionable? Will he ask his right hon. Friend about an incident the other day when his right hon. Friend read out a large chunk of a speech which turned out to be a verbatim report of the words of the General Secretary of the Inland Revenue Staff Federation? The right hon. Gentleman owes us an explanation. Please may we have one?

My right hon. Friend has commented on that in the House on previous occasions. However, I remind the hon. Gentleman that the whole clause is subject to debate in the House. Proposals have been put forward by the right hon. and learned Member for Surrey, East (Sir G. Howe), and will be discussed in the debate. What we are concerned with here is trying to reduce the amount of erosion of taxpayers' normal responsibilities and I should have thought that in that we should have the support of the whole House.

asked the Chancellor of the Exchequer how many representatives he has received since 6th April on the proposed new method of life assurance tax relief.

None until the past week, since when I have received about six.

Is it not inevitable under the proposed new system that for a period at least there will be a substantial effect on the investment income and the cash flow of insurance companies? What consideration have the Government given to the effect that this will have on bonuses payable under endowment policies, particularly terminal bonuses, which are paid only in the year in which the policies mature?

Consultations have been held with the Life Assurance Offices. They are quite content with the arrangements, and I confirm that to the hon. Gentleman. In the introduction of this system, considerable representations were made. There was a request for such representations. The consultations have been extraordinarily effective, and that will be seen, I hope, in the working of the arrangements.

Why does the Chancellor's meanness extend to the point of stopping people saving more than £ 1,500 a year in life premiums?

The whole basis of the scheme was a simplified operation. A figure had to be selected. I should have thought that £ 1,500 was quite generous. It allows many people on an income of less than £ 9,000 a year to get considerable advantages as a result of the introduction of this new scheme. Those in excess of that income will have plenty of time to make arrangements, because the starting date is not until 1979–80.

Many pensions in the public sector are based upon the final year's salary and employees' pension schemes certainly allow much greater contributions than would be allowed under the arrangements now proposed with the limit of £ 1,500. Why is this double standard being used? Surely it is right that there should be comparable arrangements in all fields of savings for pensions. Will the Government look at this matter again, or anyhow make some concessions during our debates?

These matters will be subject to the scrutiny of debate. I would not for a moment dream of trying to impinge upon those rights of the Opposition. These arrangements are not only satisfactory but beneficial to the large majority of people who save through the life assurance method. The advantage that we give, not only to those people but, in the simplicity of operation, to all those concerned with it, is very considerable.

The hon. Gentleman has not answered the point at all. Even with the present rate of inflation, civil servants have guaranteed pensions related to their final year's salary, but the whole of the private sector is grossly penalised. It is absolute gobbledegook for the hon. Gentleman to talk about its being to the benefit of the large majority. It is to the benefit of only civil servants, not to the private sector at all.

No. The life assurance method is not the only method available for saving for the ordinary individual. There are other methods for which tax relief is available. The £1,500 limit is based on a comparison with what happened previously under the old scheme of particular allowances for life assurance. The person who gets £8,000 a year gains considerably as a result of these provisions. The person who has been saving at a higher rate will continue to get the benefit, during the next few years at any rate.

I am sorry to come in again. Will the hon. Gentleman say what are those other methods by which the self-employed and others can set aside money with tax relief? Secondly, is not a permanent secretary on an income of, say, £12,000 to £15,000 a year able to set aside far greater sums in the public sector pension scheme than are allowed to ordinary people through life assurance policies?

The hon. Gentleman must surely have heard of self-employed annuity policies, the allowances for which are being substantially increased this year to meet the very point that the hon. Gentleman makes.

asked the Chancellor of the Exchequer what was the amount that Her Majesty's Government borrowed in the year 1975–76, expressed in £ sterling per head of the population.

About £157, based on the central Government borrowing requirement of £ 8·8 billion.

Is the right hon. Gentleman aware that most people will consider that a horrifying figure? Will he confirm that it is now more expensive for the taxpayer to fund the interest on the total borrowed than it is to fund the whole of the National Health Service?

If the hon. Gentleman will put down a Question on that subject, I shall be happy to deal with it. I say to the hon. Gentleman and the Opposition generally that they have never yet made a single proposal that would seriously reduce the borrowing requirement. What we have had is a series of generalisations about public expenditure cuts to be offset by specific tax reductions. We have never had a serious suggestion that would reduce the borrowing requirement.

Will the right hon. Gentleman tell the Chancellor of the Exchequer that he will not be able to rely for much longer on the revenues from Scottish oil as collateral for spendthrift borrowing?

I know about North Sea oil. We are not dependent on that for the borrowing requirement. The borrowing requirement will reduce in the coming years. That is our policy. In 1976–77 the Chancellor has deliberately left the borrowing requirement higher than we should like. But if we did what the Opposition have in mind—if they would spell it out—we should probably reduce the borrowing requirement but increase unemployment substantially.

My hon. Friend has mentioned the fact that the borrowing requirement is perhaps higher than the Government would like it to be. Is he confident that in the upturn sufficient funds will be available, given the size of the borrowing requirement, to fund investment without recourse to printing money?

The answer is "Yes, certainly". This is precisely what we had in mind when we made the cuts in public expenditure programmes in the years after 1976–77. We are confident that there will be sufficient funds available for the crucial investment.

How can the right hon. Gentleman tell the House that for every family of four £ 600 a year is the sum involved, or more than that, and then justify the Government's grandiose nationalisation plans?

I am not too sure how the two parts of that question are relevant. There is no question—and the present Government have no intention of doing so in 1976–77—of taking the kind of generalised action about which we have heard from the Opposition. That would do the maximum possible harm economically, financially and industrially.

asked the Chancellor of the Exchequer what is the current annual rate of inflation.

The Retail Price Index rose by 21·2 per cent. over the 12 months to March, the seventh successive month in which the year-on-year rate of inflation has fallen. The increase of 0·5 per cent. between February and March is the lowest monthly rise since August 1974. The figures for April will not be available until tomorrow, but I am confident that they will show that the year-on-year rate of inflation is continuing to decline.

What figure for inflation was used as the basis of the Chancellor's talks with the TUC? Was it sufficiently flexible to allow him to use the same figure that he had in his Budget estimation, despite the fact that wage rises in 1976–77 have been allowed to increase from 3 per cent., as then envisaged, to 4½ per cent?

The hon. Gentleman will know that the result of the agreement between the Government and the TUC will be to reduce the rate of inflation by half once again during 1977. This is an agreement that has been welcomed universally throughout the world. Indeed, so far as I know, the only area from which it has received a sour, sullen and equivocal reception is the Opposition Front Bench.

Will my right hon. Friend reiterate his view that the 4½ per cent. agreement with the TUC is designed to combat inflation? Will he also tell the House how the 25 per cent. dividend allowance to ICI will convince the TUC of the validity of its sacrifice? Will he say, for example, whether he has a copper-bottomed guarantee from ICI that the money raised in its rights issue resulting from the dividend allowance will be used and invested in this country, and not siphoned abroad by this large multinational company?

I am grateful for the support that I have received from my hon. Friend. It comes as a particular pleasure an hour or two after the National Executive of the National Union of Mineworkers has voted for the new policy by a substantial majority. I hope that we shall have congratulations from the sour Front Bench opposite on this as well. The Opposition are concealing their enthusiasm quite successfully.

Is the Chancellor of the Exchequer aware that when he talks about economic miracles we cannot help recalling the economic miracle he achieved in October 1974 of reducing inflation to 8·4 per cent.? This is bound to be taken into account when assessing his latest rather extravagant claims.

The House and the country will have noticed the grumpy and trivial way in which the hon. Gentleman responds to a great national achievement. [Interruption]. As hon. Gentlemen are addressing me from recumbent positions I am unable to hear what is said. No doubt they will seek to catch your eye, Mr. Speaker, if they wish to make a substantial contribution.

asked the Chancellor of the Exchequer what further consultations he intends to have with the TUC about the level of wage increases necessary to bring down the rate of inflation.

I refer the hon. Member to the statement I made to the House on 5th May.

Is the Chancellor of the Exchequer satisfied with the present ad hoc negotiating arrangements with the TUC and others, or does he feel that it would be in the long-term national interest for statutory machinery, such as an annual wage-salary budget, to be set up among the Government, the TUC and the CBI?

My right hon. Friends and I have repeatedly made it clear that we do not believe that any statutory machinery is suitable for the regulation of wages. We believe that it is necessary for the Government, of whichever party, to discuss these problems with the leaders of the trade union movement and of the CBI to reach an agreement which is consonant with the nation's interest. I think that the hon. Gentleman will agree that it is a great deal easier for us to reach an achievement such as we reached last week—an achievement which has been universally welcomed both outside and inside this country, apart from the Opposition Front Bench—because we treat trade union representatives in these discussions as representative of their members. We do not take the view expressed by the Shadow Chancellor of the Exchequer two days ago in this House that the agreement represents an

"onslaught upon their standard of living and freedom generated and forced down the throats"

"by ageing doctrinaire, prejudiced, Socialist trade union leaders."—[Official Report, 11th May 1976; Vol. 911, c. 375.]

Is the Chancellor of the Exchequer too smug to be aware that at the launching of the £6 limit at a Press conference on 11th July last year he gave a firm assurance that the next round of the pay policy would allow a widening of differentials? Why has he gone back on his word?

First, I regard the hon. Gentleman as perhaps the leading expert in this House on smugness. But I think that he will recognise that, whereas last year we had a flat £6 limit for all salaries up to £8,500, the new agreement, which has been universally welcomed, except by the Opposition Front Bench, provides for a spread between £ 2 and £4, and the £4 is available at all levels of income.

asked Mr. Chancellor of the Exchequer if he is satisfied with the wording of letters sent by Her Majesty's Customs and Excise to small traders whose VAT payments are alleged to be overdue.

Yes, Sir. These letters are formal demands for payment of VAT which are by regulation required to be made before distress may be levied to recover the tax.

Is the hon. Gentleman aware that one of my constituents received a peremptory and aggressive letter from the Orpington VAT office demanding immediate payment of £128 and threatening to levy distress upon his goods and chattels, when the tax had been paid in full five months earlier? Is this not another example of the way in which small traders are being needlessly harried? Will he remind these VAT officials that they are public servants and that they ought to watch their language and their facts?

Normally such a letter is sent after two and a half months beyond the time when the tax has become due, and usually when up to three reminders have been sent.

Is my hon. Friend aware of the effects that VAT is having on certain areas of amateur sport? Will the Financial Secretary see what relief can be given for the work usefully done locally by those who organise this type of venture, particularly for young people?

I am aware of the problem that my hon. Friend has mentioned. There is a Question on the Order paper with which I hope to be dealing in due course.

asked the Chancellor of the Exchequer what has been the fall in the value of tthe £ sterling since 5th April 1976 in terms of the United States $.

The sterling/dollar rate at the close last night was $1·8390 compared with $1·8675 at the close on 5th April.

Will the Chancellor of the Exchequer explain why the marvellous, superlative, miraculous, ecstatic deal which he has made with the TUC has resulted in a fall in the pound of 3 cents.? Could it be that the real problem is the borrowing requirement and that the deal is in fact irrelevant?

The country will notice that the hon. Gentleman regards what has recently happened as a matter for a snigger, but I quote to him the words of the Deputy Governor of the German Bundesbank:

"The £ is now undervalued and Britain has an excellent chance for an export-led recovery … Over the last six to eight months the social consensus has been re-established in Great Britain between the Government and the trade unions. The social consensus is the decisive factor."

Is my right hon. Friend aware that ordinary people, who have accepted the policies of the Government and have made massive sacrifices, are getting somewhat angry about these folk overseas, whoever they are, who seem to be able to influence and damage the pound and the nation, with the support of some members of the Conservative Opposition?

I well understand the feeling of the British people about what is happening and their contempt for members of the Conservative Opposition who, in the hope of party political advantage, seek to damage our national interest.

When the Chancellor of the Exchequer gets the parity of sterling and the rate of inflation back to the level at which they stood when he took office, he can begin to talk with some justification of a miracle and of being home and dry. So far the Chancellor of the Exchequer is only recovering the consequences of the social contract.

I well understand the hon. Gentleman's interest in the minutiae of Soviet policies since his own party has been taken over by Conservative Trotskyites, but, since he mentioned sterling, I am bound to draw his attention to the fact that it was his own Government, when he was a Minister at the Treasury, who decided to float sterling in 1972, consequent upon which there was a heavy and rapid fall in its value.

On a point of order, Mr. Speaker.

After Questions, if the hon. Gentleman would be so kind.

asked the Chancellor of the Exchequer what increase in income tax would finance a 1 per cent. pay increase in the public sector.

If a 1 per cent. pay increase in the public sector was financed wholly from income tax, this would require an increase of about one quarter of one penny in all rates of tax. In practice, of course, central Government revenue does not bear the whole cost of increases in pay in the public sector.

Given that the increase in public and private sector pay is likely to be four times 1 per cent., will the right hon. Gentleman explain why this extra taxation burden will go on so many people who would be better off if they did not work, and why he did not use the funds which appeared to be available to raise child and family allowances, as proposed by the Child Poverty Action Group?

I find that question quite remarkable. If we had taken the advice of the Opposition, the pay deal would not have been remotely like the one we have obtained, and public sector pay would have been hugely increased, as would the tax burden.

asked the Chancellor of the Exchequer what revenue was raised from the 8 per cent. rate of VAT on cesspit sewage disposal during the financial year 1975–76.

I regret this information is not available.

Does the hon. Gentleman accept that, whatever the figure may be, it is likely to be piffling in relation to the resentment felt at the bureaucratic incompetence that brings this particular charge to bear? Will the hon. Gentleman take this opportunity of agreeing to bring in a zero-rating charge level, which would be a fair move and could be recouped by a 10 per cent. rate of VAT, which we have urged for services generally?

The hon. Gentleman talks about bureaucratic incompetence. This charge is an essential part of the 1972 Act, which was introduced by the previous Conservative Government. It was they who imposed this tax and the charge is a direct consequence of their measure. Any bureaucratic incompetence can be directly attributable to their action on that occasion.

Will the hon. Gentleman confirm that the Scrutiny Committee was told the other day by officials from the EEC that last November the Government gave an undertaking to the EEC not to extend zero-rating? Was that so? If so, why was a statement not made to the House of Commons?

I do not know where the hon. Gentleman gets his information. I can assure the hon. Gentleman that no commitment on zero-rating has been made. If he is thinking about cesspool treatment in the EEC, I can tell him that in that context there is a wide range of variation.

asked the Chancellor of the Exchequer how many representations he has had asking him to zero rate VAT on the collection and disposal of sewage from properties unconnected to main drainage.

About 15 since the beginning of the year.

Is the hon. Gentleman aware that before the recent House of Lords decision on this matter, the sewage rate was zero-rated because rates themselves are zero-rated? Therefore, the loss of revenue argument cannot be used if we zero-rate sewage collection from unconnected properties. Bearing in mind that gas, electricity and water are zero-rated, essential services for the home, why cannot the Government make this extension and zero-rate as suggested in the Question?

The problem, which the hon. Gentleman may well understand, is that when a local authority is in competition with the private sector, it has to be treated in exactly the same way, and the private sector has the standard rate of value added tax applied to it.

asked the Chancellor of the Exchequer what evidence he has of revenue lost each year both to Her Majesty's Customs and Excise and the Inland Revenue through evasion of tax.

It is impossible to make precise estimates of revenue lost through evasion which escapes detection.

I recognise that, but does the hon. Gentleman agree that the Chairman of the Board of the Inland Revenue said in a recent interview that tax avoidance certainly and tax evasion probably were on the increase, and that it was the high marginal rates of tax—I would add high marginal rates for all taxpayers—that were causing it? Does the hon. Gentleman agree that it would be better for the Government to concentrate on reducing the marginal levels of tax and to spend rather less time on tax avoidance and evasion, which uses an enormous amount of unproductive labour on all sides which does not help the country?

No one can dispute for a moment that high rates of tax are more profitable to the evader. That has always been so, and presumably it is always likely to be so. But that is no reason for our not being concerned with ensuring by appropriate measures that evasion is reduced to the minimum whenever the appropriate measures can be introduced.

Does my hon. Friend agree that the cost of tax evasion each year must run to millions of pounds? Will he contrast the concern of Conservative Members about tax evaders with their savage attacks on the tiny number of people who abuse the social security system, and their attempts to bring an excellent welfare system into disrepute by their constantly repeated attacks?

I must say that I totally agree with everything that my hon. Friend has just said. There is a need for a comparison between the ability of small limited sections of our community to evade their responsibility and the need, as my hon. Friend said, to get into perspective some of the abuses that take place on a smaller scale and involving much smaller amounts. I think that the need for balance should be recognised by the whole House.

The Minister's views on tax evasion are always of interest, but will he tell the House of his reaction to the practice of civil servants, or sabbatical civil servants, who express their own highly divisive opinions on this topic to the Press in interviews? I quote—

Order.

He refers to "our boys" being granted an opportunity which has been denied them for so long and says that people who squeal are doing so only because they have something to hide. What are the hon. Gentleman's comments on the propriety of that?

I must confess that I find it difficult to understand the burden of the hon. Gentleman's comments. However, if he will kindly let me have a copy, or, more appropriately, supply a copy to my hon. Friend the Minister of State, Civil Service Department, it will be looked at. The problem of evasion is one that the whole House must recognise. It is an obvious difficulty. We are faced with a need to reduce evasion and at the same time to maintain the liberties which we have held for so long. There is the problem of achieving the right sort of balance, bearing in mind the responsibilities that we all have.

asked the Chancellor of the Exchequer what are the rates of VAT applicable now to burglar alarm equipment and installations.

They are 12½ per cent. in the case of burglar alarms which are of a kind suitable for domestic use: 8 per cent. in other cases.

Will the hon. Gentleman admit that this is a classic example of the stupidity of multi-rate VAT, which creates confusion, frustration and paperwork, and hinders the work of the police in their campaign to prevent crime?

I do not see this as a particular problem of multi-rate VAT. After all, before multi-rate VAT was introduced, such domestic installations were chargeable at the standard rate. I understand that Conservative Members are prepared to accept a standard rate. Some have said that it should be 122 per cent. and others that it should be 15 per cent., which would have been an even greater increase on the rate of VAT for burglar alarms. The Opposition should sort out their own inconsistencies.

Does my hon. Friend regret as heartily as I do the introduction of VAT by the Conservative Government?

I remind my right hon. Friend that this was a tax that I inherited, with all its problems and complexities. My duty is to implement the tax. My work would have been very much easier if I had not inherited such a difficult tax. If it had not been introduced I should have had a much easier load, which I should willingly have been able to bear.

More seriously, regardless of what the position was in the past, in view of the considerable increase in crime, which these installations are intended to combat, will not the hon. Gentleman reconsider whether burglar alarms should be considered more luxurious than ice lollies?

I must refute the impression that the higher rate of value added tax is for luxuries. Burglar alarms were always rated at the standard rate. When this batch of articles was looked at again, it naturally fell into the higher rate category. I am willing to receive representations from the hon. Gentleman on this matter, but I have looked at it before and I find some of the problems rather more difficult than perhaps can be explained now. If the hon. Gentleman will agree to have further consultation by letter or by visit, I shall be happy to oblige him.

asked the Chancellor of the Exchequer why a person who has his tax deducted by a building society at the source for interest earned then receives two separate new assessments for the same interest in the current financial year, together with demands for respective payments and if he will make a statement.

Building society interest is treated as received after deduction of basic rate tax, and so an assessment is not generally necessary unless the investor is liable to higher rate tax or to the investment income surcharge. If my hon. Friend has any particular case in mind I will, of course, be happy to look into it if he will let me have details.

I thank my hon. Friend for that offer and assure him that I shall let him have the details.

These arrangements between the building societies and the Inland Revenue have not generally caused serious problems. I shall take the opportunity of having discussions with my hon. Friend. We may be able to clear up the point that he has in mind.

asked the Chancellor of the Exchequer what action he proposes to take to strengthen exchange control rules especially in relation to dealings on commodity markets, including metals.

Certain aspects of exchange control, including dealings in the commodity markets, are currently under special scrutiny. If this should show that the rules need strengthening, the necessary changes will be made.

I welcome my hon. Friend's statement about special scrutiny. Is he aware that certain specialist journals in the United States have pointed out that the evasion of currency regulations and tax evasion are technically possible because of the methods used on the London Metal Exchange? Will he go carefully into that matter?

I assure my hon. Friend that these matters are closely watched. As he may know, participants in these schemes submit monthly returns to the Bank of England. These returns can be scrutinised and, on the basis of those returns, further action can be and often is taken.

What is the value to the balance of payments of having the Metal Exchange in this country?

About £100 million.

By whom is this special scrutiny being conducted? Is it only the Bank of England, the Treasury, or the police, or any two or all three of them?

This scrutiny is undertaken by the Investigation Department of the Treasury, which employs officers for that purpose.

asked the Prime Minister what was the outcome of his last discussions with the TUC.

The agreement of the TUC General Council to make a recommendation to a special TUC conference next month about a further voluntary extension of incomes policy that will meet the Government's objective of ending next year with an inflation rate in line with our foreign competitors.

Does the Prime Minister recollect his assurances to foreign holders of sterling that he did not foresee any expansion in the public sector as a means of overcoming the dreadful unemployment position in this country? Is he aware that the same foreign holders of sterling are now saying that British manufacturing industry is still overmanned and that, therefore, investment should not take place without a further fall in the value of the pound? How does he reconcile Labour Party policy of doing all that it can to overcome the unemployment situation with these threats from foreign holders of sterling?

I was referring to the levels of public expenditure, which have been a source of controversy between some of my hon. Friends and the Government for some time, but which were decided a few weeks ago, and not to anything else. Overmanning obviously varies industry by industry. It may be true of some industries, but it is not true of others.

Will the Prime Minister tell us when he expects to meet the STUC in Scotland? Like most other people in Scotland, it is anxiously waiting to hear what real measures the Government will introduce to deal with the horrifying unemployment situation.

The Scottish TUC will be able to address me directly if it wishes to give me an invitation. I look forward to meeting the STUC, the Scottish Labour Party and, indeed, any other organisation which has anything to offer on this serious matter of unemployment in Scotland. I was very glad to see, and I am sure the hon. Gentleman welcomes the fact, that Govan Shipbuilders yesterday secured a very valuable order. That shows the competitiveness still of British shipbuilding.

Mr. Grimond.

Hear, hear.

May I ask whether the Prime Minister has registered this scene of enthusiasm for Liberal policy? Has he received any indications that productive investment may now increase?

I should like, on behalf of a great many Members, to congratulate the right hon. Gentleman on his bed of thorns. We recognise that he is taking on the leadership of the Liberal Party out of a sense of public responsibility and duty, but I hope that he will get some enjoyment out of it while he is doing it. [Interruption.] The House should not be so cynical. I really hope he does. As to Liberal policy, when I see the right hon. Gentleman leading the party, I think that the wrapping is very attractive, but I am not sure about the contents.

Does the Prime Minister recall that he has spoken a great deal about the need for increased profitability in order to obtain increased investment? But even when there were high levels of profit, this did not invariably mean that they went into increased investment, job creation, or to regions such as Merseyside. If we are to have higher profits in future, we need more public means of controlling them to ensure that they go into socially desirable objectives.

My hon. Friend points to a dilemma. Although high profits do not necessarily lead to high investment levels, the corollary is true also. Profitability in a number of industries at present is not sufficient, assuming the will is there, to enable proper reinvestment or investment at current prices to take place. Therefore, it is essential that there must be an improvement in the rate of profitability. We must go on working at this. In a nutshell the situation is this—today's profits must be tomorrow's jobs. If there are no profits, there will be no jobs.

Now that the Government have introduced a special incentive to encourage investment, as in the case of ICI, will the Prime Minister tell the TUC whether it would be appropriate also to consider introducing a special incentive in pay to encourage productivity and to deal with the difficult problem of differentials?

The House is very good at pointing out some of the dilemmas of Government. The Leader of the Opposition has just touched on another. There is a general recognition that pay settlements of this year's nature or last year's nature will lead to difficulties later. The question of differentials will be very difficult to solve, as is the fact that the new rates have not been consolidated in the basic rates. But that is no reason for trying to destroy the advances which are being made in this direction and which are having a substantial impact on our economy now.

I am not trying to destroy anything. I am trying to say that there will be very considerable difficulties with differentials. Already there has been a suggestion that there should be power cuts to enforce differentials, or so it was reported in the Press. Is the Prime Minister to continue to ignore this, or, as he has allowed a special case for investment, will he allow a special case in pay?

I was not aware of the right hon. Lady's enthusiasm for the TUC's recommendations. As far as I can see, she seems to be damning them with faint praise. If she is in favour of them, I welcome that. What is needed over the next 12 months—which will be difficult when working people find that their standard of living has been reduced—is a common understanding of the reasons which have led to this situation. I hope that the right hon. Lady will lend her authority in support of the Government on this matter.

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

I have at present no plans to do so.

Will the Prime Minister come and have a fatherly word with the Bexleyheath Labour Party? Having opposed Britain's entry into Europe and his election as leader of the Labour Party, the Bexleyheath Labour Party is now opposing the Government's belated expenditure restraints, claiming that they are contrary to the party manifesto.

I would sooner hear the views of the Bexleyheath Labour Party direct than through the mouth of the hon. Gentleman. I fancy that he has plenty of troubles of his own without concerning himself with anyone else's.

Whether the Prime Minister goes to Bexleyheath or anywhere else, he will find that many working people have a great resentment of golden handshakes, which are being paid by private companies to more and more directors. Private companies would have more profits to invest if they paid out less in golden handshakes to directors.

I agree with my hon. Friend. I am sure that this creates a great deal of resentment. On the matter of differentials, we must make sure that energy, enterprise and responsibility are properly rewarded—[Interruption.] Hon. Members opposite cheer, but I do not think that in matters of golden handshakes they have anything at all to cheer about. They and some of their followers have been some of the exemplars of golden handshakes. There is a difference between my hon. Friend's criticism and rewarding responsibility as it should be rewarded.

The intellectual stature and stamina shown by the Chancellor in the recent negotiations deserve the praise of everyone.

asked the Prime Minister if he is satisfied with the coordination between the Ministry of Agriculture, Fisheries and Food, the Department of the Environment and the Home Office in moves to combat the spread of rabies to Great Britain.

asked the Prime Minister if he is satisfied with the co-ordination between the Ministry of Agri- culture, Fisheries and Food, the Department of the Environment and the Home Office in combating the threat of rabies spreading to the United Kingdom.

asked the Prime Minister if he is satisfied with the co-ordination between the Ministry of Agriculture, Fisheries and Food, the Home Office and the Department of the Environment in moves to control the entry of rabies into Great Britain.

Yes. There is close co-ordination among all the Departments concerned in the campaign against rabies, and among central Government, local and port authorities, and the police.

Will the Prime Minister consider the possibility of introducing more severe legislation against those who smuggle animals, possibly the destruction of the pets concerned?

I welcome the hon. Lady's concern about this matter. This country has been fortunate to be spared for so many years from this dreadful disease. It is a disease which the country is taking seriously. I should be grateful if the hon. Lady would put Questions about legislation to the Minister of Agriculture, who is better informed about the details than I am.

Is the Prime Minister satisfied with the promptitude and efficiency of the monitoring of this disease through Europe as it sweeps towards our coast?

I shall draw that to the attention of the Minister of Agriculture. While we have a group of such efficient Ministers, I do not master every detail of every Department.

Is the Prime Minister aware that a group of 12 hon. Members have been waiting for over a week while the Home Office and the Ministry of Agriculture decide between them who should receive a deputation on this matter? This is at a time when the nation faces the threat of this disease with a police force which does not have powers to arrest people who are suspected of illegally importing animals. It does not even have powers to seize such animals. Will the Prime Minister give that his urgent personal attention?

I will inform the Minister of Agriculture and the Home Secretary of what the hon. Member for Christchurch and Lymington (Mr. Adley) has said. I cannot have groups of efficient Ministers and then undertake to do all these things myself.

Is the Prime Minister aware that Continental experience shows that foxes are the main instruments for distributing this disease? Since, for example, in Wales last year between 7,000 and 8,000 foxes were destroyed by fox destruction societies, will he satisfy himself that the Ministry of Agriculture has tied up the problem of the control of foxes and rabies in our areas?

I am obliged to the hon. and learned Gentleman for calling my attention to this matter. I shall see that the attention of my right hon. Friend the Minister of Agriculture is directed towards it.

In view of the unsatisfactory nature of the answer, I beg to give notice that I shall seek leave to raise the matter on the Adjournment.