asked the Chancellor of the Exchequer if he expects to make an early statement on cuts in public expenditure.

asked the Chancellor of the Exchequer if he is now in a position to make a statement on future levels of public expenditure.

asked the Chancellor of the Exchequer if he will make a statement on future levels of public expenditure.

I refer the hon. Gentleman and my hon. Friend to the answer my right hon. Friend the Prime Minister gave to the Rt. Hon. Member for Finchley (Mrs. Thatcher) on 29th June, following his statement about the Puerto Rico summit meeting.

While the right hon. Gentleman's conversion to the need for public expenditure cuts will be welcomed by all sections of the House, is it not clear that his own record of massively increasing public spending in his first years as Chancellor of the Exchequer has been a major cause of our economic troubles? When he makes such a massive admission of error, how can he expect to instil confidence at home and abroad?

I dare say that I made the mistake of following my predecessor, Lord Barber, who increased public expenditure by over 8 per cent. in 1973. We are getting the economy into better balance and I am sure the hon. Member will agree with the Banker, which in an article today says that, although it is not wholly satisfied with Government policy, at least it is better than having no policy at all, like the Opposition.

Does not my right hon. Friend realise that further public expenditure cuts at this stage are likely to antagonise the activist sections of the trade union and Labour movements by feeding the appetites of the Tories and international blackmailers? Does he not agree that he is likely to increase that appetite by making further cuts?

I realise that no Labour Government welcome cuts in public expenditure, and neither does the Labour Party or anyone else who supports it. There are, however, times when a Government must accept their responsibility for keeping the economy in balance, and that will be done. As to feeding the appetite of the Opposition, my hon. Friend will agree that the sort of food that I give them is not always to their taste.

Is the Chancellor of the Exchequer aware that his answer is totally unsatisfactory and that it smacks of the kind of political compromise which is becoming intolerable? Does he not agree that he is more concerned about consultations with his hon. Friends than with the needs of the country at large? What has he to say to that?

I have been asked what I have to say to that. I shall control myself, Mr. Speaker, because I know that you have a deep regard for the proper proprieties of our institutions. The Government face—[AN HON. MEMBER: "Defeat."] Not defeat. We have to maintain a relationship with the trade union movement—and that has won international praise, not least from the International Monetary Fund—while at the same time making adjustments in the economy which are required to make the rest of our policies successful. No doubt I shall succeed on this occasion, as I have done in the past.

Can the Chancellor of the Exchequer say anything about cuts in expenditure that he has imposed upon the Home Office and which have resulted in a situation in which prison officers can no longer take prisoners half-way through murder trials to continue those trials in the Crown courts? Is he aware of the situation that judges are sitting but cannot hear a trial because there is no prisoner? We have been told in the local Press that that is a consequence of cuts in public expenditure.

I welcome the fact that the hon. Gentleman has decided to add his weight to the Liberal Front Bench—after some misgivings, which all of us on this side of the House well understand. The question he has just asked me would be better put to my right hon. Friend the Home Secretary, as no doubt the hon. Gentleman recognises.

Does my right hon. Friend accept that, now that the economy is expanding, the growth should produce a fall in the public sector borrowing requirement next year? Is he in a position to tell the House what sort of fall he envisages as a result of the growth that is now taking place?

I am not in a position to make an estimate of that but, as I have often said, between one-third and one-quarter of the present sector public borrowing requirement results from unemployment. As unemployment comes down, the public sector borrowing requirement will come down with it, but nothing like enough to make room for the expansion of exports and investment which is our objective.

Does the Chancellor of the Exchequer accept that the time has ended when he can simply go on chuckling through with backward looks at the past? Is it not time for reductions in public expenditure to be genuine and to come soon? Does he agree that they will have to exceed the figure of £1 billion which has been widely bruited around for so long that it is already discounted? Is he not making the task harder for himself by prolonging the process of re-educating his party?

Those words were sombre, even to the point of pomposity. I am not prepared to be lectured by the right hon. and learned Gentleman, with his record and the record of his Government, about the need to control the public sector borrowing requirement and the money supply.

asked the Chancellor of the Exchequer whether the additional public expenditure of £400 million announced for the present financial year will be charged to the Contingency Fund and is within what remains of that fund.

asked the Chancellor of the Exchequer what is the amount committed to date in 1976 for expenditure from the Contingency Fund; and what percentage this represents of the total amount allocated for the year.

On the assumption that the hon. Gentlemen are referring to the Contingency Reserve rather than the Contingencies Fund, I would refer them to the answer my right hon. Friend the Chancellor gave the right hon. and learned Member for Surrey, East (Sir G. Howe) on 7th June.

I am very inexpert in these matters, but even if the extra expenditure falls on and within the Contingency Fund is it not rather odd to be increasing Government spending when by general consent, except that of some Labour Members below the Gangway, it should be drastically reduced?

I find that quesetion rather odd, because many of the hon. Gentleman's hon. Friends, and I think he himself, are constantly demanding that we should increase public expenditure in certain areas and on certain programmes. I could make a huge list of their demands to increase public expenditure. I have noted what the Opposition say on these matters, but I prefer to stand on what we are doing.

Is it not the case that a quite high proportion of this year's Contingency Reserve has already been committed in a short part of the year? Does not that cause additional worries that there is no proper control yet over public expenditure even this year, let alone next?

I do not accept that. As the hon. Gentleman knows—he is a member of the General Sub-Committee of the Expenditure Committee—about £400 million has been committed out of the £875 million Contingency Reserve. But we have made it absolutely clear time and again that there is no question of that Contingency Reserve being exceeded in 1976–77. The method of control of public expenditure is enormously improved on what it was under the hon. Gentleman's Government. The present Government will ensure that there is no extra over and above the Contingency Reserve as set out in the last White Paper.

asked the Chancellor of the Exchequer what is the rate of return of corporation tax for those firms paying the lower rate of corporation tax in the years 1966 and 1975, or at the latest date for which figures are available; what is the rate of return for those firms paying the higher rate of corporation tax in the same years; and if he will publish a table showing the figures for the intervening years.

I am afraid it is not clear to me what the hon. Member means by "rate of return of corporation tax". If by "firms paying the lower rate" he has in mind the small companies rate, there was, of course, no such rate for profits arising before 1973–74. It is estimated that the yield in 1975 from companies paying at the small companies rate might be about £250 million.

The figure of 14 per cent. has been bandied around as the overall rate of return on corporation tax by small and large companies. The question I hoped that the right hon. Gentleman might be able to answer was whether small firms were benefiting from the concessions through stock relief and similar matters to the same extent as large firms. I hope he will accept that small firms are much more reliant than large firms on retained profits and that the impact of corporation tax on them and their ability to expand is considerable.

I know that the hon. Gentleman has accepted that the corporation tax system introduced by his party was not helpful to small companies. We extended substantial corporation tax relief to small companies by way of stock relief and the 100 per cent. first-year allowance, which is of enormous benefit to companies, particularly small expanding companies.

Is my right hon. Friend aware that the vast majority of trading and manufacturing companies pay very little mainstream corporation tax, and that that can no longer be used as an excuse by industry or the Opposition for their inability to increase output and investment as required to meet our national economic objectives?

I very much agree, but I hope my hon. Friend will recognise, as I am sure he does, that we have acted in a selective way rather than through a straightforward reduction in the rate of corporation tax, which the Opposition pressed upon us. We have given the relief to those companies which are investing in new stock and new capital. That is the way to do it. I believe that most people, both inside and outside the House, recognise that.

The right hon. Gentleman mentioned stock relief. Is he aware of the way in which gigantic deferred tax liabilities are being built up in company balance sheets, and that there is growing pressure that something should be done about what is an increasingly difficult situation for companies? Will he give us a clue as to how he will start unscrambling an increasingly serious situation?

I am, of course, aware that the relief is deferred, but I do not think that the Opposition can be serious in the sort of amendments they press upon us in Finance Bill debates when they seek to make the relief permanent, because companies could simply take the stock relief, close down and make a tax-free profit. Unlike the Opposition, most people outside the House recognise that that would be nonsense. The hon. Gentleman knows very well that, for a company which continues its expansion, continues to build up its stock and continues to invest in new plant, there is no problem here. The deferred tax remains in the sense that there will be no tax liability. To do what the hon. Gentleman and the Opposition have suggested would be absurd.

If stock relief is not to be part of the net worth of the business—and it cannot be if the right hon. Gentleman says that it is not to be available in a liquidation—how can this benefit British industry in its expansion? The banks will lend only if the stock relief is part of the assets, part of the net worth of the business. That is the point we have been making since the relief was introduced.

I am surprised at the hon. Gentleman, who will be aware that we are not talking about helping those companies which want to liquidate. We are talking about helping companies which are expanding and continuing. It is nonsense to suggest that companies should be given the relief as an absolute relief so that when they liquidate they can take advantage of it. I am astonished at the hon. Gentleman, who should know better.

On a point of order, Mr. Speaker. I beg to give notice that I intend to raise the matter on the Adjournment, in view of the unsatisfactory nature of the reply.

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

I refer my hon. Friend to the reply given to his Question on 8th July.

I think my right hon. Friend said then that he was not terribly satisfied and that he hoped for something better—roughly speaking, that is. Does he not agree that his optimistic forecasts on that occasion have gone somewhat astray and that it is almost bordering on madness to allow an extra £1,000 million of price relaxation when the Treasury is forecasting that profits will be up by about 30 per cent. compared with last year? Does my right hon. Friend agree with the Henley forecast in the past few days that inflation will still be over 10 per cent. by the end of 1977 and that wages will have little to do with it?

I am disturbed by the evidence that my hon. Friend's memory has become defective. My answer on 8th July bore no relation to what he appeared to remember of it, as he will discover if he refreshes his memory.

Will the right hon. Gentleman in his complacency acknowledge, having inherited a rate of inflation of 9 per cent. in 1974 and having by his policies allowed that almost to treble, that bonfires should be lit throughout Britain if he ever succeeds in getting the rate back to a single figure?

I hope that the hon. Gentleman will join me in lighting the bonfire. I can think of some suitable fodder for it. The hon. Gentleman referred to my complacency. Believe me, the only time when I am ever tempted into that vice is when I contemplate the Opposition Front Bench.

Does my right hon. Friend accept that part of the pay deal argument was that unemployment should be kept down? Is it true that extra unemployment of 70,000 as a result of proposed cuts was actually discussed with the TUC yesterday morning? If that is true, how does my right hon. Friend square it with previous statements?

In discussions with the TUC last year and this year I have made it clear that the pay policies which I have put to it, which it has accepted, would ensure that unemployment would be a good deal lower than would otherwise be the case. That point has been made many times by Mr. Hugh Scanlon on television and elsewhere. I must remind my hon. Friend that a year ago many of the Government's critics were predicting that in June of this year there would be 2 million unemployed. As you know, Mr. Speaker, it is barely above 1¼ million. It is true that public expenditure cuts in 1977–78 mean that the fall in unemployment will be less than it would otherwise have been, but unemployment is likely to fall in the next few months. Indeed, it will have been falling for at least 18 months by the time the full employment effect of any public expenditure cuts is felt.

To return to the rate of inflation from unemployment, will the right hon. Gentleman tell us when the rate of inflation last stood at 8·4 per cent.?

Yes. On the three-monthly figure it was 8·4 per cent. in October 1974, as Opposition Members often remind me.

asked the Chancellor of the Exchequer, if the rates of the private house of a trade union official are paid by the union, whether that sum is assessed against him for computing his income tax liability.

Yes, Sir.

Will the Financial Secretary permit himself a wry little smile at the fact that his review of benefits in kind and expense account brackets has ended up with the sole result that it is the trade union leaders who are getting away with it and no one else, not even business men?

The position is that even before the present proposals are implemented such payments are taxable. They will remain taxable after the Finance Bill is passed.

asked the Chancellor of the Exchequer what representations he has received to date in relation to the introduction of a tax on wealth.

Since the Green Paper setting out our proposals for a wealth tax was published in August 1974, I have received a number of representations about various aspects of the tax.

My right hon. Friend is no doubt aware of the representations contained in the Labour Party manifesto. Does he agree that the distribution of wealth in this country is very much out of balance and that the possession of wealth is not related to either merit or justice? Will he introduce a wealth tax as an urgent priority to meet this situation?

Yes, I am happy to assure my hon. Friend that the Government remain firmly committed to the principle of a wealth tax.

Does the right hon. Gentleman recognise that, although we do not have a formal wealth tax, the rate of inflation is an informal one? If when the present Government came into office a working person had retired with savings of £1,000 invested in a building society, what would be the real value of those savings now? If the hon. Gentleman does not have the figures to hand, will he arrange to make the calculation and publish the figure?

If the hon. Gentleman cares to put down such a Question, I shall be happy to do just that.

asked the Chancellor of the Exchequer what the value of the social wage is to a family of two adults and two children, under 11 years of age, with an income close to the national average for the most recent date for which figures are available; and how this compares with figures for February 1974.

As I said in answer to a similar Question from my hon. Friend yesterday, the social wage amounted to about £1,275 per member of the working population of 1975–76—that is, about £25 per week. The corresponding figures for 1973–74 and 1974–75 were £14·50 and £20 per week respectively. No estimates are available of the value of the social wage to particular types of household.

I thank my hon. Friend for that reply. Does he agree that in announcing any changes in public expenditure for next year it will be important to publish the effect of those changes on the social wage and, if possible, for a typical family household?

I shall be happy to do so.

Will the hon. Gentleman give us an asurance that his Department will reconsider the remarks made by his right hon. Friend the Chancellor of the Exchequer on the social wage in his Budget speech, in which he argued that the social wage had increased at a far higher rate than the wage from employment? Does he realise that the social wage is paid to the majority of the population who are not earning—namely, the unemployed, the sick and the elderly?

I accept that the social wage is an aspect of the income of each member of the community that has to be considered. This is part of the consideration of public expenditure that is now taking place.

Would not everyone prefer to have lower taxation and a lower social wage? Presumably that is why the Chancellor intends to cut public expenditure further—that is, because he feels that people would rather have more choice about how they spend their money than have the Government choose for them.

We well understand the opposition of Conservative Members to the services that benefit large sections of the community who are utterly depen- dent upon them. If it is proved necessary to bring about the changes that have been suggested, that will be agreed only with reluctance and only for the economic results that we shall be urgently requiring.

asked the Chancellor of the Exchequer what representations he has received regarding expenditure cuts in education.

None, Sir.

Does the right hon. Gentleman agree that education is one of the areas in which the catalyst of public expenditure should be used to obtain a more imaginative balance of priorities? For example, in his discussion with the Secretary of State for Education and Science will he bear in mind that a marginal reduction of only £50 million in the total subsidy of £362 million for school meals would enable him to contain public expenditure and make it possible to employ all the jobless teachers?

I find that question surprising. The hon. Gentleman was saying that we should cut the school meals subsidy by £50 million and spend that sum on additional expenditure in education.

Will my right hon. Friend accept that the view adopted by the Tory Party, aimed at taking the food out of children's mouths, is not the best kind of policy when considering public expenditure cuts? Does he agree that Labour Members would like to see him and his Government colleagues have their head on defence matters and recoup £1,000 million in defence expenditure so that education, which has a high priority in the trade union and labour movement, especially in deprived areas such as Yorkshire and Humberside, is maintained and improved and so that we may reduce class sizes rather than increase them?

As my hon. Friend will be aware, one or two discussions are at present taking place on priorities in our public expenditure programme. I have noted his view on the defence programme and shall bear in mind everything he has said.

asked the Chancellor of the Exchequer how he intends to fund the public sector borrowing requirement for the present financial year.

It is not the practice to provide forecasts of the financing of the public sector borrowing requirement. My right hon. Friend the Chancellor of the Exchequer has recently emphasised his objective of financing a high proportion of the borrowing requirement by sales of gilts outside the banking system.

Is the right hon. Gentleman satisfied that this year's borrowing requirement can be funded without any detrimental effect on the rate of inflation or on industry?

Yes, Sir.

What will be the implications for interest rates and money supply if the public sector borrowing requirement is left at its present level in the coming two years?

There will be a serious problem in the next few years if borrowing remains at a very high level. [HON. MEMBERS: "Hear, hear."] I am glad to have the support of the Opposition, and, indeed, of anybody else who understands that the Government's broad aim is to ensure that our industrial strategy succeeds. That means that the maximum amount of resources should be made available for industry.

The Chancellor of the Exchequer was reported yesterday as having said that cuts in public spending and reduced borrowing were necessary to stop another slide in sterling. Can the Chief Secretary say how much of the $5,000 million standby credit has been drawn in the meantime?

No, Sir.

asked the Chancellor of the Exchequer what is the annual and total tax relief, respectively, on a 100 per cent. mortgage on the average priced house of £9,090 bought over 25 years at present interest rates, compared with those reliefs on such a mortgage on a house costing £25,000, and the approximate annual saving if such tax relief were limited to the standard rate and mortgage ceilings were reduced to £9,090.

With permission, as the answer is somewhat lengthy, I shall arrange for it to be circulated in the Official Report.

Would not these two proposals save the Government about £160 million a year without hurting the average-income purchaser of an ordinary house, although the ceiling in London would have to be higher? Secondly, would not this be much fairer than to slash council house subsidies, which would be bound to mean a further increase in rents and a reduction in house building?

I understand the point made by my hon. Friend, but they are largely matters for my right hon. Friend the Secretary of State for the Environment. My hon. Friend will know that the housing finance review will be ready in the autumn. The financial implications of the matters to which he refers will need to be considered carefully in the light of that review. We know his interest in these matters, and we shall continue to watch over them as best we can.

Will the hon. Gentleman confirm that, however one does the sums, it still costs three times as much to house a person in a new council house as to help him buy his own home?

The hon. Gentleman uses his figures glibly. I am unable to confirm or deny the figures at the moment. But the way in which housing finance has developed over the years and the amount of money provided by the Chancellor in the way of subsidies of one kind or another have led to the urgent need for a review, and we await the report with great interest.

asked the Chancellor of the Exchequer if he will make a statement on his policy on interest rates.

The Government's policy is to keep interest rates at as low a level as is compatible with the external position and the need to finance the public sector borrowing requirement.

Does the Minister think that mortgage rates are likely to go up? If he does not know the answer, will he say whether it is Government policy to seek to avoid their going up?

It is the Government's policy to keep interest rates as low as possible consistent with the twin objectives of attracting money to pay for the borrowing incurred overseas as a result of our overseas deficit and also to retain as low a rate as possible for the expansion of industry.

Does my hon. Friend accept that it is now time to give serious consideration to a two-tier system of interest rates so that the expansion of industry at home is not hindered by the need to attract funds from abroad at high interest rates?

My hon. Friend will know that I and many others are much attracted to a scheme of two-tier interest rates. The difficulty is that with the sophisticated markets that operate in this country there would be bound to be considerable leakage from one tier to the other. That would make such a policy unworkable.

Does the Minister foresee that in the next decade interest rates will fall to the level that was common in the 1950s and 1960s? If so, what steps does he believe need to be taken to attain that objective?

I find the forecasting of interest rates one of the hardest problems before me. As for estimates into the next decade, I am sorry that I am unable to help the hon. Gentleman.

Is the Minister aware that the interest rate differential between London and New York is now 5 per cent.? He said that the Chancellor was keeping interest rates as low as possible compatible with the need to attract foreign funds. A difference of as much as 5 per cent. is surely high. Given the Financial Secretary's answer, why is it necessary?

The day-to-day management of these matters takes into account the demand and supply of funds generally. This is the estimate at present. These matters vary, and they will vary in the coming months.

asked the Chancellor of the Exchequer what fiscal methods he will use to direct the resources made available by public expenditure cuts into manufacturing industries.

asked the Chancellor of the Exchequer what evidence he has to suggest that the resources released by the recent public expenditure decisions will find their way into exports and capital investment.

As I told the House on 6th July, manufacturing output and exports are already responding better than I had hoped at the time of my Budget speech three months ago.

Does my right hon. Friend agree that the whole question of the social contract rests on the recovery of the British economy and the regeneration of British industry? Therefore, any question of resources being made available by further sacrifices on behalf of the working class may not mean that such resources will go towards the aims envisaged by the Government. Does my right hon. Friend also agree that the only possibility of ensuring that these resources are directed in the right way lies in the co-ordination of our economy and the giving of a firm role to the National Enterprise Board? Is not the trade union movement making sacrifices, and is it not a fact—

Order. Long supplementary questions only limit the length of time available for other hon. Members.

I very much support the view of my hon. Friend that the regeneration of British industry is the objective that the trade union movement and the Labour Government have in common. My hon. Friend will have seen that Lord Watkinson, greatly to the chagrin of his ex-colleagues on the Opposition Front Bench, recently gave wholehearted endorsement to the Government's industrial strategy and undertook to talk to the leading 100 companies and to exert his influence on behalf of the CBI to see that investment was speeded up.

Will the right hon. Gentleman confirm that the public expenditure cuts which he is planning for 1977–78 would be absolutely essential even if there were no external pressure whatever on sterling? Is it not the case that, for precisely the same reasons, further cuts will be needed in subsequent years?

On the first part of the question, I believe that some reduction in public spending next year is necessary in order to accommodate the expected acceleration of manufacturing output and gross domestic product to which I referred last week. As to future years I do not think that that will be required, but the profile of public expenditure needs to be changed in the light of the latest information about the speed with which the economy is recovering and our industrial policy is succeeding.

Is my right hon. Friend aware that it confuses the issue when he switches from monetary to physical resources? What is the mechanism within the capitalist system which switches real economic resources away from education, the social services, and hospitals and into exports and capital investment? The fact is that there is no mechanism. Under the Price Code recently we saw £200 million to £300 million again diverted away from the consumer into increased prices. Does not the reaction of the Government—[Interruption.]

Order. The hon. Gentleman is only cutting out two of his hon. Friends who would otherwise have been called.

I was unable to hear the last part of my hon. Friend's supplementary question, but I will answer the first part. In the past, too little attention has been given to financing economic activities as against actual resource flows. If my hon. Friend is asking about the mechanism which ensures that the resources flow increases with the wishes or desires of the Government, this depends very largely on the fiscal policy followed by the Government. In the 11 years since 1964, the increase in local authority manpower was 700,000 and the reduction in manpower in manufacturing industry was about 1 million. There is no reason why there should not be a reverse flow, provided that we give the necessary incentive to manufacturing industry.

Does not the Chancellor recognise that if that incentive is to come into existence he must be prepared to accept the advice of Lord Watkinson and others to make a more substantial relaxation in the Price Code, and take further action on the public sector borrowing requirement if interest rates are to come down to a sensible level which makes investment possible?

I take very seriously the views of representatives of important groups in the economy, such as the trade unions and industrialists, but if I accepted all the advice given to me I would be carrying out contradictory policies in all fields. The recent relaxations in the Price Code were necessary and will be sufficient to enable manufacturing industry to rebuild its liquidity. With the tax reliefs already offered, this should help the upturn in the economy. That is the overwhelming view of the majority of British industry. Otherwise, we should not have seen the very large increase in declarations of intention to invest which was shown in recent surveys carried out by the CBI, the Department of Industry and the Financial Times.

asked the Chancellor of the Exchequer when he next plans to meet the Governor of the Bank of England.

My right hon. Friend meets the Governor of the Bank of England frequently.

Knowing my right hon. Friend's desire for good relations with the TUC, may I ask him, next time he meets the Governor of the Bank of England, to discuss why a publicly-owned corporation is backing a "sweetheart" union—a staff association—at the expense of a TUC affiliate? Will he ensure that this courtship is broken off and that the TUC affiliate is granted the same facilities? If he wishes, I shall send him papers on this matter.

I am happy to receive papers from my hon. Friend at any time. I note what he has said with a view to considering the matter when we have further discussions with the Governor.

Will the Chief Secretary ensure that when the Chancellor next meets the Governor he will say that he intends to resist the advice of his hon. Friends below the Gangway who are in favour of the nationalisation of banks? This is against the view of the vast majority of those who work in banks and of foreign investors and against the wholehearted views of the majority of the British people.

I do not claim to speak, as the hon. Gentleman does, for the wholehearted view of the majority of people in this country. However, the Government have no plans to nationalise any company in the banking sector.

asked the Prime Minister when he next intends to make a ministerial broadcast.

I refer the hon. Member to the reply which I gave to the hon. Member for Blaby (Mr. Lawson) on 27th April.

When the Prime Minister makes a ministerial broadcast will he explain to the nation which Bills he intends to drop this Session as a result of the muddle brought about by the Leader of the House?

By the time I make my next ministerial broadcast those Bills will be well on the way through the House, so I shall not need to refer to them.

When my right hon. Friend makes his broadcast, will he make a more forthright reply to the Leader of the Opposition and tell her that if she is anxious to recommend the right hon. Member for Sidcup (Mr. Heath) as one of the two Commissioners in Brussels he will give that suggestion earnest consideration?

I do not wish to make any mischief between Members of the Opposition. I have enough troubles of my own. Of course, I shall consider any suggestions that the right hon. Lady may wish to put to me in that regard, but having looked at the precedents since yesterday I find that on the last occasion an appointment of this sort was made it was made without any consultation with the Leader of the Opposition at the time.

When the Prime Minister next broadcasts to the nation, will he mention the position of British citizens—business men and missionaries—in Uganda? Their safety is of paramount concern to the people of this country. Will he tell the House what representations he has made to the President of Uganda and what representations have been made by other international bodies, such as the EEC, the United Nations and the Organisation of African Unity, about the safety of British citizens?

I have some personal experience of this matter, because a year ago I found to my astonishment that when I went to the High Commissioner's house 350 British citizens had assembled there at 24 hours' notice. I mingled with them and talked to them about their position, and I judge from that conversation that most of them are long-serving residents of Uganda who know the risks they are running. It is for them to assess those risks. Some will leave Uganda. Others will never leave, because they regard Uganda as their home. The time has come when I would say to British citizens "You know the risks, you know the limitations on our capacity to assist you when you are dispersed throughout the country. Please assess those risks as much as you can and take your own decision."

Will my right hon. Friend also ask for a full inquiry from President Amin and, if possible, the return of the remains of Mrs. Bloch's body to her family?

I do not propose at this stage to communicate with President Amin. We have a representative in Uganda, and he should make such representations as are necessary in these matters.

In considering the fate of citizens who are arrested in Uganda, will the Prime Minister take steps, with other members of the Commonwealth, to ensure the safety and to discover the fate of Kenyan citizens who may have been massacred by the Ugandan authorities as an act of spite?

Relations between Uganda and Kenya have been getting more difficult as the days have passed. I think that Kenya has been subjected to an unjustifiable campaign. I hope that in so far as we can give assistance to Kenyan citizens who need help we shall do so, but on balance I think that the Kenyan Government are best able to do that.

asked the Prime Minister how many ministerial broadcasts he has made in the last month.

None.

In view of the annual estimate of at least £300 million of unclaimed supplementary benefit, will my right hon. Friend make a broadcast encouraging needy people to claim for benefits to which they are entitled? In view of the scurrilous, unsubstantiated allegations that 20 per cent. of claims are fraudulent and that half the unemployed are scroungers, and bearing in mind the estimate of at least £500 million annually which is stolen by rich tax evaders, would not that be a more worthwhile cause to be pursued by cheap Right-wing sensationalists, such as the Sproats and Knights of this world?

Inquiries have shown that a number of genuine claimants who should receive their entitlement do not do so. It would be a misfortune if those who genuinely need assistance were to be deterred from claiming it because of the activities of a swindler who has rightly been convicted and given a heavy sentence. We all know from our constituencies how our own people, in many cases honest, decent and hardworking, deeply resent the abuses that take place, but I invite the House to keep this matter in proportion in relation to the benefits that the House has agreed that those in need should draw and not be driven into accepting a situation in which decent, honourable people are discouraged from making their claims.

Since the cuts in public expenditure that the Government are now planning are bound to affect many Government Departments, will the Prime Minister undertake to make a broadcast explaining them to the country and not leave that to the Chancellor of the Exchequer? When may we expect that broadcast to take place?

The decision on whether the broadcast should be made by the Chancellor or myself can be left for a little later. As for when we shall make the decision, I cannot go further than I have in response to previous questions by the Leader of the Opposition, namely, that it would be very convenient if we could reach a conclusion on this matter and inform the House before we rise for the recess.

Is my right hon. Friend aware that if he makes a ministerial broadcast it will give the Leader of the Opposition the right of reply? Is he further aware that if the right hon. Lady took that right we could then try to discover why the Opposition are calling for increased public expenditure in numerous ways, and especially for a heavy increase in defence spending, but are saying that we should cut it back in general?

I had not thought of that advantage in making my broadcast. My hon. Friend has certainly encouraged me to make it.

Will the Prime Minister consider making a broadcast that will make absolutely clear the position of the Government on the one hand and the Labour Party on the other about the nationalisation of the "big four" banks and the "big seven" insurance companies? Will he make an estimate of the effect on the balance of payments if invisible earnings from both those sources were to dry up?

No, I do not think that I shall make a broadcast on that matter. We are capable of settling it ourselves.

asked the Prime Minister whether he intends to attend the TUC in September.

I do not plan to do so.

When my right hon. Friend met the TUC yesterday, did he detect a certain reluctance by a large majority of its members to accept the current public expenditure cuts? Is not that to be expected when only three years ago just about the only advocate in this House, and possibly outside it, for cutting public expenditure was the right hon. Member for Down, South (Mr. Powell)? Is my right hon. Friend aware that even at that time the right hon. Gentleman was attacked by the Deputy Leader of the Opposition, who said, in a speech at Berwick on 7th November 1973, that inflation could not be got under control by cutting public expenditure? Is this not a strange road for the trade union and Labour movement to travel at this time?

I found as much reluctance among the TUC Economic Committee as my right hon. Friend the Chancellor and I feel in putting forward the proposals. No one should assume—and I am sure that my hon. Friend the Member for Bolsover (Mr. Skinner) does not—that there is some masochistic pleasure to be secured in this. My hon. Friend made a significant point about the position three years ago. In the last three years public expenditure, in real terms, has increased by 20 per cent. while our gross domestic product has increased by only 2 per cent. Therefore, a speech that might have appeared totally unjustified three years ago might prompt different conclusions if made now.

The Prime Minister is widely reported as having told the trade union leaders yesterday that public expenditure cuts are vital if he is to stay in office. Is that true? Did he say that? If he did, when will he make clear to his hon. Friends below the Gangway and the country at large this connection between public expenditure cuts and his job?

I assure the hon. Member that it is not so much a matter of my personal position; it is much more the case that I believe very strongly that only a Labour Government can at present carry this country through the economic circumstances that demand a difficult combination of asking the trade unions for sacrifices from their members at the same time as we are restraining public expenditure, and getting a unique agreement from the CBI to encourage manufacturing industry. I believe that the Labour Government are the Government who can carry this through, and it is in that sense that I wish them to stay in office.

When my right hon. Friend next meets the TUC, will he put to it the possibility that substantial increases in taxation on alcohol, gambling and tobacco, which would reduce the borrowing requirement, would be a more acceptable policy than cutting expenditure and, as a result, increasing unemployment, by 70,000?

I would prefer not to be drawn into details on these matters at this time. They are more questions for my right hon. Friend the Chancellor, who has just endured 45 minutes of them.

As the Prime Minister, in some interesting recent speeches, has invited investors and the CBI, as well as the TUC, to co-operate with the Labour Government, will he explain to the TUC and the country how the co-operation of investors can possibly be secured in the light of answers I received from the Chancellor today, which showed that at any rate of income and at any rate of investment the total return is negative?

That shows the absolute necessity of the Government continuing their policy to overcome inflation, on which there has been very great success in the last 12 months, with a reduction from about 27 per cent.—

Who put it there?

If we are to go into the reasons for the rate of inflation being there, I shall give the answer in two words—Lord Barber.

Whether my right hon. Friend does or does not attend this year's TUC conference, his Administration has always attached the greatest importance to relations with the TUC and has derived great strength from that relationship. Is it not clear, therefore that any policy which, instead of reducing unemployment greatly by the end of this year, adds to the number of unemployed is bound to create serious problems between the Government and the trade union movement? Is my right hon. Friend aware that there are many supporters of the Government who will find it difficult to support such a course?

Yes, Sir, I understand all these matters—at least, I hope I do. I have always based our policy, as indeed did my predecessor, upon close co-operation with the TUC. That is why I am engaged with the Chancellor of the Exchequer, in consultation with others, in the perhaps unprecedented task of discussing these problems with the TUC. I do not wish to embroil the TUC in what must be Government decisions, but I want to make sure that the TUC understands whatever measures are taken, so that the social contract can continue and the basis upon which Britain's recovery can be achieved will not be destroyed.

If the Prime Minister believes the economic diagnosis he gave in his answer to my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd), why did his Chancellor of the Exchequer, in the last General Election, boast that he had already got inflation down to 8·4 per cent?

Answer.

If I am given an opportunity, I shall do so. My right hon. Friend gave the figures for the previous quarter. Those figures have never been disproved. Statistically and arithmetically they were right, but unfortunately, when extrapolated, the trend did not continue.