asked the Chancellor of the Exchequer what is the estimated annual cost of tax relief at the standard rate on second-class rail commuter season tickets costing: (a) £250 a year, and (b) £500 a year.

I regret that the information needed to provide the precise estimates requested is not available. However, if expenditure on all railway season tickets were relieved at the basic rate of tax the current cost would exceed £50 million.

Will my hon. Friend accept that many people in Hemel Hempstead and other new towns around London and other cities have no option but to commute to their jobs because that is where they are employed? Does he accept that they are hard hit by escalating rail fares? Would it not help the voluntary pay policy and British Rail if some tax relief could be given, at least on part of commuters' season tickets?

Most people have to commute to work, but it does not follow from that that we should give tax relief on travel. If we did as my hon. Friend suggested, it would be unfair—apart from the expense—to other people who travel to work in other ways.

Has not the time come when, instead of repeating that type of answer, the Government should look to the systems in operation in four of the EEC countries where part of essential travel-to-work expenditure is allowable against tax? Will the Government also explore the possibility of employers who provide travel vouchers to employees in the same way as luncheon vouchers being able to claim the expense against corporation tax?

One cannot deal with these problems by giving various forms of tax relief. Perhaps there are other ways of dealing with the problem, but that is not the way.

Is the Minister aware that rail fares are now so high that some of my constituents are being asked to pay £500 a year out of their taxed income in order to earn a living? Should it not therefore be a deductible expense against income?

People pay many necessary expenses, but it does not follow that they should be deductible against income tax.

asked the Chancellor of the Exchequer what is the United Kingdom's current indebtedness to the International Monetary Fund.

asked the Chancellor of the Exchequer if he will make a statement on the recent negotiations with the International Monetary Fund.

asked the Chancellor of the Exchequer if he will make a statement on the progress of his discussions with the International Monetary Fund and on any developments which may have occurred since his Letter of Intent.

United Kingdom drawings on the International Monetary Fund now amount to 1,700 million special drawing rights. On the negotiations for a further standby, I would refer the hon. Members to the statement I made to the House yesterday.

Will the Chancellor confirm that the standby which he announced yesterday is to involve a number of tranches? Is that not an unprecedented and humiliating position for our country to be in? Will he confirm that these tranches will necessarily require a review of our performance against the current projections which he has been making and which in the past have been so far adrift? In those circumstances, will he do the honourable thing and resign?

The answer to the last question is "No, Sir". On the serious part of the hon. Member's question, it is quite normal for the International Monetary Fund to pay three whole tranches of standby in stages. We are applying for three tranches from the International Monetary Fund, not for a single one. In fact there is a great degree of front-loading, since two-thirds of the $3,900 million will be paid by the end of the first financial year concerned. On the question of performance, we are not on this occasion inviting the Fund to monitor our performance by visits every quarter. We have told the Fund how we hope to achieve our targets in the early stages of the programme, and, therefore, we shall be subject only to the normal annual visits of the members of the Fund which all members agree to accept.

Instead of acting as Scrooge at this time, will my right hon. Friend act as the Santa Claus of the Labour movement by adopting an alternative strategy—a Socialist strategy—which would wipe the smiles off Conservative Members and delight the Labour movement? Does he accept that it is a question of having not a siege economy but a planned economy which would put us on the road to recovery?

Nothing would please me more than to be the Santa Claus of the Labour movement, even if it meant wiping the smiles off the faces of hon. Members opposite. On the alternative strategy, I would draw my hon. Friend's attention to the remarks of the TUC Economic Committee which considered my announcement of yesterday at its meeting this morning, when it said:

"It has to be accepted that there was no real alternative to seeking financial support from abroad if the pound were to be protected against continuing downward pressure, the consequence of which would have been even more difficulties on the balance of payments and even more unemployment."

When my right hon. Friend was discussing with the IMF the particular currencies that he would need to draw, did he have in mind the fact that the oil countries would be charging a further £500 million or £600 million this year for their oil supplies to this country? Will not that disrupt his calculations about consequential unemployment and price rises?

I am grateful to my hon. Friend. The currencies to be drawn are drawn from the members of the General Arrangements to Borrow, and it is not a matter of great consequence to Her Majesty's Government what are the proportions of the various currencies at any particular time. Account has been taken in all the figures that I gave the House yesterday of the possibility of an increase in oil prices as a result of the current deliberations of OPEC.

Will the right hon. Gentleman tell us more about the $500 million special facility from the United States Treasury and the $350 million from the Bundesbank? Are they new facilities or an extension of the facilities that were started in July?

The arrangement to which the hon. Gentleman refers—it was, in fact, the June standby—terminated completely with the full repayment of all drawings on 9th December. The facilities offered to us by the United States Treasury, the Federal Reserve Bank and the Bundesbank in Germany are entirely new. The American facilities—$500 million divided equally between the Federal Reserve Bank and the United States Treasury—are a normal swap arrangement. The $350 million offered by the Bundesbank is a standby to be drawn only if we wish to draw it.

asked the Chancellor of the Exchequer how much he estimates taxes have increased since February 1974 compared with rates.

Since many taxes are levied on an annual basis and receipts show seasonal variation, figures relating to the particular month of February would be misleading. However, between the financial year ending April 1974 and the current year as estimated in the Financial Statement in my right hon. Friend's last Budget, taxes will increase by 84 per cent. while rates increase by 71 per cent.

Since so many of the charges on local government are national and the result of Government policy, and not local, why do the Government get the councils to do their dirty work for them?

The Government are not getting local authorities to do their dirty work for them. In fact, the increase in taxes has been greater over the period than the increase in rates. Most hon. Members would agree, I think, that if we are to have a healthy local democracy there must he a local form of raising taxes. I should have thought that that was the basis for local taxation.

Will my hon. Friend impress on Conservative Members that the significant statistical fact is that, since about 1890, rates have taken about 2½ per cent. of disposable income in every year?

Yes, Sir.

Has not the latest rate settlement been particularly politically biased, since it is deliberately intended to help Labour-controlled inner city areas to the detriment of Conservative-controlled rural areas?

No, Sir.

asked the Chancellor of the Exchequer whether he is satisfied with the current operation of Her Majesty's Government's fund-raising systems.

These systems have functioned well in recent months, but I am always ready to consider constructive suggestions for improvements.

Does not the right hon. Gentleman accept that the short-term arrangements with the United States and Germany and the sale of BP shares show that the Government's creditworthiness is fraying at the knees? What other lines of credit are open to him? Will he have to flog off something else? Is he aware that he will not get much for his conscience?

I can understand the hon. Gentleman's chagrin, but if he had read the full text of the statement by the United States Secretary to the Treasury, the statement yesterday by Dr. Witteveen and the full-hearted endorsement of our general strategy and of yesterday's measures which has now been given by spokesmen of all the strongest economies in the world and by the world's leading monetary authority, he would be less flexible in casting doubt on the United Kingdom's creditworthiness.

Is my right hon. Friend aware that in Japan the Government raise about 35 per cent. of their total revenue by corporation tax and spend less than 1 per cent. of their resources on defence? In view of that evidence and the success of the Japanese economy, will he review his current strategy?

I am always ready to see what I can learn on behalf of Britain from the experience of other countries. I only wish that we could adopt some of the habits which are current in the economic field in Japan—particularly the very high level of productivity achieved from the same capital equipment as is possessed by many British firms in similar sectors. I will, of course, consider what my hon. Friend has said and see whether it has any lessons for us.

In view of the Chancellor's announcement of enormous public sector borrowing requirements for the next two years, has he any plans for any further borrowings from abroad? If he has no such plans, does he intend to balance the Budget in the foreseeable future?

All countries recognise that a certain amount of Government borrowing for capital purposes is very sensible, even in conditions of full capacity use and full employment. I would certainly believe that that was right for the United Kingdom too. When the hon. Gentleman talks about an enormous PSBR, he is perhaps not aware that even at this time our borrowing requirement is lower than the equivalent in Western Germany, which is so often held up to us as a model. In the next two years the PSBR will be only 6 per cent. and 5¼ per cent. of GDP, which is very reasonable by any international standards and was recognised as such yesterday by all the leading financial authorities in Washington.

Will the right hon. Gentleman recollect that month after month he has been telling the House that his policies had the massive endorsement of monetary authorities around the world and that month after month he has been comparing his borrowing requirement with that of other countries, with a sense of complacency? Will he understand that the people of this country are still concerned at his failure to make the real changes that are necessary to give real people in this country the prospect of incentives to work and to succeed by getting down direct tax rates? Is he aware that we are sick and tired of comparative statistics and endorsements from people outside this country and that the people want to see real changes designed to give real people a chance of succeeding in future?

Perhaps I have met as many real people as has the right hon. and learned Gentleman. I understand very well—I have noticed it repeatedly—that he suffers from nausea and exhaustion. The plain fact is, however, that we have arranged a massive shift of resources in favour of British industry. That has been recognised over the months by the CBI, which, I think, represents British industry rather better than the right hon. and learned Gentleman does, and which also endorsed the measures announced yesterday.

asked the Chancellor of the Exchequer if he is satisfied with his Department's efforts in combating tax evasion.

I am satisfied with efforts to counter tax evasion by both the Inland Revenue and Customs and Excise. The measures necessary to control and discourage tax evasion are kept under constant review.

Would my hon. Friend care to estimate the result of the recovery of tax following 80,000 prosecutions for tax evasion last year, of which we do not hear much and for which the Treasury will not give a figure? Would it not be a good idea to make surtax and capital gains tax returns public documents so that everyone can have a look? In that way we might create a deafening silence among Conservative Members on all sorts of other matters.

The second part of that question does not relate specifically to tax evasion, but the Inland Revenue and the Customs and Excise are extremely zealous in their work in combating tax evasion. Indeed, the complaint that one hears—especially from hon. Members opposite—is that they are too zealous in doing so.

asked the Chancellor of the Exchequer whether he will give details of total overseas borrowings of all public authorities since the beginning of the financial year 1974–75; what have been the terms and effects of these borrowings; and what is the cost in repayment charges.

asked the Chancellor of the Exchequer what is now the total of overseas borrowings on Government and public sector account.

The total amount of medium and long-term foreign currency borrowing by Her Majesty's Government and the United Kingdom public sector outstanding at the end of November 1976 was equivalent to $18.9 billion. Information about all public sector borrowings up to the end of September 1976 has already been placed in the House of Commons Library. I am arranging for this to be updated.

Can the right hon. Gentleman tell the House what percentage of that is represented by Government borrowing, by nationalised industry borrowing and by local authority borrowing?

I could if the hon. Gentleman put down such a Question.

So that we may better appreciate these figures, will my right hon. Friend give us the corresponding figures for private investment in other countries by British citizens and private industry in Britain?

Yes; my right hon. Friend is on to a very good point. Conservative Members are constantly complaining about the borrowing that we make. They take every opportunity to talk the country down and to indicate that we are borrowing at excessive levels. What they should know is that the latest available figures indicate that our external assets exceed external liabilities by about £1·8 billion.

Will the Minister enlighten the House about what plans the Government have for a phased repayment of the $19 billion?

Yes. We have considerable plans for the phased repayment, which will be phased over a period after 1978, 1979, 1980 and beyond when we shall be in a substantial balance of payments surplus. I am sure that Opposition Members will be delighted to have that piece of information.

asked the Chancellor of the Exchequer how many representations he has received from members of the public about the taxation of pensioners and widows since the latest increase in national insurance pensions and benefits.

I have been receiving around 60 letters a week on the subject of taxation of pensioners and widows since 15th November when the pension increases were introduced. This is about the usual number for this time of the year.

Whether or not it is the usual number, does the hon. Gentleman agree that it is some sign of the resentment felt by these groups that over £100 million of the increases has been clawed back in tax, partly as a result of the deliberate decision taken earlier this year not to increase tax allowances in line with pension increases? In view of the Chancellor's welcome conversion to the view that income tax is too high, will the hon. Gentleman at least ensure that pensioners are not hit again in the same way in the coming year and that something is done for working widows?

In fact, the Government have made sure all along that pensioners have not been hard hit by inflation and other factors. The hon. Gentleman knows very well that since the Government took office pensions have increased by 97 per cent. as compared with an increase of just over 60 per cent. in the cost of living, which has been a definite real increase for pensioners. I accept, because of problems with marginal rates at the lower end of the scale and threshold problems, that some people will have to pay back some of the increase in taxation. Surely the hon. Gentleman could have given us some credit for what we have done for pensioners.

Will my hon. Friend have a word with the Secretary of State for the Environment with a view to appropriate circulars being sent to local authorities on rent and rate rebates when pensions are increased? Is it not defeating the whole purpose of a pension increase when the recipients have to pay increased taxation and when a large slice of the increase is removed by a reduction in rent and rate rebates?

My hon. Friend has raised an important point. The interaction between tax thresholds, benefits and assistance given to pensioners and the increase in pensions is a matter that we keep constantly under review, but it is extremely difficult to solve the problem.

Does the hon. Gentleman recall the substantial petition that I recently sent him on widows' pensions? Does he agree that it is wrong that widows who are working and receiving a gross income should receive less net income than a married woman who is working?

I do not accept that the widow gets less in relation to the married woman. There are allowances available to both groups. It does not follow that the widow gets less. What happens in many cases is that a widow's allowances are set against her pension so that PAYE operates entirely on income from employment, which is taxed at the standard rate. I disagree that at the end of the day widows are prejudiced as against married women.

asked the Chancellor of the Exchequer when he now expects a single-figure annual rate of inflation to be reached.

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

The retail price index rose by 14·7 per cent. over the 12 months to October. Given continuing moderation in the increase in wage costs, the rate of price inflation should start falling again next summer.

Is that not a scandalous evasion of the truth? Is it not clear that, although the original social contract in July 1975 was based on reaching single-figure inflation by this month, the latest Treasury forecast shows that there is no hope of that being reached within the best part of the next two years? How can the Chancellor command credibility when he so miserably fails to fulfil his own forecasts?

The hon. Gentleman will know when he calms down for a moment that there has been a large increase in import prices throughout the industrial world this year. The increase has been greater than expected in all countries. There has been depreciation of the £ sterling, which we hope to stop through the measures announced yesterday. There has also been a large increase in food prices all over Europe, which was reflected in a rapid increase in recent months—for example, in the rate of inflation in our neighbouring country, France. It is not possible for any British Government to take control of all external factors that affect inflation. On the other hand, the pay policy has made a major contribution towards the reduction in prices in this country and has been a total success over the 18 months that it has now been in operation.

Is my right hon. Friend aware that I do not like his new package any more than it is liked by him or anybody else but that I realise that the alter- natives of savage deflation suggested by the Opposition and a siege economy suggested by some of my hon. Friends are bogus and potentially disastrous? If my right hon. Friend is talking of sacrifices, will he bear in mind that massive tax reliefs are given to wealthy people buying expensive houses and those with high-level pension schemes? My right hon. Friend should think of those people and ask them to make sacrifices rather than ask for sacrifices to be made by the poor.

I fully agree with my hon. Friend that there is no sensible alternative to the Government's current policy. That was endorsed in the words that I quoted from the Economic Committee of the TUC, which met this morning. As for tax relief that is given to wealthy house-owners, my hon. Friend will know that we have set a limit to the size of mortgage on which tax relief is given. This aspect of the problem is under continuous review.

Will the right hon. Gentleman tell us which of his forecasts have been accurate during the past three years?

I doubt whether I could complete the answer to that question by half-past three. However, I shall give one important answer in relation to inflation. I was absolutely bang on in respect of the reduction in the rate of inflation by half between July 1975 and July 1976. I know that I shall be congratulated by the hon. Gentleman, possibly privately behind the Chair, for that achievement.

Does my right hon. Friend agree that the present period of continuous inflation was precipitated by the inflation caused by the reckless monetary policy of the Conservative Government in 1972 and 1973?

I know that that is the view of at least two Members of the Opposition Front Bench—namely, the hon. Member for Oswestry (Mr. Biffen) and the right hon. Member for Leeds, North-East (Sir K. Joseph). I have never yet succeeded in discovering whether that is the view of the right hon. and learned Member for Surrey, East (Sir G. Howe).

Will the Chancellor of the Exchequer and his hon. Friend recognise that the tune just offered to the Chancellor of the Exchequer is the tune of the year before last and has nothing whatsoever to do with reality? The Chancellor has now been responsible for the economy for three years and cannot use the alibi offered by his hon. Friend.

They are all specific questions but there is nobody on earth who could give an accurate answer, for the reason that I have already explained. The right hon. and learned Gentleman, for example, asks me to predict the inflation rates in the countries which compete with us. That is absolutely impossible. The predictions that I have seen for the United States, Germany and France have been varying even over the last few weeks. Again, it is quite impossible to predict precisely what will happen to world food prices over the coming year. We do not even know whether there will be an increase in oil prices over the next week or two and, if there is, how much it will be. That is why it is impossible to give accurate predictions at this time.

asked the Chancellor of the Exchequer how many representations he has received in 1976 about the level of direct taxation.

I have received many representations from different sources.

I thank the hon. Gentleman for that illuminating answer. Following yesterday's indication that we might look forward to some measure of relief of income tax in 1977, will he say whether it is predominantly in the mind of the Government to assist in particular those for whom incentives have totally disappeared over the past few years and those who, as a result of the operation of phases 1 and 2 of the incomes policy, have found their standard of living falling more than most?

The Government accept, as my right hon. Friend has said on a number of occasions, that the rates of direct taxation at the margin, the lower levels, as much as at the higher levels—perhaps more so at the lower levels—are too high, and this is something that we should wish to remedy. But there are constraints, as the hon. Gentleman is well aware, in relation to the Government's borrowing requirement and the needs of public expenditure.

If there is to be a reduction in income tax, as suggested, would it not be fairer, instead of reducing the rate of tax which helps the very wealthy, to increase the personal allowances, which would help those at the bottom end of the scale?

My hon. Friend is quite right to some extent, but whichever way we do it we shall assist people right along the tax scale. It may very well be that increasing the personal allowances is fairer than decreasing the rates of tax, but any increase in the personal allowances would benefit most people right up the scale.

Now that the Chancellor of the Exchequer has changed his mind and discovered that direct taxation discourages effort and efficiency, will the Minister recognise that next year—supposing that there were 15 per cent. inflation, and, say, at the very least, a 10 per cent. growth in personal incomes—if he does not increase the personal allowances or change the thresholds, this will constitute an enormous increase in direct taxation? Should not Treasury Ministers and others make that clearer than they have done so far?

The hon. Gentleman knows very well that we have made perfectly clear—my right hon. Friend has said it on a number of occasions—that we have not been able to uprate the personal allowances in line with inflation over the last few years. This must remain our aim, but, as I said previously, there are constraints and there are also questions of the level of public expenditure which have to be taken into account.

asked the Chancellor of the Exchequer whether he wishes sterling to rejoin the European currency snake.

No. I very much doubt whether it would make sense for sterling to rejoin the European snake in its present form.

Would it not be more honest to say that our chances of rejoining the European currency snake are now non-existent? Is it not a matter of very great disappointment to everyone in the House that yesterday's measures have notably failed to stabilise sterling, which is the one thing they needed to do?

I do not see what joining the European currency snake has to do with the problems of sterling or the problems of the British economy. I should have thought that, rather than talking of trying to join some kind of artificial arrangement, the hon. Gentleman should recognise that the main problems we face are to improve our manufacturing base and industry to enable us to compete with European manufacturers on a proper basis.

Does the Minister's answer about the snake decision mean that monetary union is now a forgotten cause?

I have no doubt that it is forgotten in some quarters and that in other quarters people are still thinking about it. While we have divergent economies and different nation States in Europe, I do not see how we can have economic and monetary union.

asked the Chancellor of the Exchequer what representations he has received protesting about his decision to postpone the introduction of a wealth tax.

I am aware that my decision to postpone introduction of the wealth tax beyond the life of this Parliament has caused some concern. The joint working group, set up as a result of the TUC-Labour Party Liaison Com- mittee's recent meeting, will be giving further consideration to the form the tax should take when it is introduced.

Does my right hon. Friend remember his very famous pledge that when be became Chancellor of the Exchequer he would squeeze the rich until the pips squeaked? Why is he now turning his attention to the unemployed victims of his Tory-style economic policies instead of to the wealthy people such as Sir Hugh Fraser who can gamble £2,000 a week while the level of poverty in the country rapidly increases?

The so-called famous pledge to which the hon. Gentleman refers was never made by me or, as far as I am aware, by anybody else. But I have, with some caution in listening, heard a number of pips squeaking every time we have Treasury Questions in the House.

Since the Chancellor of the Exchequer's decision to consult the Trades Union Congress on the form of a wealth tax appears to indicate that he gives greater credence to the views of that body than to the views of a Select Committee of this House, chaired by his right hon. Friend the Member for Battersea, North (Mr. Jay), will he perhaps at least involve the CBI, the Retail Consortium and representatives of smaller businesses in his further consideration?

Of course, the Government will consider this matter with everybody who has a legitimate interest in it. The hon. Gentleman asks me whether I take more notice of one particular body than of a Select Committee of the House. One of the problems I face is that the Select Committee of this House produced five reports instead of one, and that rather complicated matters for me.

asked the Chancellor of the Exchequer how much taxation has been paid in total, in the last convenient 12-month period, by those aerospace companies the Government is seeking to nationalise.

I regret that this information is not available.

Since the companies publish annual reports, why is the information not available?

The hon. Gentleman has asked a question which it is not possible to answer. He asked not about direct taxation but about taxation, which includes indirect taxation. It is not possible for me, therefore, to say.

asked the Chancellor of the Exchequer whether he will take fiscal measures to help to deal with the problem of the poverty trap.

My right hon. Friend is well aware of the problems caused by the poverty trap and will bear them in mind in preparing next year's Budget.

Is the Chief Secretary aware that many of us on the Conservative side welcome the Chancellor of the Exchequer's recent recognition of something that we have been pointing out for a very long time—that for many income groups it pays not to work but rather to seek not to work? Is the right hon. Gentleman aware also that to a large extent this has been caused by the Chancellor's own action in not increasing tax thresholds sufficiently to keep pace with inflation, and that we shall not believe his words until he takes real action to deal with the problem?

The hon. Gentleman should be careful about overstating the position. There is a serious problem, which we have recognised, but the poverty trap as such is not as fierce as is sometimes suggested. Items such as family income supplement, free school meals and free welfare milk are awarded for a year, regardless of subsequent income changes. Therefore, the poverty trap does not always work to the same degree. It is a serious problem and we intend to deal with it in due course.

Does my right hon. Friend accept that the poverty trap which he wants to abolish will be widened and deepened as a result of constant public expenditure cuts, which affect house building for the homeless and schools for working-class children? Will he appreciate that when he throws out clever little phrases in relation to TUC policy referring to there being no alternative, what the TUC really meant was that once the decision was made to borrow there was no alternative? Does he not appreciate that the TUC has an alternative strategy which includes import controls and some of the ideas that we have proposed from these Benches?

I do not agree with my hon. Friend. The TUC has never advocated the kind of generalised import controls that my hon. Friend and others have suggested. We have looked at these propositions seriously, but he must take it from me that if we were to carry out the alternative strategy which he recommends it would not make it easier for the people he and I want to help because there would still be a need to restrain the growth of public expenditure.

asked the Chancellor of the Exchequer if he will take steps to return to the principle of value added tax levied at a single effective rate, in addition to zero rating.

I shall continue to keep the structure of all taxes under review.

Is the hon. Gentleman aware that that is no answer at all? Will he please bear in mind the anomalies caused by having differential rates?

Obviously some anomalies are caused by differential rates, but I remind the hon. Lady that most European countries, where this tax originated, have a far greater number of differential rates than we have. They seem to be able to cope well with the anomalies and their economies also are coping well.

Will my hon. Friend confirm that if the Government are to carry out the Chancellor's pledge and make VAT progressive, there will be a need to have multi-rate VAT? How will that fit in with our Common Market obligations?

My hon. Friend is right that a multi-rate VAT is more progressive in terms of the tax system. That is one reason why a number of European countries have such a system.

Why did not the Chancellor increase the VAT rate, which was what was expected and would have been accepted by the nation?

The answer is, as we made clear in the debates last week on the National Insurance Surcharge, that any increase in the rate of VAT would work quickly into the cost of living and would almost immediately increase the retail price index.

asked the Chancellor of the Exchequer whether he will now announce further economic measures.

I would refer the hon. Member to the statement I made to the House yesterday.

But that was yesterday. The Question relates to "further economic measures". In view of yesterday's completely inadequate statement, when will other measures be taken? In February?

The hon. Gentleman knows that I shall make any statement I wish to make about further measures when appropriate. I am glad to say that this morning there has been a substantial increase in the value of equity shares and the sterling rate has stabilised.

Are we to understand that the loan has now actually been secured? What will happen if the pound goes on falling, and will the Chancellor be unable to take advantage of the loan without a further deflationary Budget?

The managing director of the IMF has already informed me that he intends to advise the Executive Board to accede to our application for the borrowing, and the major countries concerned have expressed their satisfaction with the measures we have taken. That includes in particular the United States, German and Japanese Administrations.

If in the measures he announced yesterday the Chancellor fails to halt the slide in sterling and fails to reduce interest rates, will he confirm that in his Budget next April he will announce further public expenditure cuts?

The hon. Gentleman should consult Conservative Front Benchers and persuade them to make up their minds what they want.

Is it not increasingly clear that the Opposition are anxious to do all they can to damage sterling?

Yes, Sir, that has been made clear for quite a time. I think it is a matter of regret for the vast majority of British people that the Conservatives should behave so continuously in this way.

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

I refer the hon. Member to the reply which my right hon. Friend the Lord President of the Council gave on my behalf to my hon. Friend the Member for Bolsover (Mr. Skinner) on 30th November.

How can the CBI or anybody else be expected to have confidence in a Government whose party machine, against the express wishes of its own Prime Minister, appoints a Trotskyist to high executive office?

I understand that yesterday the CBI had a Press conference—[HON. MEMBERS : "Answer the question."] I am answering the Question. I was asked when I am expected to meet the CBI, and I am replying to that Question. I understand that, although CBI leaders have warned that they will reserve final judgment, they broadly welcome my right hon. Friend's measures as a boost to business confidence, although they criticise many aspects of them. Therefore, in conjunction with the TUC, which also has certain criticisms to make, there seems to be a much better reception among those who really know than among those who are just here to criticise.

Will my right hon. Friend tell the CBI to tell its friends in the international monetary community that they must not think that they can ratchet into another round of public expenditure cuts which have been the subject of discussions in the Cabinet, that this has happened for the last time and that we do not wish to see this country put at the mercy of the monetarists on the Opposition Benches, with the chaos that that would bring to the conduct of our affairs?

When the representatives of the CBI came to see the Chancellor, they were opposed to further substantial measures of deflation because of the effect on industry. For that reason they have been critical of the measures taken in the construction industry. I think that the whole House—or, at least, I hope the whole House—will agree that, in view of the present state of British industry and the general level of the economy, it would be a bad thing if there were any further cuts in public expenditure. It is our belief, looking at the package as a whole, that when the world has had time to examine it clearly, instead of taking these things off the tapes, there will be a substantial boost to confidence and that that will go towards a reduction in interest rates.

Yesterday the Chancellor said that his measures would generate more jobs. How many?

With respect to the right hon. Lady, we have just had 45 minutes of Questions to my right hon. Friend the Chancellor on these matters. What he said yesterday was that some of the offsetting measures he proposes to take would have this effect on jobs. He did not say that unemployment would not rise next year, as the right hon. Lady knows. I have said myself that it will rise. It will go up, but the measures my right hon. Friend has taken on the temporary employment subsidy, job creation and the additional investment made available through the provision of funds will have a substantial offsetting effect. That is what my right hon. Friend said.

The figures must have been before the Cabinet at its many meetings. Why is the Chancellor afraid to give them to the House?

The right hon. Lady should not attach all that importance to forecasts which are bound to be inaccurate. [Interruption.] When we know that two forecasts produced by two reputable bodies differ by a figure of £3 billion in terms of the public sector borrowing requirement, I believe that the right hon. Lady is making a fetish of this matter. There was a former and reasonably successful Tory Chancellor who said that in the end one had to fly by the seat of one's pants. When he had examined all the forecasts, he made his best judgment. That is what has been done here. The thought that one can produce exact figures of the increase in unemployment next year shows a hobgoblin of a little mind.

Since the withdrawal of the regional employment premium in development areas, coming on top of the increase in employers' national insurance contributions, will make a substantial difference to the financing of employment in development areas, when will the right hon. Gentleman spell out the alternative measures which the Government will take to promote employment in those areas?

This was examined and, as far as it is possible to see, the abolition of the regional employment premium will not make all that substantial a difference. We would not have taken the step if we had thought that it would. When we introduced it 10 years or so ago, it was a quite significant proportion of the weekly wage bill. It is no longer that. A great many of the companies that receive it do not need it. Therefore, we thought it better to have a more selective form of aid to industry, which my right hon. Friend the Chancellor of the Exchequer spelt out in some detail yesterday, through the operation of the National Enterprise Board and through the operation of the Welsh Development Agency, the Scottish Development Agency and other institutions of that kind.