asked the Chancellor of the Exchequer if he will now make a further statement on the position of sterling balances.

The main features of the new facility for official sterling balances are as described in my statement on 11th January. But many details, relating in particular to the operation and administration of the facility, remain to be settled. These are being worked out at present and I hope to be able to make further information available by about the middle of next month. Details of the terms and other aspects of the foreign currency bonds that are to be offered to official holders will also be made available at a later stage.

I am grateful for that reply. In view of the wide disparity between interest rates here and elsewhere in the world and the present inflow of hot money, is the Chancellor concerned about the situation, and what does he intend to do about it?

It is fair to remind the House that a great deal of the inflow—and it is not possible at this stage to identify it—is an unwinding of leads and lags and the return to Britain of money which has been involved in the financing of third countries' trade which is now terminated. There is a Question on interest rates from my hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) later on the Order Paper, so I shall confine myself to saying that the disparity is reducing week by week.

Would the Chancellor accept that having achieved this very welcome safety net for sterling it would be ludicrous for the Government to fall into the trap of attracting vast sums from overseas which we would be forced to repay in the event of a downturn in the economy? Is it not correct that we should pursue a policy to prevent that occurrence, which is the whole reason for the safety net precautions?

With respect, my hon. Friend is mixing the two things. The purpose of the safety net is to protect sterling against the possibility of a further run-down of official balances—a run-down which we want to encourage, and to which foreign currency bonds will contribute. On the question of the increase in private sterling balances, it is not possible at this moment to identify the proportion of sterling coming in recently which belongs to British residents and that which belongs to foreigners. But if it is necessary to take further action to discourage these inflows we shall take it. We have made clear that we have no intention of using such inflows as a means of financing our current account deficit. The best evidence of that is the impressive loan which I announced on Monday.

But surely the Chancellor must know that present sterling balances held by private holders have very little to do with leads and lags, and a great deal to do with foreign buying of gilt-edged securities. This is because of the interest level which the Government are allowing. What is Government policy towards private holders of sterling balances? Is it to encourage or discourage them? Is it Government policy to allow interest rates to be as high as they are—that is, far higher than those of other countries? It just does not make sense.

The hon. Member thinks that he knows more about the composition of the recent inflows than does the Bank of England. Of course he may well be right, but his record gives little ground for confidence. On the question of interest rates, I was told by Conservatives many times in the recent past that there was no possibility wheatsoever of the rates coming down within a time-scale that would ensure that the increase in October did not have a damaging effect on private industry in Britain. We all know that since October the short-term interest rates have already come down by 1¾ per cent., and no doubt the hon. Member has read newspaper accounts of what may happen later this week.

I forbear from comment on the Chancellor's record, but I want to know a little more about interest rates. Can the Chancellor assure us that he is still fully aware of the necessity of getting public borrowing down in order to reduce interest rates and of the dangers of maintaining a competitively high interest rate with the damage that that could do to investment in this country? The Chancellor has said before that he would be anxious to discourage any excessive inflow of private capital. Will he bear in mind our anxiety that the worst thing for this country would be a barrier of exchange controls against incoming money alongside a barrier of exchange controls to stop money going out? Is he aware that we should welcome any movement towards the liberalisation of exchange control?

The right hon. and learned Gentleman has mixed up five or six different matters there, but I shall try to disentangle them. We have already taken steps to reduce the amount of money the Government require to borrow, and the extent of the reduction has been welcomed by foreign markets. The recent strengthening of sterling, the inflow of money into this country, and the reduction of interest rates all reflect the success of measures I announced last December, measures which were denigrated at the time by the Opposition Front Bench.

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

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

I maintain close contact with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.

Will the Chancellor reprimand the Governor of the Bank of England for the remarks he made recently at the dinner in Scotland of the Institute of Bankers in which he was critical of the Government's devolution policies? Can he confirm that the Governor of the Bank of England should maintain a nonpolitical line?

I have the impression that a good deal of the criticism of the Government's devolution policies has been expressed in recent days by the hon. Member himself. I do not believe that the Governor said anything at the dinner of the Institute of Bankers in Scotland which I would regard as inconsistent with his relationship with me.

When my right hon. Friend is next having discussions with the Governor of the Bank of England will he perhaps discuss with him a policy by which a percentage of bank deposit funds and insurance and pension funds might be secured to get enough money behind the National Enterprise Board in order to make it the positive instrument for the reform of and investment in British industry that we promised the nation at our last election campaign?

I shall take special care to draw my hon. Friend's views to the attention of the Governor of the Bank of England the next time I meet him.

When the right hon. Gentleman next meets the Government, will he clarify with him the position of future inflows of official rather than private funds? Do these official funds also qualify for and benefit from the arrangements announced for the safety net some weeks ago? If so, there is an enormous continuing obligation under the safety net for any official funds that come into the country.

I made clear in my statement about the safety net that it involves an obligation by the other participants to replace by medium-term borrowing any further reduction in official funds from the present level. An increase in official funds would not count for substitution if those official funds were later withdrawn. However, we have done our best to discourage a further inflow of official funds, and that is a matter that we shall pursue through diplomatic channels since it is a matter for foreign Governments.

When the Chancellor meets the Governor will he clarify one point concerning the Government's many borrowing activities? In December the Chancellor spoke of a $500 million facility from the United States Treasury and the Federal Reserve which he said was entirely new. Subsequently the Financial Secretary said that it was not entirely new, that $250 million was part of the $3 billion borrowed back in the summer as a standby facility. Recently we have seen another Press release saying that this $500 million is now to be a standby and not a swap. May we know who is right in all this saga, because I am sure that the Chancellor would not wish to mislead the House about the nature of these borrowing facilities?

I would not want the hon. Gentleman to confuse himself on this matter, although I do not have great confidence that I can secure his understanding of it. There is no inconsistency between what I said and what my right hon. Friend said. The standby facility which was negotiated in June terminated and was fully repaid on 9th December last year. A further credit of $500 million, which the United States Administration and the Federal Reserve Board made available at the time of the IMF borrowing, has now been converted into a standby. That is because, in the light of the strengthing of sterling in recent weeks and the negotiation of the $1·5 billion new borrowing, we certainly do not need to draw the additional United States credit at this time, and it is not certain that we shall wish to do so during the period of its currency.

asked the Chancellor of the Exchequer what was the highest rate reached by the £ sterling against the United States $, after the 1967 devaluation reduced the rate from $2·80 to $2·40; and on what date this rate was reached.

asked the Chancellor of the Exchequer what is the current exchange rate for the £ sterling against the United States $; and what was the equivalent figure on the day on which he assumed office in March 1974.

The highest rate reached against the United States dollar since 1967 was $2·6515 on 9th March 1972. On 5th March 1974 the opening rate was $2·2775, and at noon today the rate was $1·7179.

I thank the Financial Secretary for showing the House that the pound is always strong under a Conservative Government. Will he confirm, however, that the real fall through the devaluation of the pound since February 1974 under this Government has exceeded even the devaluation of Stafford Cripps? Will he say why Labour Governments always cause a devaluation of our currency?

I do not think that anyone can be particularly proud of the Smithsonian Agreement on exchange levels as it was fixed for Britain. The subsequent reaction was that it was clearly far too high. The exchange rate is affected by the level of inflation appertaining in this country at present, and unquestionably the Opposition share a great measure of responsibility for that. The exchange rate must ultimately reflect what those abroad think of our current inflation difficulties and the steps that we are taking to overcome them.

Does the right hon. Gentleman agree, however much he tries to get out of it, that the figures represent an eloquent comment on the record of the Government? Is it currently the Government's policy to hold the exchange rate down?

The Government's current policy must be to reflect the view that outside holders of sterling have of our economic prospects. In the past few weeks we have seen an improvement in the prospects for the country, and that is reflected in the movement of the exchange rate itself.

Does my right hon. Friend recall the disastrous effects on our competitiveness in exports and on our balance of trade after the Bank of England's action in 1972 of pushing up the exchange rate when our costs were rising faster than those of our competitors? Should we not take that lesson to heart in the present situation?

I am sure that my hon. Friend is right to draw attention to the unrealistic exchange rate pursued by the previous Conservative Government, a rate which was reversed following the reassessment that they eventually made. These are factors which obviously have to be taken into account, although the main decision both about our competitiveness and the levels of our inflation are inevitably made by our overseas partners. It is they who determine principally the exchange rate of the pound against other currencies.

Is there ever any necessary relationship between the well-being, prosperity and economic progress of a country and the number of units of its currency which exchange for US $1?

Most people would agree that if the country is progressing satisfactorily and is expanding production and productivity, that would be reflected in its exchange rate. The rate is a reflection of these attitudes over a sufficiently long period.

asked the Chancellor of the Exchequer what are the latest figures available for the yield of a 1 per cent. wealth tax on £100,000 plus accumulated wealth; and what plans he has to introduce a wealth tax.

asked the Chancellor of the Exchequer if he will make a statement on what progress has been made towards the devising and introduction of a wealth tax.

The estimated yield of a 1 per cent. tax would be about £100 million from individuals, together with a further amount, not readily quantifiable, from certain kinds of trusts. A considerable amount of preparatory work has already been done. This, together with other studies, will ensure that we shall be ready with a suitable form of wealth tax at the appropriate time.

Would not some indication from the Government that at long last they are going to go ahead in this direction be helpful in negotiating the next stage of the wages agreement? Would the Minister agree that in terms of the wealth of small firms with new ideas some movement from taxation of income to taxation of wealth is necessary?

I am happy to confirm that the Government are fully committed to the wealth tax. There is no question about that.

Will the Minister define wealth?

If the hon. Member puts down a Question.

Will the Government introduce such a tax at the appropriate time?

I am happy to assure my right hon. Friend of that. I congratulate him on his excellent chairmanship of the Select Committee. The things that happened within that Committee were not his fault. When the time is appropriate, the Government will come forward with the tax.

Is not the Minister taking the matter frivously? Is not one of the major threats to jobs and to small businesses today the possibility of a wealth tax, as well as threats of industrial democracy and so on? Can the Government reassure British business that there will be no wealth tax introduced in the foreseeable future and certainly not during this Parliament?

I would rather be accused of being frivolous than of being as miserable as the hon. Gentleman. He has wholly misunderstood, and frivolously, mischievously and grossly exaggerated the effect of capital transfer tax and of wealth tax, certainly in the shape or form that we have in mind, on small businesses.

asked the Chancellor of the Exchequer if he will make a statement on the Inland Revenue's decision to tax the special care allowance paid to foster parents of mentally handicapped children.

Payments made to foster parents by certain local authorities may, in some cases, be taxable as the receipts of a profession or vocation. In these circumstances, tax is charged only on the excess of the payments over expenses incurred in looking after the foster child.

Is it not highly desirable on social and financial grounds that severely handicapped children should be taken into family life by foster parents rather than remain in expensive institutions? Should not the foster parents, therefore receive the same attendance allowance as would be given if the child were being cared for by its own parents?

I fully accept the point, but the only instances in which tax is chargeable concern those foster parents who are professionally engaged. They are charged tax, but they can obtain their personal allowances as an offset.

If the special care allowance is taxed, why is not tax also payable on the special care allowances given to members of another place in the form of attendance allowances? Are not those allowances completely contrary to all normal tax rules since they are paid tax free?

I understand the similarity that my hon. Friend feels exists between the two kinds of attendance allowances. The allowances originally referred to in the Question are not taxable. It is only those who bring professional expertise to bear—for which other allowances are made—against whom extra charges are made. We are not dealing here with ordinary foster parents, but with a limited special category.

Does the Minister agree that any method of taxing such allowances will be regarded as being similar to the taxation of widows? Have not the cutbacks in public expenditure badly affected needy sections of the community? Can we have an assurance that there is some humanity in the Treasury?

I am aware that a number of local authorities take a lenient view of this matter, and perhaps the hon. Lady also knows of them. I have attempted to state the position in law. I offer the hon. Lady what assurances I am able to offer on the last part of her question.

asked the Chancellor of the Exchequer when he next plans to meet the CBI; and if he will make a statement.

I am in constant touch with representatives of the CBI at the NEDC and on other occasions. They have many opportunities of making their views known to me, and meetings are arranged as necessary.

Will the Minister remind CBI leaders at his next meeting with them that the CBI can have no reason to complain about the way in which the Government have reacted towards it in the past two and half years? Will he tell the CBI that it has had about £8,000 million of the taxpayers' money through various forms of tax and incentives since the Government came to power, and that it is not paying much corporation tax? Will the Chancellor add that the CBI has a damned cheek to propose after workers have had a cut of £10 in their real wages, that they should be subject this year to a 3 per cent. flat wages increase? Will the Minister tell CBI leaders that that is preposterous and that he will have nothing to do with it?

I shall draw my hon. Friend's views to the attention of CBI leaders next time I meet them. I know that the views that my hon. Friend has expressed about the assistance that the CBI members have received from the Government will be reassuring to them.

Will the Chancellor go one better and take the hon. Member for Bolsover (Mr. Skinner) with him to the meeting in order to show the CBI what the right hon. Gentleman has to put up with daily—the tail trying to wag the dog? Would not the Chancellor receive much more sympathy from the CBI if he did that?

I shall reflect on that interesting suggestion. I hope that there will be no objections if I also take with me one or two of the hon. Member's right hon. Friends from the Opposition Front Bench so that the CBI will also be able to see what I have to put up with from that quarter.

Will the Chancellor also tell the CBI that many people in this country share its concern about the majority view of the Bullock Committee, but for different reasons? Will he tell the CBI that some of us think that it is wrong to enmesh workers in a scheme that is an attempt only to arrest the long-term decline of the capitalist system in this country?

I see that I am going to be the bearer of many messages from many quarters to many persons as a result of Question Time this afternoon. As to the Bullock Report, there has been a tendency for people and institutions in many parts of the country to react without due reflection on a most interesting and comprehensive report that fully carries out the purpose that the Government had in mind when the Committee was set up. Some people have overreacted. I hope that everybody concerned will take the opportunity of the consultations offered by the Government to see whether we cannot, as the Government desire, reach a lasting settlement of this problem on the basis of the maximum degree of agreement.

While there is widespread agreement on the legitimacy of the involvement of workers in the management and understanding of the affairs of their companies, will the right hon. Gentleman understand and discuss with the CBI the widespread anxiety lest if legislation along the lines of the Bullock Committee's majority report continues to be discussed, grave damage is done to the confidence of those who would otherwise be investing in this country? What will the right hon. Gentleman do to remove that threat?

I have had the opportunity on a number of occasions in the past year or two to discuss with investors in countries such as Norway and Germany their views on worker representation at board level. The right hon. and learned Gentleman may be surprised to hear—though he should know it already—that they take a very different view of these matters from that of the Conservative Party. I hope that the period of consultation that the Government have in mind will enable hon. Members opposite to acquaint themselves with the views of many people in industry and finance overseas who, unlike the Conservative Party are not scared stiff by the thought of board representation of working people.

asked the Chancellor of the Exchequer if he will introduce legislation to encourage the growth of credit unions and to regulate their working.

There have been recent discussions between my Department and the credit union representative organisations. I hope to make the Government's views on legislation known shortly.

Can the right hon. Gentleman define "shortly"?

As soon as possible. I understand the hon. Lady's interest in these matters and it is shared by my hon. Friend the Member for Farnworth (Mr. Roper) and myself. The ability of such credit unions to arrange loans among themselves at finer rates of interest than are generally available commercially is something to which we should be sympathetic. I shall be pressing ahead at the earliest possible moment, but I cannot give any more precise assurance on timing.

asked the Chancellor of the Exchequer if he expects to complete consultations on future pay policy before making his next Budget Statement.

As I made clear to the House on 15th December 1976, I hope that this will be possible.

In the light of the growing problem of the poverty trap and disincentives at every level arising from the interaction of the pay policy and taxation, will not the right hon. Gentleman agree that it is essential that his next Budget Statement, unlike the last, should allow the House to judge these matters together? Will this not be even more important if, as has been reported, it is his intention to abandon the inflation-proofing of short-term social security benefits and to make them part of a package deal on pay and tax?

The hon. Gentleman must not believe everything he reads in the newspapers. I have made clear on many occasions that I hope to be able to reduce the burden of income tax in my next Budget. It is always open to the House to consider tax questions in relation to benefits and in most previous Budget debates these comparisons have been made.

Does not my right hon. Friend agree that in the interests of all sections of the community a sensible and fair pay policy is vital for the economy? Would he make a particular point of ignoring the ridiculous reaction of the Chairman of the CBI and some right hon. Members on the Opposition Front Bench to the Bullock Report? They have hardly had time to study it, yet, because it tries, rightly or wrongly, to give working men an interest in their industries, the Opposition condemn it out of hand. Does not my right hon. Friend agree that such an attitude will not help him in his consultations for a future pay policy?

My hon. Friend's views on the need for a pay policy has overwhelming support among the British people and I wish that they had the same sort of support in the Conservative Party. I have indicated that the reactions of some CBI spokesmen to the proposals in the Bullock Report were far too speedy and ill-considered in some respects. I hope that the opportunity will be taken to consider the matter at leisure and in a calmer mood. I commend to all concerned the tone of today's leading article in The Guardian, which says that this is a matter of immense importance in which pondering is more important than shouting.

Will the right hon. Gentleman bear in mind in his review of the impact of income tax that the most needed change in the tax structure is a substantial raising of the income tax threshold and that for it to be really effective and to remove the liability to tax of families on subsistence incomes he will have to think in terms of £2,000 million?

I agree that raising the income tax threshold should be a major element in any reduction of the burden of income tax, but the hon. Gentleman would not expect me to comment on the figure mentioned in his question.

Will the right hon. Gentleman not bear in mind that, in considering reactions to the Bullock Report, it is beside the point to talk about experience in Germany and other countries because they have had 30 years' experience of similar approaches although, even now, they do not go anything like as far as the suggestions in the Bullock Committee's majority report would take us in one leap in the trade union domination of industry? Will the right hon. Gentleman understand that there is widespread concern about the proposals and that he should give that concern proper thought instead of brushing it aside?

I am deeply grateful to the right hon. and learned Gentleman for suggesting that I should not bear in mind any of his remarks. I shall not bear them in mind because they bear no relation to reality.

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

The retail price index rose by 15·1 per cent. over the 12 months to December 1976.

Can the right hon. Gentleman say to what special factors he attributes the present level of inflation? Will he hazard a new guess about when single-figure inflation will be reached?

The answer to the latter question is "No". A whole range of matters has affected our level of inflation, including the depreciation of sterling and our general level of industrial performance in comparison with other countries.

Does the right hon. Gentleman accept that the rate of inflation is related to exchange rates? Does he agree with the Financial Secretary that the exchange rate is being dictated by the level of overseas demand or otherwise for sterling rather than by the policy of the Bank of England? Will he ask the Chancellor of the Exchequer to state clearly to the Governor of the Bank of England at their next meeting the Government's priorities? Are they to keep down the exchange rate to fund the borrowing requirement, to encourage the inflow of funds, which is against the Chancellor's expressed intention to run down the private balances, or to allow the British people some alleviation of inflation in the coming months?

As anyone who was present will recognise, the hon. Gentleman has totally distorted the views of my right hon. Friend the Financial Secretary. It is our intention to bring down the rate of inflation as fast as possible and we have a better chance of doing that and of getting a sensible pay round in our negotiations with the TUC than we should if we pursued the policies proposed by the Opposition.

Does my right hon. Friend agree with the United States Treasury's strongly held views that the depreciation of currency is a consequence of and not a cause of inflation? Has he any comment on the statement by the Under-Secretary for Economic Affairs in the new Carter administration that the fall in value of the pound last year was probably not enough to take account of our comparative inflation rates?

My hon. Friend is right on two counts in regard to the views of the United States Treasury. The exchange rate has an effect on inflation and inflation affects the exchange rate; we have a sort of vicious circle. The way in which our economy is now moving gives us every confidence that we shall be able to achieve a stable exchange rate and a lower rate of inflation.

asked the Chancellor of the Exchequer whether he is satisfied with the Government's ability to sell gilt-edged stock.

Yes, Sir.

The Chancellor of the Exchequer has clearly indicated that interest rates will fall, yet the Government are selling mountains of gilt-edged stock at crippling interest rates. Will the right hon. Gentleman comment on this situation which sounds like a cross between "Catch-22" and incompetence?

I am not sure about that. All I am aware of is that it was not so long ago that many Conservative Members were talking about the difficulty of financing the deficit in this country. I do not think that many people are saying that today.

asked the Chancellor of the Exchequer what criteria he uses to establish the price competitiveness of United Kingdom exports of manufactures.

Measures of competitiveness include relative prices and relative profitability and a method of calculating these was explained in the reply given to my hon. Friend's question on 15th November.

Does my right hon. Friend accept that the 9 per cent. revaluation of the pound against the dollar over the past three months, at a time when our export prices have been rising fast, has seriously damaged the competitiveness of our exports of manufactures, which are probably less competitive now than at any time since 1972?

My hon. Friend's Question reflects some of the over-valuation of the exchange rate as it existed prior to last year. I do not think that anyone can seriously suggest that the present-level of the exchange rate does not provide a considerable competitive advantage for British industry. The latest figures suggest that it is taking advantage of it.

Does my right hon. Friend accept that major factors in overseas markets are industrial capacity and reliability of delivery and that price competitiveness is not the only factor? Does he agree that industrial capacity will be hindered if we keep interest rates at their present level?

These are all factors that have to be taken into account. The most important aspect is not necessarily the level of interest rates but the ability to invest profitably in particular areas where we can be sure of a long and continuing demand. Possibly that sort of confidence is the most important factor in terms of my hon. Friend's question.

asked the Chancellor of the Exchequer whether he is satisfied with Treasury forecasting.

I am always looking for improvements in forecasts, both inside and outside the Treasury.

I must thank the right hon. Gentleman for his honesty. But are Treasury economists now definitely converted to control of the economy through domestic credit expansion control rather than through demand management, or will they revert to their old ways once the restraints of the IMF are lifted?

I think that the hon. Gentleman is mixing up his first question. The fact is that we are talking about forecasts and forecasters. All forecasters have made errors, both inside and outside the Treasury. If we look over the years of forecasts, we find that in the early 1970s the errors were very large. I am glad that the hon. Gentleman restrained himself from criticising his own Government in that respect, because he would have been quite wrong to do so. I can assure him that economists and Ministers within the Treasury take due consideration of all forecasts that are made, as well as many other judgments, in coming to conclusions about DCE and many other matters affecting the economy.

Does my right hon. Friend agree that economic forecasting is an uncertain business? Does he accept that all the recent statistical tests carried out show that as a whole the Treasury forecasts in many leading areas are far better than most of the other forecasts?

My hon. Friend is right. Forecasting is an uncertain business. One has to take account of great magnitudes of figures affecting countries around the world as well as this country. I do not wish to be complacent about anybody's forecasts, but I am surprised that some seem to believe that it is only Treasury forecasters who from time to time do not get it absolutely right.

The Chief Secretary is right to be shy of forecasts, although he should not be surprised by people's reactions. Will he at least reassure us that in the forthcoming public expenditure White Paper, which I believe is to be published very shortly, full account will be taken of the relative price effect and the impact of inflation on projections of public expenditure for the coming year and the year after that? It would be misleading if such matters were left out of a public expenditure White Paper.

I have no wish to make any comments about the White Paper, the first volume of which was published today. We take account of all these matters in deciding on the White Paper and, indeed, on our public expenditure plans and control of public expenditure, which I am sure the hon. Gentleman will agree is now under much greater control than it has been for many years.

asked the Chancellor of the Exchequer what items of food were not subject to an import levy at the latest convenient date.

This information is available in the Customs and Excise Tariff, which indicates whether particular foodstuffs are subject to import levy. In addition to those items not subject to levy, certain items are subject to levy at a nil rate.

Is not the true answer that every sort of foodstuff imported into this country and available to our housewives is now subject to an import levy? Does the right hon. Gentleman appreciate that the system of import levies is invoked only when food from outside the Community is cheaper than food grown within the Community?

I must inform the hon. Gentleman that he is mistaken. There is a wide range of foodstuffs not subject to levy, including vegetables, fruit, fish and lamb. He may care to examine those commodities.

asked the Prime Minister when he last met the TUC.

asked the Prime Minister when he last met the TUC.

I refer my hon. Friends to the reply which I gave to my hon. Friend the Member for Gravesend (Mr. Ovenden) on 7th December.

At that meeting did my right hon. Friend discuss with the TUC how many jobs would be lost and how many industries would face collapse, especially in the West Midlands, if the Tory proposal that is quite explicit in the so-called "The Right Approach"—namely, to scrap the NEB—were ever to come to fruition?

It is clear that the National Enterprise Board is performing a valuable function. Having had some serious discussions with members of the NEB during the past fortnight, I think that the idea of instant opposition, in which it is supposed to be abolished, will need further reflection by the Opposition. At present the NEB is responsible for about 300,000 workers. I believe that the total output of the companies for which it is responsible is about £3 billion. I ask the House to accept that this institution, which started off in a certain wave of criticism, is performing a valuable function. I believe that it will be of great use in supporting the industrial strategy.

Has the Tory Opposition offered any support for the industrial strategy? Was the progress of that strategy discussed with the TUC when my right hon. Friend last met its leaders?

Whatever the views of the Opposition, or their ignorance, both the CBI and the TUC take the industrial strategy very seriously. The 39 or 40 sector working parties have produced reports that would repay careful study and debate in the House if that were possible. I do not know what view the Opposition take, but I suspect that it is no industrial strategy, no industrial democracy, no incomes poicy, and no social contract. I am not sure that they can even agree on what they do not want.

When the Prime Minister talks to the TUC will he bear in mind the actual record of his Government, which is a loss of 750,000 jobs and an increase of 1 million in the number brought into paying tax? Will he also bear in mind that there are many trade unionists as well as a majority of others, who would prefer the Tories' actual record of more jobs and lower taxes?

I shall certainly raise these matters with the TUC, but I wonder what answer the right hon. Lady received from the leaders of the TUC when she met them recently and asked them whether they would prefer a Government led by her. My understanding is that they were not wholly convinced, despite her lures and wiles.

Is my right hon. Friend aware that the Opposition confirmed in the House only last Friday that if they were returned to power they would scrap the NEB? Does he not agree that the 300,000 jobs that are dependent upon the National Enterprise Board would be put in jeopardy if the Opposition were returned to power?

Yes, I think that there is no doubt about that. The Opposition were totally opposed to the funding of Leylands. If Leylands went, that would in itself destroy a couple of hundred thousand jobs. The Opposition cannot escape from their responsibility. I trust that they will become a little more responsible about the maintenance of jobs in the West Midlands in this important enterprise and about the National Enterprise Board itself.

When he next meets the TUC, will the Prime Minister care to ask its leaders why trade union leaders are so determined to maintain control over industrial democracy instead of relying on real democratic participation? Will he care to comment on the fact that the other side of industry, the CBI, would get far more thanks and sympathy from the rest of the community in its criticisms of the Bullodck Report if it had ever shown any encouragement of industrial participation in its whole lifetime?

There are many differences of view. For example, when I hear the Tory Party and Mr. Arthur Scargill condemning the same report, I begin to wonder what kind of holy alliances we are seeing growing up.

Does my right hon. Friend agree that endemic in the thinking of some sections of the Tory Party is the belief that there should always be a measure of unemployment, but that it has certainly never been within the orbit of Socialist thinking? Is not the growing rate of unemployment far too high and should we not set about sharing the work available?

I agree with my hon. Friend about the level of unemployment. I take no pleasure from standing at this Dispatch Box facing questions on this matter every week. [HON. MEMBERS: "Resign."] The reason that I do not resign on this matter is that, if the Tories came to power, they would double the numbers of unemployed. Their proposals for cutting public expenditure by several billion pounds would undoubtedly have that effect. We must stick at this present policy under which we are attempting to get rid of inflation, under which inflation is in fact going down, and under which we hope to get another agreement with the trade union movement on pay for another 12 months. That, combined with the emphasis which is being placed on the industrial strategy and exports, is the only way to see this country through.

Does not the fact that the Prime Minister has to stand at that Dispatch Box every Tuesday and Thursday and try to defend his record on unemployment destroy completely any industrial strategy that the Government put forward? Does not the fact that when he says that unemployment would be 300,000 higher if it were not for the NEB and 200,000 higher if it were not for other measures which the Government have taken mean that the true unemployment figure is nearly 2 million? What kind of unemployment policy and industrial strategy is that?

I am glad to say that because those who are actively engaged in industry take a rather more realistic view of the situation the industrial strategy has not been destroyed. The series of reports that have been produced are the result of the combined work of trade unionists, employers and managers. They are setting for themselves new targets for exports and new targets for productivity. They deserve to be encouraged, not constantly disparaged, by this House.

asked the Prime Minister if he will now appoint a Minister with particular responsibility for poverty and homelessness.

The questions of poverty and homelessness are clearly related and I have accordingly considered the hon. Member's proposal. I reach the conclusion that the appointment of a single Minister would cut across the functions of other Ministers and would not improve matters.

I thank the Prime Minister for that reply. May I continue to tempt him away from the divisiveness and confrontation which he has seen earlier and ask whether he will support the move in this House to set up a Select Committee to examine housing problems and the link between social security and the tax system and the incomes policy so that, as far as possible, a bi-partisan approach can be brought forward, which would be more successful than the policy we have seen in the medium and long-term past?

I shall certainly look into that series of propositions. I know that the Chancellor is considering one of the propositions to which the hon. Gentleman referred.

Is my right hon. Friend aware that some Labour Members are getting anxious about the non-publication of the report on housing finance? Will he have a word with his right hon. Friend the Secretary of State for the Environment to see whether it can be published rapidly?

The matter is being considered in the Cabinet at the moment. I shall certainly have a word with my right hon. Friend to see how quickly the report can be published.

Does the Prime Minister agree that the one way not to cure homelessness is to destroy the construction industry? Is he aware that his policies are resulting in unemployment in the construction industry in the South-West in excess of 30 per cent.? What action will he take to avoid destruction of the industry and to create homes for people in that region?

The construction industry should undoubtedly be doing more than it is at present. I have been looking into the numbers of housing starts. For the year 1976 it looks as though they will be the highest since 1969 in the public sector. Private starts—I have only the figures up to the end of November—will almost certainly be higher than in 1974 and 1975. This morning I was glad to see references to the effect that private starts look as though they, too, are about to move upwards.