asked the Chancellor of the Exchequer what organisations, or representative bodies, have made representations to him about the development land tax: and if he will make a statement.

I will circulate in the Official Report a list of those bodies which have made representations to date.

They must be fairly numerous. When he is considering these representations will the Chief Secretary bear in mind particularly the complaint of the Chairman of British Rail, who feels that the high incidence of this tax prevents the effective commercial development of British Rail sites? Such developments could alleviate unemployment and contribute much to the revenue to help the hard-pressed commuter in the South-East.

I listen most carefully to all the representations that I receive. I have taken very careful note of what the Chairman of British Rail said.

Does the Chief Secretary agree that the real situation is that some property landowners are deliberately holding back in the hope of squeezing the British public even more and avoiding tax on unearned profits in the event of a Tory election victory? Will he reject completely this type of pre-Budget pressure by the British Property Federation and Conservative Members?

From time to time I agree with my hon. Friend, and certainly on this occasion I do. But there is no evidence yet of any shortage of land or of any holding back for the reasons that he has stated. If landowners are holding back for these reasons they are very foolish indeed, because they may have to wait for decades, or even for ever.

Contrary to the Chief Secretary's last answer, is he aware that there is a desperate shortage of house building land in this country because of the excessively high rates of development land tax? Surely this will mean a spiral-ling of house prices, which will adversely affect first-time house buyers. Will he not do something about that situation?

I would if that were true. There is about six years' supply of residential land with planning permission available, half of which is in the hands of builders.

Will the Chief Secretary consider deferring the introduction of the 80 per cent. rate while he considers the devastation that this Act has already inflicted on the development market?

I do not accept the premise of the hon. and learned Member's question.

asked the Chancellor of the Exchequer if he remains satisfied with the level of interest rates.

Yes, Sir, though I keep the position constantly under review.

Will the Chancellor resist the pressure which seemed to appear at the beginning of this week to increase interest rates? On the contrary, will he do everything possible to push them down, because this is vital for industrial expansion and particularly significant to the small business community, which we want to promote?

Interest rates should be as low as is consistent with the general welfare of the economy. I know that my hon. Friend shares my pleasure in the fact that the minimum lending rate is now 6 points below the level that I inherited from the previous Government. Mortgage rates are 2½ per cent. below the level that I inherited. That means that a person with a new £10,000 mortgage is £250 a year better off than he was a year ago.

Will the Chancellor note that while this reduction is extremely welcome, interest rates are still too high? Will he not agree that there is every conceivable reason for bringing them down further in present circumstances? With our much lower rate of inflation and the fact that there are no exchange rate problems this should be possible.

I hope that it will be possible. However, one must consider interest rates as one of a number of variable contributions to the welfare of the economy.

Is it the case that the rate of increase in M3 is about the same—working on a three-months' basis—as that which the Chancellor inherited? Does this have an implication for interest rates?

I would love to answer that question, but parliamentary protocol prevents my doing so because there is a later Question about that very point.

asked the Chancellor of the Exchequer if he will endeavour to organise a special meeting of Commonwealth Finance Ministers to discuss the problem of external indebtedness of non-oil-exporting developing countries within the Commonwealth.

The Government regularly have discussions with Commonwealth and other developing countries in which the question of their balance of payments and debt is covered. UNCTAD is the forum in which the debt issue is fully considered. We hope there will be a constructive review of this problem at the Ministerial Trade and Development Board in the week after next.

Is my right hon. Friend aware that some countries—Sweden, Canada, and one or two others—have already cancelled the debts of the poorest of their debtors in the developing countries? Since, apparently, it is Government policy to deal with these matters case by case, will he consider cancelling the debts of countries whose per capita income is less than $200?

My right hon. Friend is right to say that these matters are dealt with on a case-by-case basis. That is the purpose of the Ministerial Trade and Development Board. Not all these countries have the same problems. They all have their individual problems, and I believe that the forum of UNCTAD, in which these matters are to be discussed the week after next, is the best place for that process to take place.

Does the Minister accept that this is an aspect of a wider problem, involving oil money that is not available for long-term investment? It causes Governments world wide to create debts. Should not that money be mopped up so that it will not add to inflationary pressures? Do Her Majesty's Government have any plans, with their partners in Europe or with other countries, to take positive action to mitigate the evils of the effects of excess savings over investment?

The right hon. Gentleman is right, because the indebtedness of these less developed countries has grown compared with the situation in the 1960s. Last year serious problems were foreseen and there were fears that a default position would lead to further failings. Fortunately, those fears have not been realised. There is a great amount of international co-operation in this matter, and the meeting that is about to take place will deal with these problems. I believe that that is the right forum for such discussions.

asked the Chancellor of the Exchequer when he next intends to chair a meeting of the National Economic Development Council.

I hope to take the chair at the next meeting on Wednesday 1st March 1978.

Does the right hon. Gentleman agree that although there was some improvement in the British economy in respect of financial statistics there has not yet been any improvement in real performance? Will he say to what extent the NEDC is worried about this matter, in terms of priority? Bearing in mind the deterioration in our terms of trade and volume of exports in recent months, may I ask what plans the NEDC has on specific headings to try to obtain a programme for real economic recovery?

I welcome the tribute made by the hon. Gentleman to the improvement in our financial situation. It is true that so far this has not been adequately reflected in the behaviour of output or employment, although there was an increase last year in the volume of private manufacturing investment, which is part of the real economy, of between 12 per cent. and 13 per cent. The hon. Gentleman will be aware of the substantial increase in retail sales in the last two months. We can expect that to be reflected in the coming months in the build-up of stocks and new production.

Has my right hon. Friend seen the forecast by the Cambridge Economic Group with its devastating comments about unemployment not only in the next two decades but much earlier—as near as 1980, and going on to 1985? On that basis, does he think that in the next Budget and succeeding Budgets it will be necessary to err on the side of Benn rather than other pressure groups, whose views have been made known?

I am not sure what abstract economic concept is intended by the word "Benn". I am not familiar with that concept. In regard to the Cambridge Economic Group and its fore- casts, I study these matters with the attention they deserve. I remind the House that the Cambridge Economic Group told me three years ago that our balance of payments deficit would increase with our public sector deficit. That forecast turned out to be entirely wrong.

Will the right hon. Gentleman confirm that the national output in each quarter of last year was running at a rate below that achieved in 1973, and that there is no sign whatever of the upturn forecast in his Budget last autumn? Will he also confirm that, as has been reported, the Prime Minister does not share his optimism about the future of the economy? Will he tell members of the NEDC that they would be better advised to agree with the Prime Minister than to accept his own views?

I must warn the hon. Gentleman not to rely on Press reports by people who were not present at the meeting concerned, but to rely instead on the denial of those reports by both the TUC General Council and the Labour Party National Executive Committee, whose members attended an excellent meeting with me on Tuesday morning.

asked the Chancellor of the Exchequer if he intends to allow hotels to qualify for industrial building allowances, as pertains in the other eight EEC countries; and if he will make a statement.

asked the Chancellor of the Exchequer what representations he has received that hotels should be eligible for industrial building allowances; and if he will make a statement.

My right hon. Friend has received a number of representations on this point. I have noted the suggestion of the hon. Member for Christchurch and Lymington (Mr. Adley) but I cannot anticipate the Budget Statement.

Since the Minister knows my interest in the industry, will he accept that the non-classification of hotels for the industrial building allowance is the greatest single barrier to new investment and job creation? Does he agree that the notional tax loss that would be suffered if the proposal in my Question were implemented should be well and truly out-weighed by the new investment that would result if hotels were so classified?

We are now examining this matter. The cost of extending the industrial building allowance to new hotel building would be about £30 million The hon. Gentleman must remember the considerable assistance that is already being given by means of capital allowances, which cover up to one-third, or even more, of the cost of building new hotels or additions to them.

Does the Minister agree that a notional tax loss of approximately £30 million would bring far more benefits to the economy than would some of the payments made by this Government to other sectors of economic activity?

I have no doubt that the development of hotels would be advantageous, and we shall do our best to encourage that activity. On the question of the indusrial building allowance being extended to the hotel industry, I would point out that the Treasury is now examining the matter. If we have anything to report, it will be done in the course of the Budget debates.

Will the Minister bear in mind the competition between British hotels and hotels abroad, which is very keen? Does he appreciate the severe disadvantage suffered by those who wish to invest in new buildings and to modernise buildings because there are not the super profits to put into vast new ventures unless an allowance of this nature is made?

I do not accept all that the hon. Gentleman says. Clearly, there is still a considerable amount of hotel development taking place, but there is enough in this point to warrant the further examination that is being given to the matter.

asked the Chancellor of the Exchequer what is his current estimate of productive potential.

I have no reason to change the view that my right hon. Friend gave on 10th November 1977, that the growth in productive potential is now about 3 per cent. a year, at 1970 prices.

Will the Minister explain the curious combination of stagnant output on the one hand and, at the same time, falling unemployment and an increasing number of vacancies?

There is no simple explanation. This proposition has bothered many economists and others. In the past year one would not have expected to see the decline that has occurred in the unemployment figures in the last five months. We are glad of that, but I am sure that my hon. Friend will agree that we should seek to bring down the unemployment level even more.

If productive capacity is growing by 3·3 per cent. per year, what positive advantage is there in having a level of pay settlements that exceeds that figure?

I cannot see what that has to do with the Question.

If the growth of potential is being stated in percentage terms, does it matter what prices it is conceived in?

It just so happened that it seemed the most convenient way to present it.

What likelihood is there of a growth in industrial investment in a period of stagnation in production?

We want to see an increase in productive potential, productivity and growth of output. These are our objectives and will remain so. My right hon. Friend certainly hopes to do something about that in the Budget.

The Chief Secretary may well want to see an increase in the rate of growth and in productive potential—that was the whole point of the industrial strategy—but is he aware that growth of productive potential was higher than 3 per cent. when the Government took office and has gone down since then? Is that not an indictment of the Government's whole industrial strategy?

I do not think so. If the hon. Gentleman looks a little further into what was happening before 1974, he will see that the situation that we inherited was appalling, and he and his hon. Friends presided over that.

asked the Chancellor of the Exchequer what representations he has received suggesting three-year averaging of tax liability for agricultural business.

I have received a number of representations on these lines from organisations representing farmers.

Is it not time the Treasury acknowledged that there can be wide fluctuations in incomes, particularly for small farmers and market gardeners such as the potato growers in my area of Derbyshire? Should not the Treasury accept that this would be a sensible assistance to farmers and would not necessarily mean any lost revenue?

Well spoken, spud

There have been a number of representations, and some have included the suggestion of an investment reserve scheme for farmers. This proposal is under examination. In relation to the averaging of incomes generally, or even for groups within the community, there are formidable administrative problems that have been recognised by various commissions. An investment reserve scheme merits closer scrutiny and is now receiving it.

Has my right hon. Friend received any representations from the Minister of Agriculture? Is there not a great deal of support for this idea within the Government, and would it not assist farmers and be of benefit to agriculture?

It is one of the proposals under consideration. My hon. Friend will surely appreciate that there are difficulties in moving in this direction. Averaging was turned down by the Radcliffe Committee, which called it an administrative impossibility. Of course, things have changed since then, but there are problems that have to be looked at closely.

Does the right hon. Gentleman appreciate that agriculture is one of the few industries in this country with real growth potential? Does he realise that adopting a system of three-year averaging would do more to restore the confidence of farmers than virtually any measure that the Minister of Agriculture could introduce?

I must remind the House that the possibility of averaging does not apply only to agriculture. There is a whole range of trades and industries that experience violent fluctuations in income and there are great problems in drawing the line over the period in which these accounts have to be looked at. There are practical problems which have to be considered, and they are under examination.

Will the right hon. Gentleman avoid being over-oppressed by the technical difficulties and recognise the urgent need for some sort of relief in the next Finance Bill? Will he press on with the examination of investment reserve relief and take the Australian scheme as a useful precedent?

This is under examination. I can say no more except that at the time of the Budget debates these matters can be examined further and the Government's proposals, or whatever may be brought to the House, can be considered.

asked the Chancellor of the Exchequer whether he will introduce further fiscal and other measures to protect the national heritage of buildings and works of art.

The latest public expenditure plans provide for an increase in the money available for the purchase of heritage items, their preservation and display and for expenditure on historic buildings and ancient monuments.

Will the right hon. Gentleman consult his colleagues who bear responsibility for these matters with a view to ensuring that the Tate Gallery can acquire Gainsborough's portrait of Sir Benjamin Truman? Will he also look at the present tax structure, which seems designed to ensure that an increasing number of works of art of national importance come on to the market and that neither British citizens nor British galleries have the funds to acquire them?

The hon. Gentleman will know that this is a matter for my noble Friend the Minister with responsibility for the arts. If my noble Friend does not have sufficient funds to deal with this matter, he will no doubt approach me, though my colleagues who have to approach me for more funds are reluctant to do so.

As a cultured animal—

The hon. Gentleman or the Chief Secretary?

Both. Is my right hon. Friend aware of the real dangers to the retention of the national heritage in buildings and works of art, such as Gainsborough's superb portrait of Ben Truman, which has just been mentioned, the export of which is more likely and the survival of the buildings the less likely because of our tax policies and because not enough Government funding is provided for the retention of our heritage?

As one cultured animal to another, I am always ready to try to do as much as I can to help in this area. I know that my hon. Friend will not under-estimate what we are spending already. The total amount planned to be spent in 1978–79 in this area is £108 million.

It is not enough.

I appreciate that my hon. Friend has a right to ask me to spend more, but Opposition Members do not have the same right.

Will the right hon. Gentleman remember that capital transfer tax on the private capital resources required to support the heritage and to prevent a flood of sales taking place is an absolute killer, and that he should turn his attention to that?

If the hon. Gentleman were in a more reasonable mood, he would accept that his proposition is nonsense. Most reasonable people in the heritage lobby know that we have done an enormous amount to help with capital transfer tax.

Does my right hon. Friend agree that, apart from acquisition and retention, there is no point in keeping these things if they remain buried in the cellars of our museums and galleries where 99 per cent. of our people cannot see them? There is not enough funding to allow the majority of people to see famous works of art in travelling exhibitions, and so on.

I have a great deal of sympathy with my hon. Friend's view. I should like to see more works of art available for public gaze. The whole purpose of the reliefs that we have provided in capital transfer tax is to do precisely that.

What are the Government doing to protect and replenish the National Land Fund, and to what purpose will it be put in future?

The right hon. and and learned Gentleman will know that the Fund is being examined by a Select Committee. We are awaiting its report and will comment upon it.

Is the right hon. Gentleman satisfied with the relief available under the last Finance Act for maintenance funds? If so, can he tell us how many people have so far taken advantage of the provision?

No one has yet taken advantage of it, but that is not surprising. The hon. and learned Gentleman is a lawyer and he knows that setting up trust funds takes a little time. I understand that some funds are firmly in mind to be set up. When hon. Members on the Opposition Benches laugh about the question of relief for the heritage, they should understand that those engaged in the heritage are not as interested in becoming an over-privileged class as those hon. Members seem to imply.

asked the Chancellor of the Exchequer what arrangements for training and consultation have been made to safeguard the ability of Her Majesty's Customs and Excise to ensure that the provisions of the Endangered Species Act will be met.

The training of Customs officers covers the enforcement of import and export restrictions including those imposed by the Endangered Species (Import and Export) Act 1976. There are also written instructions relating to each restriction. Expert advice is made available by the Department of the Environment when required.

Is my right hon. Friend aware that there is growing concern at the demanding tasks of recognition of the items covered by the Act? Will he consult further to ensure that Britain's high reputation in this area of responsibility is maintained? Does he agree that the import of ivory in the last two years, which may have accounted for between 2,000 and 3,000 elephants, scarcely helps to maintain that reputation?

I think that my hon. Friend will accept that the training of Customs officers is adequate to deal with the problem that he has in mind. The quantities that have been imported are less than those that have been licensed. If my hon. Friend is seeking to reduce the number of licences that are made available, he will need to put that point to the appropriate Department.

Will the Government consider extending the provisions of the endangered species legislation to include the self-employed?

asked the Chancellor of the Exchequer what plans he has to apply the 10 per cent. guidelines in 1978–79; and on what criteria his decision depends.

It is far too early to expect me to have firm plans.

Does my right hon. Friend agree with me that the intractable problem of unemployment can be only partially solved if the stimulus to which he referred in answering an earlier Question from my hon. Friend the Member for Bolsover (Mr. Skinner) is applied to the economy? Does he further agree that production is allied to stimulus being given to the economy and that it is almost idle to want unemployment figures to drop, a stimulus to be given to the economy and production to be expanded, unless the stimulus to which he referred is given to the economy fairly quickly?

Of course, I accept that, but I think that one has to relate it to the question that my hon. Friend asked. The fact is that any stimulus that I give to the economy is liable to lead to a dangerous extent into imports and inflation unless we can narrow the gap that exists in Britain between productivity and earnings to about the size of that of most of our trading partners. It is in this area that the question of the level of earnings will remain important.

Will the Chancellor let us into the secret of how he is getting on with the discussions with the CBI over the publication of the black list? May we, particularly, expect to have the names of those on the black list and on the white list before a new black list is drawn up for stage 4?

That Question is stupe-fyingly irrelevant to the original one. I do not propose to be led by the hon. Member into breaking the confidentiality of discussions with the major employers' organisation in this country.

Will the Chancellor of the Exchequer devote rather less of his mental energies to the problem of holding people's wages down and rather more to fulfilling his Government's side of the social contract, which would release productive energy and regenerate the economy?

My hon. Friend has a later Question on this matter, which I shall answer. The extent to which any stimulus that a Chancellor is to give to the economy increases employment depends on the extent to which British industry is competitive. The level of earnings in relation to productivity is the central issue in this regard.

The Chancellor's original guidelines, he will recall, were an increase of 6 per cent. or 7 per cent. on wage rates and 10 per cent. on earnings. Are his guidelines now 10 per cent on wage rates and 14 per cent. to 15 per cent. on earnings?

The right hon. Gentleman knows as well as I do that the guidelines as given in the White Paper are that we wish the increase in earnings for the nation as a whole to be limited to about 10 per cent. All the indicators are that although that limit may be slightly overtaken, it will be very much less exceeded than Conservative Members were telling us some months ago. No one was more gloomy in his predictions than the right hon. Gentleman. I hope that we shall receive congratulations from him on the success of the policy so far.

Will the Chancellor reconsider his answer to my hon. Friend the Member for Melton (Mr. Latham)? Does he agree that it is of the greatest importance for the country to know whether he even has it in mind to continue into next year rigid guidelines of the kind that have proved so intolerable this year? Does he agree that British industry is becoming increasingly resentful about the impossible obligations that he is seeking to impose upon it in the new terms of contract, and that unless he makes it clear that they are not to be placed under an obligation of this kind, he is bound to get a hostile reaction from British industry?

The right hon. Gentleman seems very badly out of touch with organisations which purport to represent British industry, which have given and are giving full support to the Government's pay policy, which accept the need for sanctions to support that pay policy, and which have discussions with us about some aspects of the latest addition to those sanctions, namely, the contract clauses.

asked the Chancellor of the Exchequer by what percentage the value of the £ sterling has fallen since March 1974.

From the average levels of March 1974 until 20th February 1978 the spot rate for sterling against the United States dollar has fallen by 16·4 per cent. and the trade-weighted effective index has declined by around 20 per cent.

Are those disgraceful figures not a terrible indictment of the Government's record over four years in power? What does the Chancellor intend to do to ensure that this is not the pattern over the next year?

The hon. Member will be as aware as I am that the reason for the decline of sterling was the fact that we ran a big balance of payments deficit in the early years of this period, almost entirely because of the increase in oil prices and the fact that our inflation rate was substantially higher than that of our competitors—again largely because of the increase in oil prices. The hon. Member will also be aware that we have now eliminated our balance of payments deficit and brought down our annual inflation rate to below the level that we inherited from the Conservative Party.

That is a controversial issue, on which there are many views from both sides of the House. My own opinion is that the present level of sterling is, on balance, not damaging to the economy, but I accept that a substantial increase in the value of the pound, unless we can bring our rate of inflation down and reduce the level of our wage costs, would be damaging to our industrial performance.

Does the Chancellor of the Exchequer accept that his reply to the Question is quite horrifying? Will he also bear in mind the answer that his hon. Friend gave to Question No. 7, about the effect of a three-year averaging of tax liability applying to other industries besides that of agriculture? Will he bear in mind that agriculture is the only industry which pays for its input in real money and gets green pounds in return, and will he act accordingly?

The hon. Lady will not expect me to agree with the first part of her question. As to the second part, which has absolutely nothing to do with the original Question that is before the House, all I can say is that the performance of British agriculture is due, as was said by the Duke of Northumberland, who chairs the National Economic Development Committee on Agriculture, largely to the fact that it has operated a planning agreement with the Government for many years.

asked the Chancellor of the Exchequer what consultations he has had with the motor industry regarding the hire-purchase terms for car purchase.

My right hon Friends and I have consultations with representatives from the motor industry on a wide range of issues. Hire-purchase controls are among the items discussed.

Does my right hon. Friend agree that the British car industry is being undermined by the fact that our foreign competitors within the EEC are offering low interest rates or interest-free loans to car producers? Therefore, will he consider approaching the Bank of of England, through the NEB, with a view to getting extensive credit facilities for the motor car industry in this country?

I do not think that extending hire-purchase arrangements is the way to handle this problem. The motor car industry is very much against the extension of hire purchase, because of the problems of supply. Although the finance houses and the distribution areas are anxious to see this extension, their view is not shared by those who produce the cars.

asked the Chancellor of the Exchequer if he is satisfied that adequate Inland Revenue staff is available to administer and implement any budgetary proposals relating to taxation.

Yes. The staffing of the Inland Revenue is kept under con-stand review to ensure that it is adequate to cope with Budget proposals and other tasks which the Department has to undertake.

Does my hon. Friend accept that the Inland Revenue staff, by definition, is probably the least popular section of the work force? None the less, does he agree that he should undertake a recruitment campaign because of the overwork and lack of manpower in the Department? This could well be financed by devoting some of the extra personnel to the detection of fraud and evasion, which are apparently still rampant in the country?

My hon. Friend says that the Inland Revenue Staff Federation members are unpopular. Those who know them know that they do a first-class job. There is no reason why they should be unpopular. That being said, I understand that nobody is happy to have his tax taken from him. We are aware that there is a need for increased staffs and we are doing everything to ensure that we find suitably qualified people.

Does the Chief Secretary agree that a large part of the reason for the vast increase that has already taken place in the Inland Revenue staff is the tremendous increase in the complexities of income tax that have taken place, to such an extent that the income tax law books are now larger than the London telephone directories? Will he therefore give plenty of attention between now and the Budget to the desirability of bringing forward proposals then to simplify the income tax Acts?

I am aware of the need for some simplification, but most of the representations that I receive would, if acted upon, tend to make the tax system even more complicated.

Does my right hon. Friend remember that in 1969 the then Chancellor, Mr. Roy Jenkins, told the House that it would take 10 years for the Inland Revenue to be sufficiently computerised to introduce a proper tax credits and negative income tax system and to do away with the multiplicity of social benefits that we now have? Is the Inland Revenue keeping up to that date, and will all that be ready in 1979?

My hon. Friend should be aware that the tax credits system that was being discussed between 1970 and 1974 would not have done away with the great majority of means-tested benefits. Computerisation is proceeding, and I hope that it will be ready before too long.

If the right hon. Gentleman is not moved by any other argument, will he undertake that no wealth tax will be introduced, so as not to put any additional strain on the Inland Revenue machine?

No, Sir.

asked the Chancellor of the Exchequer how many companies have qualified for exemption from dividend control within the last 12 months.

Fifty-four companies qualified for exemption from dividend control within the 12 months to the end of January on the ground that their operations are almost exclusively overseas under provisions first introduced on 20th October 1975.

Is the Chief Secretary not concerned at the evidence found by the Central Statistical Office of a decline in individual investment in stocks and shares? To what extent does he attribute that loss, in recent years, to continuing dividend control?

Not a lot, actually. There are many reasons for the point that the hon. Gentleman made, but I doubt whether dividend control is a major cause.

asked the Chancellor of the Exchequer if he is satisfied that the money supply is within the target range.

asked the Chancellor of the Exchequer what is the current rate of growth of the money supply.

In the month to mid-January, the sterling M3 measure of money supply grew by about 2¼ per cent. This high figure can be accounted for largely by the once-and-for-all effects of the tax refunds resulting from the reliefs which I announced in October. The underlying trend rate of growth is, therefore, well below this. I am confident that the next few months will show that trend to be within the desired range.

If the further figures to be published show that the growth in the money supply is still above target, will it be the Chancellor's priority to proceed with his tax cuts in the Budget, or will he turn his priority to reducing the growth in the money supply?

The hon. Member knows that fluctuations in the money supply from month to month, or even over a period of more than one month, are perfectly consistent with keeping the monetary aggregates under control. In Germany, which is always held up by the hon. Member as a model to be followed by this country, the increase in money supply over the last three months has been at an annual rate of 15·5 per cent., nearly double the amount provided for a year ago. Yet the Bundesbank has quite rightly decided to maintain an 8 per cent. target for the increase in money supply for the coming year. We propose to follow the type of flexibility which has been successfully followed in Germany. I am glad to see that the reaction in the markets to the figures published last week has been a great deal more sensible than that of Conservative Members.

Does the Chancellor of the Exchequer recognise, and can he confirm quite clearly, the need for next year's monetary targets to be set at significantly lower levels than have prevailed this year?

I shall give the House my views on next year's monetary targets—[HON. MEMBERS: "Answer."] I have not the slightest intention of answering the question now. Instead, I refer the right hon. and learned Gentleman to the fact that Germany has consistently overshot its announced monetary targets without the consequences that the Opposition would expect. Ever since those targets were introduced they have been overshot year by year. The German Government, however, have sensibly set their monetary targets so as to leave genuine scope for growth without reigniting inflation. We propose to follow that example, and I suggest that the right hon. and learned Gentleman would make a more useful contribution to this debate if he studied the experience of countries the Governments of which, unlike his Government, have maintained a sensible and flexible control of monetary aggregates.

Bearing in mind that when the last Conservative Administration was in office the money supply was rising at an annual rate of 28 per cent., does my right hon. Friend not think that the Opposition are displaying sheer effrontery to raise the matter, let alone anything else?

For the last four years, having listened to the Opposition, we have become quite used to the spectacle of Satan rebuking sin.