Object.

asked the Chancellor of the Exchequer when he intends next to meet the TUC.

I am in constant touch with representatives of the TUC at the NEDC and on other occasions, but I have no specific date in mind for a meeting at present.

Although I welcome and appreciate what the Chancellor has done for low-paid workers, may I ask him whether he will undertake to discuss their grievous problems with the TUC? Will he also bear in mind that £44·50 is a ludicrously low level beyond which no more than 5 per cent. can be negotiated and that this could and should be increased by at least £15 without in any way sabotaging the basic principles of the pay policy, which I support?

If my hon. Friend could guarantee that higher-paid workers would not seek to rebuild their differentials on the back of the increase in low pay, to which he has referred, there might be something to be said for his views. However, I fear that to raise the level for low pay beyond that which the TUC itself set some years ago, adjusted for pay increases in the interim, would be a dangerous course.

What undertakings have been sought by the Government and what undertakings have been received from the TUC about the operation of the 12-months rule?

My impression is that the statement in the White Paper concerning the maintenance of existing annual settlement dates is one which is in line with the views of the TUC.

Is my right hon. Friend aware that there will be very great and broad welcome on the Government side of the House for the joint statement which has been published this week between the TUC and the Labour Party? In particular, will he note that some of us very much welcome the proposals for the establishment of a State bank by the amalgamation of the National Giro and the National Savings Bank, and for changes in the operation of the Bank of England? Will he clarify these propositions and say whether any more details are to be published?

I think my hon. Friend is quite right that the mass of the population will welcome very much the statement of common objectives by the TUC and the Labour Party. I have noticed that the response to this announcement in the newspapers which support the Opposition has been one of alarm and despondency.

Since the policies previously agreed between the TUC and the Labour Party have succeeded in the last four years only in lowering the living standards of British trade unions in contrast to those in every other part of the western world, is it not extremely foolish for the TUC once again to have agreed with the Labour Party on even stronger doses of the mixture as before, which can prove nothing but disastrous?

The right hon. and learned Gentleman must make up his mind where he stands on these matters. I quoted in the debate on Tuesday the offensive remarks that he made about the TUC's attitude and the effect of the pay policy last year. He said that he had changed his mind and that he thought that pay policy was a good thing. I do not think that he will advance his party's electoral prospects by accusing the TUC leadership of being fools, which he did again this afternoon. He must be very grateful that the right hon. Member for Lowestoft (Mr. Prior) was not here to hear how he is betraying the position which the right hon. Gentleman is trying to establish.

asked the Chancellor of the Exchequer what proposals he has for the further reduction of taxation.

As circumstances permit, we shall continue to reduce the levels of income tax.

Is the right hon. Gentleman aware that only a very few countries have higher top rates of tax than ours and that among them are Algeria, Egypt and Tanzania? Does he therefore feel proud, surprised or humiliated to find the United Kingdom figuring so prominently in this international league table?

I would not feel terribly proud if I were saying what the hon. Gentleman and his hon. Friends are saying—that nothing matters but the top rates of income tax.

Does my right hon. Friend agree that there would be scope for reducing taxation on persons if the tax on the oil companies operating in the North Sea were raised? Does he agree that the tax regime in the North Sea amounts to little more than a rip-off at the moment and that we are not getting anything like the return for the public revenue that other countries get?

I note what my hon. Friend has said. He will note that there is a later Question related specifically to revenue from the North Sea.

Are we to understand that the Chancellor of the Exchequer has given up any idea of a July Budget, as foreshadowed by the Chief Secretary earlier this year? Or will he accept the advice of the hon. Member for Bolsover (Mr. Skinner) and have an autumn Budget prior to the General Election?

I am not sure which General Election the hon. and learned Gentleman has in mind, but some time between now and October 1979 there will be one or two more Budgets. As to whether there will be a July Budget, I am not prepared to commit my right hon. Friend.

asked the Chancellor of the Exchequer if he is satisfied with the present functioning of the economy; and if he will make a statement.

I am satisfied that the economy remains broadly on the course charted in the economic forecasts published at the time of the Budget. Recent figures suggest that, on most indicators of economic performance, we are doing at least as well as predicted in the forecasts.

Does my right hon. Friend agree that, if there were a Tory Government led by the right hon. Lady who made that awful flop of a speech on Tuesday—which the Tories have now had second thoughts about—unemployment would be at least twice as high and the economy would be in chaos because of the confrontation tactics that they favour? Will my right hon. Friend also accept from me that the 5 per cent. limit plays right into the hands of the Tories, electorally and in many other ways? Will he not take into account the criticisms of the TUC and of individual unions and think closely about this causing more unemployment?

I find myself in agreement with some of my hon. Friend's remarks and in disagreement with others. On the first part, of course it is absolutely right that if the policies proposed by the Tory Front Bench were put into effect we should have a massive and rapid increase in unemployment and a deterioration in our economic performance in almost every area. However, I cannot share my hon. Friend's view about the 5 per cent. limit. Our disagreement with the TUC here is confined solely to methods. On the question of keeping inflation in single figures, we are in agreement, and I have no doubt that we shall have the same co-operation from working men and women next year as we have had during the current pay round in achieving the Government's objectives.

Does not the right hon. Gentleman agree that, if there has been any improvement in the economy, it has been due to the regulations and stipulations laid down by the International Monetary Fund?

No, Sir, I would not agree with that. However, at least it enables me to remind Conservative Members of the point honestly made by the hon. Member for Oswestry (Mr. Biffen), who found the company he kept in the Shadow Cabinet totally intolerable and therefore retired to the Back Benches. The hon. Member for Oswestry made the very fair point that Opposition Members cannot at the same time claim that the Government have been following a mistaken policy for the last 18 months and also that their successes are due solely to the right policies which they followed after the agreement with the IMF.

Does my right hon. Friend agree that the economy is not functioning satisfactorily in relation to unemployment and that we need a substantial stimulus to new jobs by using the great range of public corporations that we now possess and by means of the housing sector, where much could be done without putting any strain on the balance of payments?

I agree that the unemployment situation is unsatisfactory, but the trend of unemployment has been steadily downwards since last September. My hon. Friend will no doubt have seen the figures published yesterday, which show an increase of 28,000 in employment in the first quarter of this year.

Apart from the many ways in which hon. Members have already demonstrated that the economy is far from satisfactory, does the right hon. Gentleman recall that, on 14th June last in the debate on his salary, he confidently forecast that minimum lending rate—bank rate—would be reduced within a matter of days? That is now six weeks ago. What went wrong?

What went wrong, of course, is the hon. Member's recollection of what I said. I never said that the MLR would be down in a matter of days, and I ask the hon. Gentleman to withdraw that false statement.

Is not the truth of the matter that the Trades Union Congress finance committee yesterday took a decision almost exactly in line with the line that some of us pursued on Monday, when we refused to support the Government's attempt to impose a 5 per cent. incomes policy next year and presumably a permanent incomes policy after that, and that it is completely in direct contradistinction to the line which is pursued by the man who supposedly heads the manifesto group, who should be wearing a pair of knee-pads because of the many times that he crawls up and down the corridors trying to get a job in the Government?

My hon. Friend has a colourful but usually inaccurate turn of phrase. What the TUC did yesterday so far as pay policy goes was to repeat the opposition that it expressed last year to the setting of a numerical guideline by the Government. However, I am confident that the TUC members will adhere to the guidelines set down, at least to the degree that they have over the last 12 months. My hon. Friend will have seen that at the same meeting the TUC committed itself to the same collective objectives as the Government have accepted for economic policy over the coming years. I hope that it will have the support of my hon. Friend in pursuing those objectives.

asked the Chancellor of the Exchequer whether he still expects that the Government will devise tax-raising powers for a Scottish Assembly; and which economists and tax inventors have been consulted.

As we made clear in the White Paper, we are prepared to consider sympathetically any proposals other than in relation to offshore oil put to us by the devolved Administration. It would not be right for me to prejudge the results of any such discussions.

May I go on my kneepads to the Chief Secretary and ask him how it is that able Ministers, clever civil servants and tax inventors as ingenious as Lord Kaldor can spend four long years reflecting on some form of an acceptable taxation system for a subordinate Parliament in part—though only in part—of the United Kingdom and come up with nothing?

My hon. Friend never has to go on his knees to me. I am happy to see him on his feet or in a seated position. Although he is absolutely right that there are many bright people around—particularly in the Treasury—who have thought about these and many other matters and will continue to do so, we do not pretend that it will not be fruitful also to have discussions with the new devolved Assembly. I hope that those discussions will be very useful.

Will the Chief Secretary take comfort from the fact that few Scottish Members of Parliament have received representations from their constituents for the Assembly to have power to impose additional taxes upon them?

I note that the hon. Gentleman is able to speak for all Scottish Members of Parliament, but I am not sure whether I should take that as gospel.

asked the Chancellor of the Exchequer at what average age men and women, respectively, employed in his Department have retired in each of the past five years.

With permission, I shall circulate the figures in the Official Report, but the overall average age of men and women who retired from the Treasury during the years 1973 to 1977 was 621 and 60, respectively.

When does my right hon. Friend think we shall be able to afford to get rid of the present ludicrous system under which older men who are desperate to retire have to stay on at work while younger people who are desperate for jobs are left unemployed? When can we afford to bring in the flexible approach to pensionable ages which is presaged in the admirable Green Paper, "A Happier Old Age", which appeared last week?

My hon. and learned Friend has raised an important point, but when he uses the word "afford" I must remind the House that the gross cost of reducing the pensionable age for men to 60 would be about £2½ billion. Some of that would be saved, of course, by a reduction in the unemployment register, but even with that taken into account the cost might still be about £1½ billion.

Why do the Government insist on costing a reduction in male retirement age on the assumption that everyone entitled to retire at 60 would therefore do so? As this appears to be the most likely social change to develop in the immediate future, should not the Government start by finding out how many people would take the advantage of retiring early if it were given to them?

It is extremely difficult to make those assumptions. This is the difficulty in this matter of putting a figure of cost on a reduction in the retirement age. We do not know, and it is very difficult to find out, what the pattern of retirement would be afterwards.

asked the Chancellor of the Exchequer what is the latest annual rate of inflation recorded in the United Kingdom and West Germany respectively.

In the 12 months to June, the retail prices index for the United Kingdom rose by 7·4 per cent. In the 12 months to May, the latest figure available, consumer prices rose by 2·7 per cent. in the Federal Republic of Germany. This shows that, although we have made excellent progress in the last year, we still have some way to go before we catch up some of our main international competitors.

After four and a half years of Labour Government, what explanation does the Minister have for our rate of inflation still being three times worse than that of one of our major competitors?

The hon. Gentleman is really quite remarkable. He overlooks the fact that when we took office inflation was running at 13·2 per cent. and rising. What is more, if we listened to his right hon. Friends we should have inflation rising again.

Will my right hon. Friend bear in mind that over the past 20 years Germany's GNP has been running at double that of the United Kingdom and that over those 20 years the United Kingdom has spent roughly just as much on defence as has Germany? Is it not true that if the Germans had paid to us under the Paris agreements what it has cost the British Government to keep British troops in Europe, our position would have been very much better?

I agree with my right hon. Friend that we pay a much higher proportion of our GNP on defence expenditure than do many countries in Europe, but it would be quite wrong to imagine that that is the sole reason for our much worse performance over a long time on the industrial front in relation to Germany.

Is the Chief Secretary aware that over the period of this Government as a whole inflation has been twice as bad as it was under the previous Conservative Government? Is he aware also that the figure which he himself said is the most accurate guide to the current rate of inflation—namely, the annual rate over the past six months, leaving out seasonal foods—shows an increase of 9 per cent. and rising?

I think it fair to say that what the hon. Gentleman is proving is that an incoming Labour Government invariably inherit a much worse economic situation than do an incoming Conservative Government.

asked the Chancellor of the Exchequer when he next expects to meet other EEC Finance Ministers.

I hope to meet them at the next meeting of the Finance Council scheduled for 18th September.

Does the Chancellor of the Exchequer realise what is happening inside the Common Market? Is it not time that he and his colleagues woke up and spoke for Britain for a change? Why does he not use some of his well-known parliamentary bullying tactics against the Common Market? Does not my right hon. Friend know that the Jenkins plan—the Franco-German plan announced at Bremen—will result in further industrial penetration of our markets and allow the common agricultural policy, which assists France, to exploit our consumers? Why does he not adopt those tactics inside the Common Market? We cannot expect anything from the European party on the Benches opposite.

I can see that my hon. Friend prefers "bovver" boots to knee-pads—

My right hon. Friend knows all about that.

—but he would be more impressive if he used them for some purpose other than tap-dancing on the Common Market.

Why is it that the Chancellor appears to be polite to his colleagues in the EEC even if he does not agree with them but is consistently rude and abusive to anybody in this country with whom he disagrees? Does he not realise that the British people do not really like the sort of tactics that he and the Prime Minister have been indulging in? Will he give an assurance that he will have second thoughts and not conduct the General Election campaign at that sort of abusive level?

My right hon. Friend the Prime Minister and I try to be honest and straightforward in our dealings with all those whom we meet. All I can assure the hon. Gentleman is that anything which the Prime Minister and I said about the leader of his party on Tuesday is as nothing to what the Conservative press said about her on Wednesday.

When my right hon. hon. Friend next meets the EEC Ministers, will he continue to express reservations about the proposals brought forward at Bremen? Can he say whether there is any understanding yet among his EEC counterparts of the need for surplus countries to expand under a fixed exchange rate system if other countries are not to be subjected to crippling deflationary polices?

There is a series of Questions on this matter on the Order Paper, which I shall answer with Question no. 13.

Was there any discussion at the Bremen meeting about the Franco-German proposals of any element of control of the money supply by the Community in each national State?

There was certainly no suggestion that every country in the Community should follow the same money supply targets.

asked the Chancellor of the Exchequer if he will review the working of the tax system in its application to disabled people.

This aspect, like other aspects of the tax system, is always kept under review.

Will the right hon. Gentleman recognise that there is a growing body of opinion on both sides of the House that we should be moving away from the present hotch-potch of disablement benefits towards a tax-free disable- ment costs allowance? Would it not be sensible in this context to consider giving early priority to the removal of tax from the mobility allowance?

I do not agree that there is necessarily a growing body of opinion suggesting that we should move away from the taxation of benefits in that way. Indeed, it is often fairer to tax benefits within the tax system and then provide for relief through the social security system than to proceed in the way the hon. Gentleman suggests.

Is it not true that a great number of disabled people, by the very nature of their handicap, are totally dependent on State benefit and accordingly do not pay income tax? Would it not be much better, therefore, to make reductions in indirect taxation, such as value added tax, which falls unfairly not only on the disabled but on families and the elderly?

My hon. Friend is right when he says that a vast number—perhaps the majority—of disabled people do not pay income tax at all and so would not benefit from some of the suggested changes in the tax system in relation to them. As regards VAT, it is fair to point out that it is not entirely a regressive tax because many of the necessities of life are exempt from VAT.

asked the Chancellor of the Exchequer when he last met the heads of the International Monetary Fund.

I last saw Mr. Witteveen, the retiring IMF managing director, and his successor, Mr. Larosiere, in their official capacity at the IMF interim committee meeting in Mexico City at the end of April. I also met Mr. Witteveen again a few weeks later at the OECD meeting in Paris.

As we are approaching the manifesto season, would the Chancellor like to tell us whether he followed the advice he received from the IMF because he had to or because he agreed with it? If it was the latter, perhaps he would like to give us an insight into the Labour Party's new economic philosophies by publishing all the correspondence.

There is nothing I should like more than to publish my correspondence with the IMF, because it would make such good reading in my election manifesto. If the hon. Gentleman wants to help his party, he must do rather better in his questions than he has this afternoon.

When my right hon. Friend meets members of the IMF, will he make it clear to them that the British trade union movement is opposed to his 5 per cent. pay policy because it realises that if a trade unionist cannot get the full benefit of a legitimate pay claim that it will have gone for ever but that any kind of restraint on dividends simply means increased capital gains, scrip issues and extra dividends later? Therefore, it is simply a facade.

I hope very much that my hon. Friend is not suggesting that he will vote against the Government's proposals for renewing dividend controls later today. If so, I think that he will have some accounting to do to his supporters in his constituency.

Does the Chancellor recall saying in the early rounds of his correspondence with the managing director of the IMF that an essential element of his strategy was to secure a steady reduction over the next few years in the share of resources being taken by the public sector? Is he not this year actually increasing public spending by at least twice as much as the likely growth in the economy? Is not the right hon. Gentleman profoundly foolish so swiftly to have broken his undertaking to the IMF?

I discussed this matter with the IMF team when it visited this country a few months ago, and I was gratified to find that it totally supports the Government's policies on public expenditure, as on every other element of economic policy. I must ask the right hon. and learned Gentleman to read the remarks of his recent colleague, the hon. Member for Oswestry (Mr. Biffen). The right hon. and learned Gentleman cannot have it both ways. If he really thinks that we are following IMF policies, when the IMF endorses our policies he must support us.

Will my right hon. Friend please make clear to the IMF that it is not only that the TUC is against the 5 per cent. limit? It wants a return to free collective bargaining and it is against cash limits in the public sector, which have held down wages and salaries in the public sector. Is it not time that we changed our policy on this?

I do not think it is time we changed our policy on either of those matters. I think that the policies the Government have followed in these respects have contributed to the fall in inflation, on which the TUC no less than others in the country has congratulated us.

asked the Chancellor of the Exchequer if he is satisfied with his estimate that there will be more taxpayers in 1978–79 than in 1977–78.

The numbers of taxpayers in 1977–78 were lower than they otherwise would have been as a result of the increases in personal allowances made last autumn in anticipation of the indexation required for 1978–79. The numbers for 1978–79 are about 300,000 less than for 1976–77. This year's main Budget proposal—the lower rate band—benefits large numbers of the lower paid but does not itself alter the number of taxpayers.

Will the right hon. Gentleman confirm that there are likely to be more than 1 million more taxpayers this year than there were at the beginning of 1974? As there has been no general increase in the prosperity of the British public over those four years, will the Minister accept that the people who have profited most from inflation have been the Government themselves?

Criticism from Conservative Members about the level of taxation and the number of taxpayers would be better received if the Conservatives were to tell us how they would compensate for the kind of reductions in taxation which they are always calling for. Those reductions would fall upon public expenditure and affect people at the lower end of the scale.

While I welcome tax relief on lower incomes, may I ask my right hon. Friend to accept the proposals made yesterday by the TUC and the Labour Party in the document "Into the Eighties" for an expansion of housing, health, schools and social services, particularly as this would relieve need and at the same time provide employment, which is what we need most of all?

This Government will always be concerned with the expansion of the public services. Indeed, this is one of our priorities. Unfortunately, that expansion must be financed through taxation or borrowing. These are often two constraints on that expansion.

Arising out of the right hon. Gentleman's reply to my hon. Friend the Member for Edinburgh, Pent-lands (Mr. Rifkind), will he confirm that, notwithstanding the cuts carried by the Opposition in this year's Finance Bill, the Government will still be taking more by way of income tax in the year 1978–79 than in 1977–78?

The hon. and learned Gentleman should put down a specific Question on that. But I repeat what I said. Conservative Members concentrate on taxation but never tell us the other side of the balance sheet, which is a reduction in public expenditure. When they tell us how they will reduce public expenditure, I shall answer these questions on taxation.

asked the Chancellor of the Exchequer if he has any further plans to alter the position regarding the taxation of married women.

We have already legislated to extend the statutory rights of wives to their own PAYE repayments, and we are looking at the fundamental question of the aggregation of wives' incomes with their husbands.

But are not the changes which the Government made recently purely cosmetic? Is not the truly satisfactory solution to the problem to move to a situation in which a woman is automatically entitled to be assessed separately from her husband, with an equalisation of tax allowances? Is that the direction in which the Government propose to travel?

I am not sure whether it is cosmetic. Many wives are extremely concerned about the fact that pay-as-youearn repayments were made to their husbands. The correspondence I received did not make me feel that it was a cosmetic action that we had taken.

Does the Chief Secretary believe that, apart from paying the tax and being assessed, wives should have a legal right to know how much their husbands earn, if they wish to know that information?

That is an entirely different question.

asked the Chancellor of the Exchequer what initiatives he now proposes to take in the EEC Finance Council to develop United Kingdom participation in the outline Franco-German monetary fusion scheme announced at the recent European Council meeting in Bremen.

asked the Chancellor of the Exchequer whether he will publish a White Paper setting out his response to the proposal for a European monetary system.

asked the Chancellor of the Exchequer what progress has been made in the discussions about a European zone of currency stability.

The Government are taking a constructive part in the work to formulate a practical European monetary system. The House will be kept informed of the progress of this work.

On a point of order, Mr. Speaker. May we have shorter answers, in the interests of making progress?

The Chancellor and Ministers have heard the hon. Gentleman's point of order. That is the end of the answer, is it not?

On a point of order, Mr. Speaker. I was answering three Questions and also replying to a point often made by hon. Members on both sides of the House that I should, where possible, give an oral report on the conclusions of the meetings of Community bodies.

I thank the Chancellor of the Exchequer for that detailed reply. Could he tell us which subsequent question he is trying to avoid or postpone? If this fund is set up in due course, will he press in the foreseeable future—which must be in the near term—that the idea of the fund being located in London should be put on the agenda for any subsequent meetings?

I shall not particularly press for that.

Is my right hon. Friend aware that, while many of us share the anxieties that he and the Prime Minister have expressed about the Bremen scheme, it is important not to lose sight of the benefits to employment and growth and stability in the western world which could flow from the greater currency stability that a scheme of this sort could provide?

The benefits which flow from a scheme of greater stability depend entirely on the nature and terms of the scheme. The British Government strongly take the view, which is held by many of our Community colleagues and the United States Government, that a form of scheme which had a deflationary effect on the Community would be very damaging to world growth. A form of scheme which relaxed the constraints on growth imposed by the anarchy in the currency markets at the present time would have a benign effect on the economies of the western world, and the discussions which I have described are designed to achieve the good outcome to which I have referred.

Arising out of Question no. 13, may I ask whether the Chancellor does not agree that one of the initiatives that would be available to the Government in the context of any future monetary arrangements would be to insist upon a fundamental reorganisation of the common agricultural policy? Is that one of the initiatives that he seeks to pursue?

May I say first how much I welcome a question from the hon. Member for Oswestry (Mr. Biffen), whose very wise remarks I have quoted on several occasions during the last 45 minutes or so.

Does my right hon. Friend agree that before the United Kingdom can join such a scheme there will have to be much greater convergence of the economies of the Community countries, and that if the United Kingdom were to join such a scheme as this in January it would have a completely disastrous effect on our economy?

I have just made clear that the effect of the scheme will depend entirely on its structure, terms and conditions. We are seeking to produce a structure, terms and conditions which will reduce the constraints on growth rather than increase them. I know that in that endeavour I shall be able to count on the support of my hon. Friend.

Does not the Chancellor accept that one of the necessary implications of movement along the lines foreshadowed in the Bremen proposals would be relaxation of exchange controls in line with our treaty obligations? Are the Government prepared to move in that direction?

As I have made clear, the Finance Council of the Community agreed last week that it would consider the Bremen proposals in the light of the discussions at meetings of the Finance Council both last week and on 19th June, when the Council adopted guidelines for a European monetary system in line with the proposals that I had made. The idea of relaxing exchange controls appeared neither in the Bremen proposals nor in the guidelines I have mentioned.

Is my right hon. Friend aware that to say at one and the same time that one is in favour of greater monetary fusion and the dismantlement of the CAP is simply nonsense, as the one involves the other? How do the Government intend to get over that?

With great respect, I must say to my hon. Friend that he is quite mistaken in what he has just said. It is perfectly possible to change the CAP so that it works in a more rational way, reduces the cost of food instead of increasing it, and produces a sensible rather than nonsensical distribution of costs and benefits, and to achieve greater monetary stability in Europe. It is the intention not only of this Government but of many Governments in the Community to achieve both these objectives at the same time.

asked the Prime Minister if he will list his official engagements for Thursday 27th July.

This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.

As part of his duties today, will the Prime Minister explain why, in the debate on Tuesday, he took as his example a family man earning £75 a week when, as a result of his policies, there are trained and skilled industrial civil servants who are taking home £45 a week, and some are taking home as little as £30 a week and might even be better off unemployed?

There is a dispute going on because industrial civil servants, whose pay year starts on 1st July, have not accepted the offer that was made within the 10 per cent. guidelines for this current year. They are unfortunately at the end of the queue. There are meetings tomorrow on the matter between Ministers and the various national officials, and I think that we should see how those negotiations go.

Will my right hon. Friend find time today to reconsider the granting of an export licence for the return of Chilean aero engines at East Kilbride in view of the real possibility that the Chilean Government may attempt to use force to remove the engines, with the resultant risk of physical confrontation with the trade union movement?

The Government's attitude to Chile and to the subject of human rights is well known, and we have made it clear not only by words but by our action in accepting a great many Chilean refugees.

Doubtless the Prime Minister has had time to see the Chancellor of the Exchequer today. Will he therefore confirm that the assumption on which his Government are working is that the figure for unemployment for the rest of this Parliament will be 1·55 million?

My right hon. Friend the Chancellor of the Exchequer has just told me that the figure has been revised downwards.

The Prime Minister said that it had been revised downwards from 1·7 million last week. He did not give the figure to which it had been revised. If it is 1·55 million under Socialist policies, will he say so, bearing in mind that he inherited only some 600,000 unemployed and that the result of his efforts and those of his predecessor has been to add some 600 men and women to the dole queue every day his party has been in office?

The right hon. Lady is, of course, right to focus on the problem of unemployment. Inflation and unemployment are the two biggest problems that the country has to face. Certainly there has been a substantial increase in unemployment, for reasons which have often been explained in this House. But, when I hear the cheers of the Conservative Party about these matters, I can only reflect that if the Conservatives had been in power and had adopted their own policies, with the abolition of grants and subsidies which has been so consistently suggested by the right hon. Member for Leeds, North-East (Sir K. Joseph), the misfortune that has fallen upon us as a result of the world recession would have been very much greater and there would have been far more people out of work. As the right hon. Lady knows—I have explained this before—an assumption in technical terms is not the same as a forecast. The Government's policy is to return to full employment as soon as we can.

What is the revised working assumption? Will the Prime Minister answer the question?

The revised working assumption was published last May at 1·55 million, as I informed the right hon. Lady at Question Time a week ago.

asked the Prime Minister if he will list his official engagements for 27th July.

I refer my hon. Friend to the reply which I have just given to the hon. Member for Gosport (Mr. Viggers).

In his very busy schedule, will the Prime Minister find time today to contact President Carter to express to him the extreme disquiet felt by large numbers of us over any suggestion that sanctions against Southern Rhodesia will be lifted? Will he make it perfectly clear to him that this can happen only with the full agreement of Britain and all other countries involved when Southern Rhodesia is free and has a democratically elected majority Government?

The position about sanctions, as my hon. Friend indicates, is that they were imposed as a result of a decision of the United Nations, and they will be lifted in the same way. The United States Administration and the British Government are working closely together on this. President Carter and Secretary of State Vance are in no doubt about the general position, and, I think, broadly accept the way in which it was summed up by my hon. Friend.

Has the Prime Minister forgotten the terms of the Anglo-American package presented to Rhodesia by Dr. Kissinger, and in particular the clause which stated that, on the establishment of the interim Government, sanctions would be lifted and economic aid would be provided? Where does the Prime Minister stand on that promise?

Those conditions have not been utterly fulfilled. There is no acceptable Administration in Rhodesia at the present time. If there were, we would not have a guerrilla war backed by many thousands of people. The purpose of British policy—backed, I believe, by a large number of Conservatives in this House—is to try to ensure that we can bring all the elements in Rhodesia into a settlement that will lead to peace.

Will my right hon. Friend try to find time today in which to seek ways and means of publishing in the Official Report the editorial in the Daily Mirror today? Does he recognise that that editorial consists of all the comments of all the Tory press on the crass ineptitude of the Leader of the Opposition? Will he say whether he can recall a precedent when all the Tory papers in the land were unanimous in their condemnation of the behaviour of the leader of the Tory Party?

I noted that there was one exception. That was The Sun. Perhaps that was because it was not appearing. But let me say that I think we all have off days at times, and not too much should be made of that.

May I recall to the Prime Minister his answer to the question put by my hon. Friend the Member for Stretford (Mr. Churchill)? Is he seeking to say to the House that the fact that a war is being waged from outside a country's frontiers by guerrilla forces means that automatically there is a case for non-recognition of the Administration within those frontiers?

No, that was not what I said, and I do not think that the right hon. Gentleman would draw that deduction if he is making it as a general rule. If he is applying it only to Rhodesia at the moment, my answer would be "Yes, I am saying that."

asked the Prime Minister if he intends to address the TUC annual conference.

The general council has invited me to address the TUC annual conference in September, and I have accepted.

When the Prime Minister speaks there, will he warn workers against any overtures from a new small but sinister organisation called the National Union of Tory Intellectuals, which is extremely vague on incomes policy, packaged by a PR firm which was, at least until Tuesday, advised by the former Conservative Member for South Angus?

I would be very happy to look into this interesting proposition. I thought that the Conservative policy was quite clear on pay: that those who are on low pay should have substantial increases, that those who are on high pay and skilled should get substantial increases, that the managers should also get substantial increases, and that it should all be done within 5 per cent. That, I thought was the policy that I heard on Tuesday.

When the Prime Minister meets the TUC, will he take it into his confidence on his views as to the future of nationalised industries? Will he not confirm that many of the problems faced by nationalised industries—for example, the difficulties they face over their profit figures in relation to different accounting systems—need to be looked at in the light of the Government's own White Paper, which is long overdue for discussion?

The depreciation methods used by nationalised industries, I agree with the hon. Gentleman, are not satisfactory for them—or, indeed, for private industries and private companies, as many of them at the present time are calculating depreciation on a different basis. What the Electricity Council has done this year—which seems to reveal a reduced profit, but is, in fact, accounted for because of its new depreciation position—is probably a move in the right direction. Certainly the Government will continue to give more consideration to this, and I hope that we shall get some agreement from industry too.

Will my right hon. Friend also remind the TUC that under his Administration—a Labour Administration—the nationalised industries have been brought back into a position of profitability, whereas under the Conservative Administration they were losing huge sums of money? Will he tell that to the TUC, and also tell it to the Opposition?

Yes, it is the case that when the Conservative Opposition were in power they did not permit the nationalised industries to charge economic prices for the services they rendered, and they then had the effrontery to blame the nationalised industries for not making profits. The present position is far more healthy.

asked the Prime Minister when he next expects to meet Commissioner Jenkins.

I have at present no plans to meet Mr. Jenkins.

Until the Prime Minister does so, will he take the opportunity to re-read his letter to Mr. Ron Hayward last September and perhaps have a discussion with Mr. Roy Jenkins about that? Does the Prime Minister recall that in that letter he said quite clearly that we should develop greater parliamentary control over Common Market legislation? But nothing has been done. Will he have all-party talks so that we can get all-party agreement before the General Election, whenever that might happen, so that we are quite clear where we stand on this?

I do not think it is fair to say that nothing has been done. The Government gave an undertaking, through the Lord President, about the reference of some of these proposals to the Scrutiny Committee and about the action which Ministers should take. That undertaking has been faithfully carried out, to a scintilla. The Scrutiny Committee, I believe, is reconsidering the matter, and the Government will consider what further steps, if any, should be taken in due course. It would be quite wrong to suggest that the Government have not kept to their undertaking.

Will my right hon. Friend stress the fact that the Labour Party is very much in favour of a looser type of Common Market organisation and that we believe that the Common Market's agricultural policy must be fundamentally changed? Will he say that, if we cannot get such fundamental change, we shall tell the Common Market sooner or later that if it goes on in this way we shall have to consider coming out?

I would not agree with the last part of my hon. Friend's supplementary question. The common agricultural policy is yielding to pressure, the pressure of inevitable results that flow from the fact that far too many resources are now being devoted to unproductive agriculture in Europe. That pressure will be sustained and will eventually transform the present agricultural policy into one which can be supported.