asked the Chancellor of the Exchequer if he is satisfied with the present threshold for value added tax registration liability.

Yes, Sir. My hon. Friend will be aware that the VAT threshold was raised by 35 per cent. to £13,500 in this year's Budget.

I thank my hon Friend for his reply. Is he aware that, for nearly half a million small business men, the cost of administering and collecting VAT from them is more than the revenue obtained? Will he initiate discussions with our Community colleagues to change the VAT system and end this scandal that employs tax collectors unnecessarily at the expense of free enterprise?

My hon. Friend will be aware that, under the sixth directive of the European Communities, the limit cannot be increased to an extent beyond that which would maintain its 1973 value in real terms. I do not, therefore, think that there is much chance of our securing a derogation from that. Nor do I wholly accept—although I appreciate the burden on small traders—that the situation is quite as bad as my hon. Friend suggests.

Is the hon. Gentleman saying that he is bound by what the EEC decides on these matters? Will he not give further consideration to his hon. Friend's point? There is a good case for raising the minimum level for registration to £50,000. Is he aware that that would really help small businesses, rather than the phoney measures that the Government have so far brought out?

The hon. Gentleman is well known as a supporter of the EEC. I would point out to him that when the registration limit was last raised in 1978—we have not yet got the statistics for the consequences of the increase in 1980—only about one-fifth of the traders paying tax who were invited to de-register, did so. The position is a little different from what the hon. Gentleman implied.

Has my hon. Friend considered the possibility of a tranche above the cut-off limit whereby a trader can purchase a licence which will average the revenue that he would have had to pay in the band from £13,500 to £20,000, thereby ensuring that money is paid to the Revenue but making the system much more simple for small business men to operate, without the normal VAT return difficulties?

I will be happy to look at my hon. Friend's suggestion. My first impression is that, far from being a simplification, it might add to the complexity of the tax. Our purpose has always been to simplify where possible, rather than to make things more complicated.

asked the Chancellor of the Exchequer if he will take steps to discourage the procurement of goods and services through hire purchase credit terms and the use of credit cards by providing incentives through the value added tax system for cash payments.

I have noted my hon. Friend's suggestion, but I would see some difficulty in using the VAT system for the purpose that he has in mind.

While recognising the importance of reducing private sector borrowing, may I ask my hon. Friend whether he sees any way in which the Government can come forward with initiatives to encourage the procurement of goods through cash payments rather than discouragement of credit terms through interest rates?

Interest rates are a considerable discouragement. The interest rate on many forms of consumer credit is very high, especially on credit cards. The statistics show that there has been a falling-off in the rate of growth of consumer credit as a result.

Does my hon. Friend agree that the whole system of credit cards is an inducement to inflation? People purchase goods by producing a card rather than producing cash at the time. Will he consider some form of restriction of this credit system, which is causing an inflationary spiral?

My hon. Friend is correct. That is the nature of credit cards and all forms of credit. Discriminatory regulations against credit cards would lead to other forms of credit. We take the view that the best way to control credit is through its cost.

asked the Chancellor of the Exchequer what further steps he is taking with a view to reducing inflation; and if he will make a statement.

asked the Chancellor of the Exchequer if he will make a statement on the development of his policies to reduce inflation.

The Government's counter-inflationary strategy was set out in my Budget speech and in the medium term financial strategy.

Does the Chancellor of the Exchequer recall being interviewed by Mary Goldring on the "Analysis" programme a few weeks ago? Does he recall saying that he would like to see a massive business portfolio abroad in order that Britain can be great again as it was in the 1930s? Does he remember that he was asked whether that might result in 3 million people being unemployed? Will he tell the House what he told the people on the air—that he would not regard that as unwelcome and that the money would have to be found from North Sea oil? [HON. MEMBERS: "Too long."] Is he aware that the arithmetic shows that not enough is coming from petroleum revenue tax to pay for 3 million unemployed?

There is no point of contact whatsoever between the purported summary in the hon. Gentleman's question and anything that I have said in the past. I cannot imagine where he gets his ideas from.

Has my right hon. and learned Friend noticed the results of the latest CBI survey on manufacturing industry's intentions which suggest that manufacturers expect to put up prices less than at any time in the past seven years?

I have noticed the fact to which my hon. Friend draws attention. House prices are standing steady and have been so for some months. That is among several indicators that the rate of inflation is likely to turn down fairly shortly.

Does the Chancellor agree that the rate of inflation has more than doubled since he took office? Does he accept that that represents not only a total failure of the policies to which he has referred, but a betrayal of all the promises made during the last general election? Now that the Treasury is forecasting inflation at between 18 and 19 per cent. at the end of the year, will he raise the increase for the old-age pensioners in November by 10 per cent. to fulfil his legal commitment to keep the rise in pensions in line with the rise in prices?

The right hon. Gentleman should know better than to found his assessments of Treasury forecasts on articles in the newspapers. The Treasury's last forecast was contained in the record published at the time of the Budget. The right hon. Gentleman will know, because he talked about it often enough himself, that the rate of monetary growth between the middle of 1977 and the middle of last year was 15 per cent. per annum, and that that is the fundamental cause of the current inflation.

Does not the right hon. and learned Gentleman accept the figures in his Red Book which show that the increase in money supply in the year before he took office was a good deal lower than the increase which occurred in his first year of office? Will he answer the central question? Will he undertake to raise the old-age pension in November in line with the increase in prices by that time and not cheat pensioners again, as he has already cheated them out of £30 million by paying the pension increase two weeks' late?

The right hon. Gentleman is expert in these matters because the Government of whom he was a member reversed the basis of assessment of pension increases and thereby laid themselves open to the charge of cheating the pensioners. This Government will not cheat the pensioners.

In considering the development of his policies against inflation, will my right hon. and learned Friend reject totally any concept of interfering with wage levels? Will he recognise that a man's power to get the market rate for his labour is one of the primary freedoms with which the Conservative Party is associated?

I recognise, as the majority of hon. Members on both sides of the House recognise, that previous attempts to introduce pay policies which are applied across the board, whether by statute or otherwise, have always contained the seeds of their own destruction. Of course the Government are responsible for determining the pay of people in their employ, but that is an entirely different matter.

Will the Chancellor of the Exchequer explain how his policy, which appears to be working since unemployment is increasing, also seems to be increasing inflation? Is his policy to increase unemployment and inflation, because that is what has been happening for the last 12 months?

No. I am sure that the hon. Gentleman understands that so long as monetary discipline is maintained, as it will be, pay settlements which go beyond the underlying rate of the money supply and beyond the growth of the country's productive resources, are bound to add to the level of unemployment. The power to influence that level rests a great deal in the hands of people who conduct pay bargaining.

asked the Chancellor of the Exchequer if he will seek to relieve from value added tax adaptations on cars for the disabled.

I am well aware of my hon. Friend's long-standing interest in this subject, and indeed of his tireless work on behalf of the disabled in general. But I am afraid that, as my hon. and learned Friend the Minister of State has explained previously to my hon. Friend, such a relief could not be justified in the context of a broadly based tax.

Does my hon. Friend accept that the provision of vehicles for the disabled has been discontinued by the Government and that it is therefore vital that the Motability leasing scheme is successful? Does he accept that one of the main obstacles is not the level of the mobility allowance but the VAT charged on adaptation?

My hon. Friend is aware of our concern for the success of the Motability scheme. That is why Motability and similar organisations supplying cars to the disabled are able to deduct input tax on cars bought for leasing. Such input tax is not normally deductible.

Does the Minister agree that the main reason why people are suffering in this way is the increase in VAT from 8 per cent. to 15 per cent? Will the Government reduce the rate of VAT, not only to help the disabled but to reduce prices in general?

No, Sir. A reduction in VAT would have to be paid for by an increase in income tax. The vast majority of the British people do not want that.

Does my hon. Friend realise that the number of people involved in the adaptation of vehicles is minimal? Does he agree that the amount of money involved is such that there is the possibility of the Government doing something about it?

My hon. Friend is right. The cost might be small but it is impossible to draw the line there. Similar relief would have to be made in a number of other cases where, in equity, the case is equally compelling.

Does the Minister realise that his answer will be met with displeasure by all decent people? Will he reconsider this, and look after these poor unfortunate people who are disabled and deserve as much benefit as we can give, although a few might take advantage of it?

I appreciate the sincerity of the hon. Gentleman's question. Nevertheless, relief for the disabled is more sensibly given through the social security system than through complicated remissions which would damage the integrity of the VAT system and make it difficult to know where to draw the line.

asked the Chancellor of the Exchequer what is his estimate of the effects of the levels of interest rates upon inflation.

If a rise in the general level of interest rates raises mortgage interest rates, there will be a short-run increase in the RPI as a result of higher housing costs. However, in the long run, the rate of inflation is determined by the rate of money supply growth. As higher interest rates help to reduce money supply growth, they will in the longer run help to bring down the rate of inflation.

I am naturally most grateful for that answer. With regard to reductions in the rate of interest, does my hon. Friend recall the controlled experiment, when an answer by the Prime Minister to a question of mine knocked four cents off the value of the pound? Can I take it that the impact of reducing interest rates and the consequences for the value of the pound will lead to more industrial activity at some cost to the rate of rising prices?

It is certainly no part of our policy to maintain high interest rates for their own sake. As soon as interest rates can be reduced, consistent with maintaining the monetary targets, they will be reduced.

Is not the hon. Gentleman aware that interest rates increase inflation because they increase the cost to industry, both of investment and of holding stocks, and that industry at present is groaning under the impact of these excessively high interest rates, which are far higher than is needed to control the money supply? Does not the hon. Gentleman agree that the attempt to re- duce private bank borrowing by excessively high interest rates has been proved a total failure?

As usual, the right hon. Gentleman is wrong, and he knows that he is wrong, because he increased interest rates during his tenure as Chancellor of the Exchequer as a means of assisting in the battle against inflation. He also knows that countries throughout the world have increased interest rates over the past year, again as part of the necessary battle against inflation.

Is the hon. Gentleman aware that when I increased MLR to 15 per cent., it started falling immediately and reached 5 per cent. within 12 months? He has maintained a 17 per cent. MLR for eight months already, and, apart from occasional murmurs from the Chancellor, which have been proved wrong within days of their being made, there is no prospect of a substantial fall in interest rates before the autumn, at least.

By allowing interest rates to come down too far, too fast, the right hon. Gentleman laid the groundwork for the rapid increase in monetary growth during the 18 months before the 1979 general election, which as my right hon. and learned Friend has pointed out, is the cause of the inflation from which we are now suffering.

Can my hon. Friend say whether there is now growing evidence that companies are finding it increasingly difficult to repay some of the interest charges, and that they are being added to the net value of outstanding loans, thereby increasing the total amount of loans outstanding in the company sector?

I have no doubt that in individual cases that may be so, but as a whole, the high level of interest rates is contributing to the lowering of inflation, not merely through bank lending but through the necessity of funding the very high Government borrowing requirement, which we have reduced from the abysmal inheritance that we received from the previous Administration.

Has the hon. Gentleman read the speech of his right hon. and learned Friend the Member for Hexham (Mr. Rippon) in the employment debate yesterday? What does he think of the right hon. and learned Gentleman's comments on this subject, and those of his right hon. Friends who sit on the Government Front Bench?

I regret that I have not yet had the opportunity of reading the comments of my right hon. and learned Friend the Member for Hexham (Mr. Rippon). Therefore, I cannot comment on them.

asked the Chancellor of the Exchequer what are the factors currently preventing him from reducing interest rates; and whether he will make a statement.

As I have made clear on many previous occasions, our policies are intended to create the conditions in which it will be possible for interest rates to fall in due course.

Does my right hon. and learned Friend accept that the present rates of interest conflict with the Government's other essential strategy of encouraging small businesses and helping them to expand? When does he intend to resolve that conflict?

Clearly, for that, and a number of other reasons, it is desirable that interest rates should come down as soon as it is possible for them to do so, consistent with proper management of the money supply.

Is the right hon. and learned Gentleman aware that the high level of interest rates, together with the high level of the pound, is causing acute problems for many of our most successful companies, the latest of which is Rolls-Royce Motors? Will he bear in mind that it is not enough to adopt a simple solution of putting inflation as one's first priority if the result is the industrial dereliction which will be typified by a number of these excellent companies finding themselves in great difficulties?

I make no comment on the particular case raised by the right hon. Gentleman. However, it must be understood—this was the experience of the Government of which he was a member—that the process of controlling the money supply at a time of high inflation necessarily involves, for a period, high rates of interest. In addition, the exchange rate is outside the control of the Government. It is, therefore, important for those concerned with the management of industry or pay bargaining on both sides to recognise the extent to which they are themselves capable of changing conditions in order to avoid the worst consequences.

When my right hon. and learned Friend decides to make decisions based on his evaluation of the state of the money supply, can he give some indication of what relative weight he gives to the figures for DCE, banking and £M3?

They are all among the factors which must be taken into account.

Does not the right hon. and learned Gentleman agree that if he reduces interest rates significantly it will only mean an increase in bank lending? Presumably an increase in bank lending will increase the money supply, which will then put up the rate of inflation. Therefore, what is the point of reducing interest rates?

The right hon. Gentleman seems to have a remarkable capacity for standing on his head, because only a moment ago his right hon. Friend urged the merits of reducing interest rates. The right hon. Gentleman will know that interest rates tend to be a leading indicator as inflation comes down. When that time comes—I cannot make any comment as to when it will be—it will not have the adverse effect which he suggests.

Can the Chancellor now explain how he reconciles the prospects of reduced rates of inflation, which he held out yesterday at the Carlton Club, with the relatively rapid acceleration of domestic credit expansion in the banking month of May?

I would not attempt to take only one month's figures. If the hon. Gentleman chooses to do that in relation to one indicator, he is likely to mislead himself in many directions.

asked the Chancellor of the Exchequer if he intends to proceed with general computerisation of the income tax PAYE system; and if so, when.

Proposals based on the Inland Revenue's detailed feasibility study of the computerisation of PAYE are under consideration. I hope to make an announcement in the near future.

Particularly in view of the evidence given by Sir William Pile to the General Purposes Sub-Committee of the old Expenditure Committee, can the Chancellor say whether the computerisation of the PAYE system will in any way limit Parliament's ability to make changes in the tax structure.

Once it has been completed the computerisation programme is designed to handle the PAYE system without impeding the possibility of introducing new developments of a very wide variety. However, while the process is being implemented—during the period when one is changing from a manual to a computerised system—there are bound to be some constraints on changes to the tax system at that stage.

Will my right hon. and learned Friend delay any computerisation of the tax system until a complete reform of our taxation and welfare system has been carried out so that we no longer take such vast amounts of income tax from the lower paid, thus reducing the incentive to work?

My hon. Friend raises an important and familiar point to which he has given a great deal of attention over the years. However, the fact is that reform on the scale that he has in mind would be a long and complicated process. If we were to wait for that to be completed, before we were to set in hand the process of computerisation, we would not be acting in a sensible way.

Can the Chancellor confirm his statement that the computerisation of the Inland Revenue is intended to facilitate changes in the structure, because my understanding is that the Inland Revenue's case is based solely on clerical savings? As this point is most important it ought to be confirmed. Secondly, can he assure the House that a British-made computer will be used by the Inland Revenue?

Computer procurement is a matter for my right hon. Friend the Minister of State, Civil Service Department, and decisions on that project, including the method of procurement, have not yet been taken. The point raised by the hon. Gentleman is one which will certainly be borne in mind. As to the effect of computerisation, it is certainly intended to add to the versatility of the tax system, and that is one of the factors which have been borne in mind throughout the process of design.

asked the Chancellor of the Exchequer when he expects his present financial policy to result in the expansion of industry in West Yorkshire.

As the Government's monetary and fiscal policies take effect, inflation and interest rates will fall, creating the right climate for increased activity in British industry generally.

Is the Minister aware that the Government's policy of over-valued sterling, high interest rates and industrial non-intervention has caused a shattering acceleration in the decline of the textile, clothing and carpet industries? Is he further aware that in sectors of those industries there is now a gallop towards extinction? In those circumstances, will he change his policies and reverse those disastrous trends?

No, Sir. Any lurch to easy money or protectionism would be even more damaging.

Does my right hon. Friend know that in areas such as the Forest of Dean, which has not been designated an assisted area, there is a serious problem with the infrastructure in some districts? Will he consider—

Order. This question is about West Yorkshire, and the hon. Gentleman must relate his remarks to that.

Does the Minister realise that the wool, textile, carpet and allied trades have lost more than 7,000 jobs in West Yorkshire during the past six months? As British manufacturing industry crumbles under the high interest rates, the over-valued pound, and the Government's deflationary policy, when will the Government reverse their disastrous policies? If the Minister will not listen to the unemployed, will he at least listen to manufacturing Britain?

The Government are always happy to listen to representations from the industrial community. I do not believe that a contrived exchange rate below the level that the market will produce is any way a salvation for British industry.

Does the Minister accept that the high exchange rate generated by his monetary supply policies has had remarkably little effect in restraining imports of textiles and clothing?

No. The high exchange rate has had a beneficial impact on the price of raw materials.

asked the Chancellor of the Exchequer if he will make a statement on the latest projection for public sector pay increases over the next 12 months.

Public sector pay settlements will need to be determined in the light of what the taxpayer and the ratepayer can afford. It is too early to reach firm views on figures.

I thank my right hon. Friend for that reply. Does he agree that future public sector pay settlements should be at rates that are considerably less than the rate of inflation, which should assist in further reducing Government borrowing?

Doubtless that consideration will weigh with the Government when fixing cash limits.

Is the Minister aware that the Government have lost any authority to ask for income or wage restraints of any sort? Is he also aware that public sector workers will be determined to make a hard fight to stop themselves from being bullied and intimidated by the Government?

It is not the Government's purpose to bully or intimidate, but to operate by the rule of law, especially in respect of wages.

On the question of the private sector, is my right hon. Friend convinced that falling profitability and reducing demand alone will induce private employers to follow the example of the Government in the public sector, or does he have any additional inducement in mind to stiffen that resolve?

The fall in profitability will be a major determinant in the level of earnings. That was evidenced in the May report of the CBI pay data bank.

Have the Government now abandoned the nonsense that public sector pay settlements of about 20 per cent. are compatible with cash limits of 14 per cent.?

That view was never entertained.

asked the Chancellor of the Exchequer whether he is satisfied that the level of wage settlements are effectively lowered by restraint on growth of sterling M3.

Wage settlements not consistent with the rate of monetary growth run the risk of destroying jobs. The sooner and the more widely that is understood by wage bargainers, the sooner the upward trend in unemployment can be reversed.

Will the Chancellor say to what heights unemployment will have to rise before he achieves restraint in wage settlements?

It is not for me to achieve restraint in wage settlements, but for those concerned with the business of pay bargaining. The central conclusion reached by the previous Labour Administration after the collapse of their pay policy was that it was best to leave pay bargaining to those concerned with it. Any attempt to achieve restraint by the imposition of a uniform policy contains the seeds of its own destruction. The right hon. Member for Ebbw Vale (Mr. Foot) may well laugh, but he was the architect of the last lesson in that.

Does my right hon. and learned Friend agree that in past wage settlements far too much emphasis was placed on a 10 or 15 per cent. increase, without sufficient attention being paid to the increased productivity that Britain needs?

Yes, indeed. As my hon. Friend knows, during the past two years pay rises have exceeded the rise in prices by about 12 per cent.—more than twice as much as the growth of production in Britain. That is a prescription for disaster and rising unemployment.

Is it still the Government's view that high wage settlements are not a cause of inflation?

High wage settlements are incompatible with the maintenance of proper monetary discipline. If the right hon. Gentleman would do me the courtesy of studying the speech that I made yesterday, he would see that it set out the point that high wage settlements contribute initially to a higher level of inflation than would otherwise be the case. In due course, inflation will come down, and the effect of high pay settlements will be to leave us with a higher level of unemployment.

Will my right hon. and learned Friend confirm that, where there is high profitability and high productivity, high wage settlements are entirely reasonable?

That is the right basis on which to approach the matter.

Does the Chancellor yet see any signs of his policies being successful?

Yes, indeed. As I have already told the House—although the right hon. Gentleman may not have been here to listen—the level at which prices are rising will shortly peak out. The number of employers likely to make price increases is at its lowest level since January 1973. House prices are not rising. Those characteristics suggest that the level of inflation is likely to turn around shortly.

asked the Chancellor of the Exchequer if he will expand tax evasion investigations, in view of the claim by the chairman of the Inland Revenue Board that an estimated £3,000 million per annum is lost to the Tresury through evasion.

The Inland Revenue keeps the matter of tax evasion under constant review. Revised and more efficient investigation methods have contributed to a fourfold increase in the amount collected by way of back taxes, penalties and interest in the three years to 31 October 1979.

That is an interesting answer, although I do not accept it. Is it not about time that the Government dealt with the scroungers at the top—those who no doubt back the Tory Party—or is that something that the Minister wants to cover up? That is how it appears to people in Britain.

I reject entirely those accusations. The hon. Gentleman may be interested to know that the Inland Revenue plan to select 50 additional tax inspectors to deal with that problem.

I shall try to put the matter in a less emotional way. Will my right hon. Friend say whether an extra tax inspector is likely to draw back more money for the Revenue than an extra supplementary benefit investigator?

Not without notice.

Will the Chief Secretary give his estimate for the revenue lost through tax evasion following the abolition of exchange controls?

Not without notice.

asked the Chancellor of the Exchequer if he will seek to zero-rate electrically propelled vehicles from value added tax and exempt them from car tax.

I have no proposals for zero-rating such vehicles for VAT. I am happy to reassure my hon. Friend that they are not chargeable to car tax.

I thank my hon. Friend for that answer. May I draw his attention to the joint communiqué issued last weekend as a result of the Prime Minister's meeting in Venice, which stressed the need to encourage development of alternative forms of energy? Will he put his personal efforts behind boosting Government expenditure in that direction, because the present total annual Government expenditure on such a vital research is at a negligible level?

My energies, as a general rule, are not likely to be put towards boosting public expenditure in any area. My hon. Friend will be aware that the Finance Bill proposes the exemption of electrically-propelled vehicles from vehicle excise duty as an encouragement to the development of alternative energy sources for road transport.

While I welcome the news of that exemption, may I reinforce the plea of my hon. Friend the Member for Harborough (Mr. Farr) because, in the context of Venice, there seems to be little sign yet that Western economies generally are using powerfully and effectively the whole of the fiscal apparatus, as they will have to if they are to achieve a massive shift from a petroleum-based economy to other forms of energy?

I am not sure of the time scale during which alternative sources of energy are likely to come into play, but my hon. Friend will be aware of the increases in taxation that the Government have imposed upon oil and oil products with this consideration very much in mind.

asked the Chancellor of the Exchequer what is the latest rate of minimum lending rate; and what is the equivalent rate in the Federal Republic of Germany and Austria.

Minimum lending rate is currently at 17 per cent. The central bank discount rate, which is the equivalent of MLR, is 7½ per cent. in the Federal Republic of Germany and 6¾ per cent. in Austria.

Why should we have the highest interest rates ever in this country when the Socialist and Social Democratic Governments in Germany and Austria can operate at a rate 10 per cent. lower than ours when they have lower unemplyoment, lower inflation, higher wages and higher industrial activity? Should not the Government abandon their Milton Friedman policies?

If the hon. Gentleman can see any resemblance whatever between the ramshackle and increasingly Left-wing dominated Socialist Party in this country and the Social Democrats of Germany he would do well to take another look and perhaps take a trip across the Channel to discover the truth.

Is not the simple answer to the hon. Member for Aberdare (Mr. Evans) that in West Germany and Austria there are responsible trade union organisations that appreciate the importance of productivity and would not dream of failing to understand the relationship between wage claims not backed by productivity and increasing unemployment?

There are, as my hon. Friend suggests, many reasons why those two countries have been able to achieve considerably lower rates of inflation than we have, as a result of which, of course, they enjoy lower interest rates. The increase in interest rates over the past year in this country has been on average rather less than in most other European countries, including the Federal Republic of Germany.

Since the Government's centralised policies, which include having an overall high interest rate, are destroying jobs in areas of high unemployment will the Financial Secretary and his Department consider the possibility of lower interest rates in areas designated as being of high unemployment in special development areas?

If we were to reduce interest rates prematurely and excessively, thus allowing the money supply to get out of control, and allowing a resurgence of inflationary forces throughout the economy, we should do far more to increase unemployment in the regions and throughout the United Kingdom than will any result of the policies that we are now pursuing.

asked the Chancellor of the Exchequer whether he will make a statement on the payment of the United Kingdom contribution to the Common Market.

I have nothing to add to the statement which my right hon. Friend the Lord Privy Seal made to the House on 2 June.

Can my right hon. and learned Friend help me? I have been trying with his Department and others to discover, over and above our net budget contribution, the net cost to the United Kingdom consumer of having to buy food at common agricultural policy prices rather than world prices, and the net benefit to other countries in Europe such as France? Not only myself but many other hon. Members and people in the country would like to the answer to that question.

If my hon. Friend will table a question on that subject or write to me about it I shall be glad to answer him, but not when he tables a question about payment of the United Kingdom contribution.

Is the Chancellor aware that the Financial Secretary told the House last week that the Government have not the slightest idea by how much the public sector borrowing requirement will be reduced this year as a result of the agreement in Brussels? Will he confirm the general estimate that the PSBR will fall this year by under one-third the amount by which he claims the European countries will reduce our net budgetry contribution? Does this not reveal as even more fatuous the suggestion by the Prime Minister the other day that interest rates would fall faster this year as a result of the agreement in Brussels?

The right hon. Gentleman knows more about fatuity than most people, but he should surely acknowledge that a reduction in the PSBR is likely to be a significant factor affecting interest rates in a downward direction. My hon. Friend did not tell the House, as the right hon. Gentleman sought to suggest, that it was not possible to fore cast the reduction. He said that it was not possible to make a precise forecast. and nor is it, as, again, the right hon. Gentleman well knows. The PSBR in the current year, and in subsequent years, will be substantially lower as a result of the settlement achieved by my right hon. Friend the Prime Minister—achieved by this Government, and so manifestly not achieved by the last Government.

Will the Chancellor give us an imprecise estimate?

The settlement, which the right hon. Gentleman should be generous enough to acknowledge as substantial and successful, will make a substantial reduction in the PSBR.