asked the Chancellor of the Exchequer if he will make a statement on his visit to Liverpool on Friday 20 January.

I visited the Merseyside Development Corporation, the Inland Revenue's north west district office at Bootle, and was the guest at dinner of the Merseyside chamber of commerce. I also had a speaking engagement in Ellesmere port.

Ministers visiting Merseryside always visit the prestigious but merely peripheral sections of the economy. Why did the Chancellor of the Exchequer not visit factories such as British Insulated Callender's Cables Ltd. and British American Tobacco, plc, which since his visit to Liverpool have laid off no fewer than 1,500 workers? Is it not time that the Chancellor and other members of the Government looked at the real social cost in terms of distress and unemployment caused in areas such as Merseyside as a direct result of the Government's monetarist economic policies?

The hon. Gentleman is wholly wrong in attributing the real difficulties of Merseyside to the Government's economic policy. I discussed these matters with the people whom I met there. I also received a number of representations that Liverpool should be made a freeport. As the hon. Gentleman will know, Liverpool has been designated a freeport, although I would not say that my visit had anything to do with that decision.

As a Merseysider born and bred, may I tell my right hon. Friend that his visit to Merseyside was very well received? People were glad to see him and listen to his views and, in particular, to note the way in which he received representations made to him on behalf of Merseyside.

I am very grateful to my hon. Friend, who represents the authentic voice of Merseyside.

Is the right hon. Gentleman aware that many other Merseysiders are very grateful to the Government for granting freeport status to Liverpool and welcome the opportunity to expand the viability of the port and to provide work? However, there is concern in the city that the council is being used as a battering ram against Government policies. Some of us may disapprove of those policies, but does the right hon. Gentleman agree that bankrupting the city will only add to the loss of confidence in the city of Liverpool and lead to the loss of further jobs?

I am aware of the situation to which the hon. Gentleman refers and hope that wise counsels will prevail. I am grateful to him for his opening remarks.

The right hon. Gentleman did not mention that he visited the BAT enterprise workshops. That is an ironic title. Was the right hon. Gentleman advised by BAT that the company intended to axe 1,100 jobs on 3 February, the date following the designation of Liverpool as a freeport, and does he feel that that announcement influenced the decision of the company?

It is true that a number of jobs in the tobacco industry have been lost over a number of years. That is largely because of the campaign against smoking, which was supported by many right hon. and hon. Members. It is a fact of life. I visited the BAT enterprise workshops and was much impressed by what I saw.

Will the Chancellor take it from me that the observations of his hon. Friend the Member for Ludlow (Mr. Cockeram) about the reception that he received in Liverpool are understood and that people are sceptical about the Chancellor's approach to the problems of Merseyside, as they fully recognise that the cuts in public expenditure are further depriving that city of the necessary means to solve many of the social and economic problems of the area?

The hon. Gentleman must be aware that Britain, like most other countries—this was brought out in a recent OECD report—has a serious problem of public expenditure over the longer term. That is one of the reasons why the Government will publish a Green Paper on the subject in due course.

When will the Chancellor's economic policies result in a fall in the level of unemployment on Merseyside? Did he not gain the impression from his meetings that everyone on Merseyside, whether in the private or the public sector, wants more public expenditure to create more jobs, not fewer?

No. The representations that were made to me concerned several issues, including freeport status. Most of the people to whom I spoke went out of their way to say that they were not asking for Government handouts.

asked the Chancellor of the Exchequer what recent representations he has received about the higher marginal rates of tax.

Most recent Budget representations have given priority to increases in thresholds, but a number have suggested reductions in the basic or higher rates of income tax.

Will the Financial Secretary confirm that someone who earns £80 a week has a marginal rate of taxation which is effectively far higher than the marginal rate of taxation for someone earning £800 a week? Is that by design, or by accident?

I am sure the hon. Gentleman knows that one has to distinguish between the impact of increases in benefits, which have been increased generously in real terms in the past four or five years, and the consequence of that on the marginal rate as opposed to the failure commensurately to increase tax thresholds. It is that confluence which creates the marginal problem. It is quite different from the impact of the burden of tax on the poor as opposed to the impact of marginal taxes as a disincentive.

Will my hon. Friend strongly support the case for raising tax thresholds rather than cutting the rates of income tax? Does he recognise that the most cost-effective way of helping those upon whom the incidence of marginal rates bears hardest—the working poor with families—would be to raise child benefit by a generous amount?

I recognise my hon. Friend's point in terms of the role of child benefit, but in the past few years a consequence of the generous increases in benefits has been to add to the problems of unemployment and the poverty trap. From a tax point of view, the help can best be given by raising the thresholds as resources permit.

Does the Financial Secretary agree that, whatever the great advantages of raising the tax thresholds may be, it is an extremely cost-ineffective way of rescuing people from the poverty trap? Does he agree also that even if his right hon. Friend were to devote some £4 billion next year to raising the tax thresholds that would be likely to remove only about one in ten from the poverty trap?

The hon. Gentleman is right, in that it is extremely expensive to remove the basic problem created by the poverty trap. However, one should not focus on the relative size without in any way denying the difficulties within the poverty trap. According to the 1983–84 forecast of the 5·75 million working families with children in Britain, approximately 161,000 families or 2·8 per cent. of the working family population are in the poverty trap.

asked the Chancellor of the Exchequer what representations he has received over direct and indirect taxation measures for his forthcoming Budget.

My right hon. Friend has received numerous representations about most aspects of both direct and indirect taxation.

When the Chancellor is working out his Budget, will he bear in mind that Treasury figures show that only those who earn more than £29,000 a year pay less tax than they did in 1979? Does that not give a lie to all those Tory promises about cutting taxes for everyone? Why should pensioners on small incomes continue to have their housing benefit reduced, even under the revised scheme, while those who earn as much as £60,000 a year are receiving substantial tax reductions?

I am sure that my right hon. Friend has listened with attention to the hon. Gentleman's representations, but my right hon. Friend will also recall with some satisfaction that the Tory Government have brought down the marginal rates of 98 and 83 per cent., which I regarded as confiscatory, and have increased thresholds in real terms by 6 per cent.

Will my right hon. and learned Friend suggest to the Chancellor that we should take steps in the forthcoming Budget to move towards revenue neutral treatment of savings by reducing stamp duty on the purchase of shares, while reducing tax relief on life assurance premiums?

I am sure that my right hon. Friend is taking careful note of these interesting observations.

If the Government's record is good, why is it that at the end of five years of this Administration full-time workers who happen to be on the bottom end of the earnings scale are worse off in real terms than they were when the Administration took office?

The hon. Gentleman is factually inaccurate. Furthermore, the key to further advances is rigorous control of public expenditure, and I have no doubt that the hon. Gentleman will lend his powerful voice to support the Government in their measures.

asked the Chancellor of the Exchequer whether he is satisfied with the use being made of the business expansion scheme by new companies involved in agriculture.

The business expansion scheme has been very successful and I understand that the approved funds alone have already raised more than £25 million of new money from investors. This is most encouraging. We are, of course, keeping the scheme under constant review.

Does my right hon. Friend agree that the scheme would be even more successful if it put greater emphasis on encouraging investment in high-risk ventures rather than in ventures which are often thinly disguised as tax avoidance schemes?

I am sure that my right hon. Friend will take note of what my hon. Friend has said.

If the Minister is to expand the scheme to give help to agriculture, will he at the same time withdraw the tax relief given to farmers by their not paying rates on agricultural land and consider introducing rating for agricultural land?

It is clearly the season for Budget recommendations, and I am sure that my right hon. Friend has heard the hon. Gentleman's remark.

Regarding business and agriculture, will my hon. Friend take particularly seriously the recommendations made to him directly that brood mares should be treated as agricultural animals for tax purposes?

I take all representations, made directly or indirectly, with great seriousness, and I have noted those pertaining to brood mares.

If the scheme relates to agricultural land, it is possible also to provide for tax-free investment in agricultural land?

All aspects of the new scheme, which I know has been welcomed on both sides of the House as a major opportunity for increasing jobs, are under constant review.

I recognise the importance of agriculture to the national economy, but will my hon. Friend give some assurance that the business expansion scheme will be encouraged in the forthcoming Budget to support high technology investments and schemes?

I know of my hon. Friend's involvement and interest in the business expansion scheme, and obviously notice will be taken of her point.

asked the Chancellor of the Exchequer what fiscal steps he is taking to expand the output of the manufacturing sector of the British economy.

Our policies have sharply reduced inflation and so provided a sound basis for the sustained growth in output which is now under way.

Mr. Tony Lloyd.

Perhaps I may continue, Mr. Speaker. Manufacturing has shared in this recovery and the January CBI survey points to a 7 per cent. increase in manufacturing investment this year.

Is the Chancellor aware that the people of Manchester have the same view as Mr. Speaker of the Chancellor's answer—that it is irrelevant to the real issues?

Order. The hon. Gentleman must not bring me into this.

I apologise, Mr. Speaker. The manufacturing base in the north-west, particularly in Trafford park, is being destroyed by the Government. Given that the Government are frittering away the benefits of North sea oil, what hope can the Chancellor give to areas such as Manchester, the north-west and whole regions of the country once those revenues disappear?

The hon. Member may not be aware that the growth of the economy in this country during 1983 of 3 per cent. was the highest in the European Community and that the prospect is for a further increase of 3 per cent. during the current year. I am sure that the north-west will participate fully in that recovery.

One welcomes the encouraging words of my right hon. Friend about growth in exports and the fact that we shall succeed in an exporting war next year, but is he aware that manufactured imports exceeded manufactured exports last year for the first time in the country's history? If my right hon. Friend is aware of that, what will he do to correct that balance?

I am not clear why my hon. Friend wants that balance corrected. The plain fact of the matter is that we are exporting oil on a substantial scale, and there is bound to be a counterpart to that on the import side. The counterpart that we are seeing is in manufactured goods, many of which are important and helpful to British industry in equipping it for the future. My hon. Friend will also be aware, of course, that on current account last year we had a surplus of some £2 billion.

Is the Chancellor not aware that the level of manufacturing output is still 13 per cent. below what it was in 1979? Has he looked at the prospects for Fawley North sea oil production, and has he considered what impact this will have on the balance of payments, on competitiveness and on the exchange rate?

The hon. Member is one of the gloomiest Members in the House consistently, and always has been as long as I have known him, in contrast to his brother, who is a very jolly fellow.

Does my right hon. Friend agree that manufacturing industry is at long last beginning to expand? One of the reasons for that is that banks have been willing to lend way above normal banking prudence. Does he therefore agree that, if that is to continue, and there is a need for it, another windfall tax on banks would discourage the very growth in manufacturing industry that we need?

The extent to which banks lend is a matter for the banks. The Government have assisted small businesses in particular very considerably in this respect with the loan guarantee scheme, but I think that the lessons of history, taken with the current position of the international debt problem, make one hesitate to wax too enthusiastic about banks lending above the limits of banking prudence.

Is the Chancellor aware that what manufacturing industry most urgently needs is to be allowed to become competitive with industries overseas? Will he therefore take steps to abolish the tax on jobs and to help interest rates and the effective exchange rate to come down?

I shall be happy to abolish various taxes when the hon. Gentleman and his party tell me where I am to make the public expenditure savings to pay them.

Is the Chancellor aware that, according to Government figures, manufacturing investment is 37 per cent. below the levels of 1979, and that manufacturing output is well down? Is he further aware that manufacturers in this country will be deeply shocked by his apparent disregard of the contribution that they make to the economy, as shown by his previous reply? Would he not do better spending his efforts on increasing public investment, so that investment and output in manufacturing industry can expand?

I am at a loss to understand the selective importance attached by the hon. Lady and many Opposition Members—and some Conservative Members—to the manufacturing sector.

Because of jobs.

From a sedentary position, the hon. Gentleman says, "Because of jobs." Approximately a quarter only of all jobs in the country are in the manufacturing sector of the economy. All sectors of the economy are important, manufacturing and non-manufacturing alike, and it is foolish to make these distinctions between them.

asked the Chancellor of the Exchequer if he will introduce legislation to provide income tax relief for those who invest in the businesses for which they work.

The Government are committed to encouraging people to share in the ownership of the companies for which they work. Measures have already been introduced to do this, including improved tax incentives for employee share schemes. These are proving successful.

Does my right hon. and learned Friend agree that employees who purchased shares in the National Freight Corporation Co. Ltd., Associated British Ports and British Aerospace made a very significant investment? Is it not now time to ensure that all employees who purchase shares in the public or private company for which they work, and who retain them for a certain period, should be given some form of income tax relief which is fairly simple and which everyone can understand?

I am sure that my right hon. Friend the Chancellor will have taken note of that general proposition. No doubt my hon. Friend and the House will take considerable encouragement from the fact that when we took office in 1979 there were only 30 share incentive schemes with income tax provisions, and that there are now more than 660. Therefore, there has been a considerable advance.

Is the Chief Secretary aware that some people have found ways of escaping paying tax for a considerable length of time? Not so long ago we were told about Lord Vestey and his group not having paid any tax for decades or more. The other day I read in the local newspaper that the Duke of Devonshire had discovered another way of not paying tax on his whole Chatsworth estate. Why do we need any more schemes?

I find it difficult to comment on the affairs of individual taxpayers. However, I note the hon. Gentleman's concern. He will be aware that the Finance Bills of this and previous Administrations have taken good care to stop up loopholes where they have been disclosed.

asked the Chancellor of the Exchequer what is the latest information he has of the rate of inflation.

Over the 12 months to December 1983 the retail price index increased by 5·3 per cent.

Although a 5·3 per cent. rate of inflation is obviously a tremendous improvement compared with the peak rate of 27 per cent. under the previous Labour Government, is it not still too high, especially for the elderly, who see their savings being gradually eroded? Will the Government persevere in their resolve and determination to reduce inflation still further?

Yes, Sir. Inflation is too high, not merely for the elderly, but for everyone else as well. That is why the Government will continue to give the highest priority to reducing inflation still further, with the ultimate objective of price stability.

Although we would all support that objective, what does the Chancellor of the Exchequer see as the connection between the public sector borrowing requirement and inflation, given the budget deficit of the United States of America and its apparent lack of impact on inflation there?

The United States of America has been able to finance a very large budget deficit so far without inflationary consequences, due to the special status of the dollar as an international reserve currency and the willingness of people throughout the world to export funds to the United States. Whether that is a healthy development is another matter. Whether it is a sustainable position is already a matter of some uncertainty and debate within the United States.

asked the Chancellor of the Exchequer if he will consider relief from taxation on money spent on active and passive energy saving measures.

Relief is already available in appropriate circumstances for expenses incurred for the purpose of a business.

Is my hon. Friend aware that over the past four years the amount of cash paid out by the Treasury on fuel supplements has escalated from £150 million to £350 million compared with a mere £40 million of grant paid on loft insulation? Would it not be both logical and humane to allow more money to be spent by the individual who makes his own home more energy efficient, instead of spending vast sums on an ever-increasing scale?

I know that my hon. Friend is a distinguished member of the House of Commons Select Committee on Energy. Without wishing in any way to pre-empt my right hon. Friend's Budget, I do not believe that tax relief is a suitable way of encouraging such measures. The value of the relief is likely to vary according to personal circumstances, and in a world of high energy costs it is in the interests of individuals to carry out their own energy efficient investments. Where help is provided to those in particular need, clearly the fuel subsidies are beneficial to those people in helping them to cover the economic cost of fuel. I should have thought that grants from the Department of the Environment were the best way to help energy efficiency schemes.

Would not the Minister save a lot of money if he spent a little more on alternative energy sources and on an investigation into those sources? I believe that the Government spend about £12 million at the moment, which is about what the expenses bill will come to for the people who are giving evidence at the Sizewell inquiry. Is that not a scandal?

The hon. Gentleman should address that question to my right hon. Friend the Secretary of State for Energy. However, I know from my previous involvement in this subject that the hon. Gentleman might be interested to look at the data for his own Government's period of office, when an insignificant amount of money was spent on alternative energy sources, as opposed to the very large amounts of money that are being spent currently. The amount of money spent in this way has increased enormously during this Government's period of office.

asked the Chancellor of-the Exchequer how many representations he has received requesting relief from value added tax to be granted to charities.

During the past three months my Treasury colleagues and I have received a total of 24 representations concerning a general VAT relief for charities and similar bodies, and I was glad to meet the deputation ably led by my hon. Friend earlier this week.

Bearing in mind the extremely valuable work that is done by many charities in this country, and the fact that in many cases that work supplements the services provided by local authorities, does my hon. Friend agree that it is now high time that the present situation, whereby charities are treated less favourably for VAT purposes than local authorities — or indeed commercial companies — was brought to an end?

I recognise the immensely valuable work that charities do in this country, but my hon. Friend will appreciate that it is not for me to anticipate in any way my right hon. Friend's Budget.

Should not the Minister also take into account not just the recent representations but those that have come from both sides of the House throughout the last Parliament? Does he realise that the situation has been aggravated by the fact that this Government have increased VAT from 8 to 15 per cent? Will he take that into account and perhaps reduce VAT to the rate that was in force before this Government came to office?

I also take account of the considerable help that the Government have given charities over the past four years by means of direct tax concessions, particularly through deeds of covenant. For example, the number of deeds of covenant has gone up from 600,000 in 1980 to 800,000 in 1983, and the amount of the tax refund for charities from £50 million to £86 million.

Although I appreciate the aid that is given by the Government, is it not disgraceful that when people make donations these are liable to VAT? Let me give as an example the Spastics Society, which paid £500,000 last year on VAT contributions. Those were donations on which tax and VAT had already been paid. Is that not unfair?

It is not accurate to say that a tax is paid on the donation, although I accept, of course, as my hon. Friend said, that a charity such as the Spastics Society pays a considerable amount in VAT each year.

When will something be done about the hundreds of thousands of pounds of tax relief given out every year to bogus charities, such as the Adam Smith Institute, which spends much of its time spreading Right-wing political propaganda? Is it mere coincidence that some extreme Right-wing members of the parliamentary Tory party, such as the hon. Member for Stirling (Mr. Forsyth), are associated with bodies of this nature?

There is concern in all parts of the House about any charity that is bogus. However, that is not a matter for me. It is a matter for the Charity Commissioners.

I know that the Minister of State understands the concern that exists on this issue in all parts of the House. Can he assure us that the resolutions by which the Finance Bill is brought in will not this year, as happened last year, prevent hon. Members from tabling amendments?

It would not be appropriate for me to give such an assurance at this stage.

Although the Government had a very good record on charities in the last Parliament, is my hon. Friend aware that many of us are looking for a similar record for this Parliament, because we believe that relief from VAT is a very good way forward?

Yes. I accept the strength of feeling in all parts of the House on this matter, but, as my hon. Friend will know, there are formidable difficulties.

asked the Chancellor of the Exchequer what is his latest estimate of revenue lost as a result of the black economy.

The nature of the black economy, in the United Kingdom as elsewhere, is such that it is not possible to make any firm estimate of the overall amount of tax lost through it.

Is the Minister saying that he does not agree with the estimate, given to the Select Committee, of £4 billion-£6 billion? Moreover, given that the black economy will grow as we are in depression, are the Government ready to give an early reaction to the idea of increasing the powers of the Inland Revenue, as recommended by the Keith committee, which was not quite the reason for which the Government set it up in the first place?

I made it clear that it is impossible to give a firm estimate. Of course I realise that the Inland Revenue made a broad extimate—possibly it would be better to describe it as a "guesstimate"—which indicated an income tax loss of £4 billion. Equally, Customs and Excise has indicated a loss of £250 million-£500 million. With regard to the Keith report, the hon. Gentleman will appreciate that the Government have entered a period of consultations on that report, and comments are coming in.

Cannot my hon. Friend get some comfort from the fact that the so-called black economy is to a certain extent manned by the so-called unemployed?

It is fallacious to assume that the black economy is all bad. It certainly contributes to growth within our society.

In view of the amount of taxation that is lost because of the black economy, why do the Government not consider transferring some of the snoopers from the Department of Health and Social Security to the Inland Revenue, to ensure that proper taxes are paid?

As I said, there are some aspects of the black economy that are not bad. I should have thought there was no difference between us in the House about the fact that fraud is fraud wherever it occurs, whether in the taxation system or in the DHSS. I should report to the House that a significant increase has taken place in the manpower deployed both by the Inland Revenue and by Customs and Excise in hunting down such fraud.

Is not the most effective way of discouraging people from entering the black economy to reduce taxes across the board? Is my hon. Friend sure that he has the support of Opposition Members in that endeavour?

I would be more interested in what Opposition Members were saying if they were advocating the reductions in public expenditure that must precede reductions in taxation.

Chancellor of the Exchequer what is the cost of collecting development land tax.

In 1982–83, the latest financial year for which figures are available, the estimated cost was £4·9 million.

May I ask my right hon. and learned Friend not to rule out eventual abolition of this essentially Socialist tax which, because its application is so uncertain, frequently hinders the development it is supposed to encourage?

I am sure that my right hon. Friend will take careful note of what my hon. Friend has said. My hon. Friend and the House will recognise that it is now a better tax than the one we inherited in 1979, because of the reliefs introduced in the last three or four Finance Acts.

asked the Chancellor of the Exchequer if he will estimate the increase needed in excise duty on petrol to offset abolition of the special car tax.

To offset the abolition of car tax, the average price of a gallon of petrol would have to be increased by 14½p, made up by 17 per cent. on the excise duty plus the consequential increase in VAT at the standard rate.

Is my hon. Friend aware of the widespread feeling that it is unjust that the product of this one industry should be subject to a capital tax when it is one of the largest employers, and one of the largest contributors to the national income? What is the justification for a tax on capital rather than on use of the product?

I appreciate the point to which my hon. Friend draws attention. Of course, he is well known in the House as someone who is particularly concerned about the prosperity of the car industry. Last year car production rose to above 1 million, and car exports in the fourth quarter of last year were up by about 40 per cent., a commendable record.

Is the Minister aware of the severe ramifications that any increase in the excise duty on petrol has on rural areas? May we have an assurance that that will be taken into account in any proposed increases?

I am sure that all aspects of this matter will be taken into account by my right hon. Friend.

Is my hon. Friend aware that in rural areas people use their cars because they have no option—because there is no public transport—and that they are usually secondhand cars? Is he aware, therefore, that any increase in petrol tax would be penal and regressive in the rural areas?

I understand that, of course, as does my right hon. Friend, and my hon. Friend makes the point in a powerful fashion.

asked the Chancellor of the Exchequer what recent representations he has received from the Confederation of British Industry; and if he will make a statement.

The CBI has sent me a copy of its Budget representations and I had a useful meeting with the CBI on 12 January.

Does my right hon. Friend agree that the increase of 210,000 jobs in the service sector in the first nine months of 1983 is a significant achievement and fully justifies the CBI's interest in promoting this sector of the economy, in which, as my right hon. Friend knows, I have an interest? Will he, therefore, in his forthcoming Budget, ensure that fiscal incentives are harmonised for the service and manufacturing sectors?

I am well aware of the campaign that my hon. Friend has waged for many years in favour of the service industries, and hotels in particular, and of the signal success that he secured some years ago. I shall, of course, bear in mind what he says when framing my Budget.

Did the CBI, in its representations, draw to the right hon. Gentleman's attention the absolute scandal that between 1979 and 1983 the real value of child support for invalidity pensioners was reduced by £2·15 or 13 per cent.? Will he take steps in the next Budget to put this right?

This Government's record in assistance to the disabled has been second to none.

In view of the rapidly improving performance of the corporate sector, should not my right hon. Friend give preference in his next Budget to assisting—PRIME MINISTER individuals on low incomes rather than to the corporate sector?

There are many sectors with claims for relief, if tax relief can be given. Before tax reliefs can be given we must find the savings in public expenditure so as to be able to afford them.

Given that the CBI says, after it has made all the adjustments that it can make in favour of the Government, that the level of Government capital expenditure is one fifth less than it was in 1979 in real terms, and given that the CBI, like the TUC, the Opposition and even some Conservative Back Benchers, has urged the Government to increase capital expenditure, why does the Chancellor refuse to listen? Is he deaf or simply stiff-necked?

That is not a very impressive way to approach a serious issue—[Interruption.]—particularly as everything that the hon. Gentleman said was totally wrong. To give just one example, capital expenditure in the public sector is now running at roughly the same level in real terms as it was in 1978–79. When the public expenditure White Paper is published in a few days' time, the hon. Gentleman will be able to see that for himself.

asked the Chancellor of the Exchequer what is his latest estimate of the revenue to be raised by investment income surcharge in 1983–84.

About £290 million.

Is my hon. Friend aware that this tax bears particularly hard on the elderly, many of whom have saved from taxed income to make investments but who find in their old age that they are caught by the investment income surcharge, which considerably reduces their financial resources? May we look forward to the Chancellor listening sympathetically to the representations that have been made to him?

My hon. Friend is right, in that of the approximately 270,000 taxpayers forecast to pay the investment income surcharge, about 150,000 are elderly and provide about half of the yield. Of the 150,000 elderly liable taxpayers, 90,000 are otherwise liable to tax only at the basic rate. I cannot, of course, anticipate my right hon. Friend's Budget.

For the sake of accuracy, will the Minister tell the House what income a person requires before he pays investment income surcharge?

I accept that it is in excess of £7,000, but, as my hon. Friend said earlier, to the extent that most of them have saved throughout their working lives, his point is legitimate, as the impact of the surcharge can be at rates as high as 75 per cent.

Is the Minister aware that the tax is a very un-Conservative one and causes offence to many of our supporters?

I hear what my hon. Friend says. There are many other claims on the Chancellor's attention when he comes to consider his Budget, which I cannot anticipate.

asked the Prime Minister if she will list her official engagements for Thursday 9 February.

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

Is the Prime Minister aware that the Greater Manchester council, which represents part of my constituency, is currently engaged in a publicity and advertising jamboree to justify its existence? Bearing in mind that we received widespread support for the abolition proposals at the general election, and that authorities within Greater Manchester council's area, including my own, support them, is it not time that this blatant political exercise was brought to an end?

I dislike political activity on the rates as much as does my hon. Friend. It is open to any elector to challenge any items of expenditure through the auditor and to suggest to him that it is ultra vires, and for the auditor then to make the determination.

Has the Prime Minister had an opportunity to read the report by Sir Douglas Lovelock, which criticises her former Minister for his attack on citizens advice bureaux? Are the Government prepared to implement the recommendations of the Lovelock committee's report, and are they prepared to provide the extra money which the report strongly recommends for the excellent work that citizens advice bureaux do?

I saw the report. The Government are considering it and will give their reply in due course.

Does the Prime Minister think it right that the British task force should have been pulled out of Beirut prior to British nationals being withdrawn? Will she comment on the fact that British nationals are being asked to sign pieces of paper for their fares?

The British forces in the Lebanon had their headquarters at Haddâsse. From that position they would have been totally unable to help British nationals in west Beirut. They are better able to help, through being on RFA Reliant, than from their previous position. We had to consider their safety in their previous position and their inability to carry out the tasks that had been allocated to them, which were to safeguard the bank where the ceasefire talks were taking place and to patrol in west Beirut. There have been no ceasefire talks since 16 January, and patrolling in west Beirut was impossible. Both tasks became impossible. I am sure that my hon. Friend will think that it was right to withdraw them under those circumstances rather than leave them in a very dangerous and exposed position.

Has the Prime Minister had time to consider the answer she gave last Tuesday concerning taxation under her Government? Will she confirm that, while income tax has gone down by £1·4 billion, the wage-earners' contribution to national insurance has gone up by £3·4 billion? Does she agree that what she has put back into wage-earners' pockets is only half of what she has taken out in a different form?

Of course national insurance contributions have increased, because the largest component of expenditure from the social security fund is pensions, and the number of pensioners has also increased. The national insurance contribution is not a tax and never has been since it was proposed by Beveridge. As the right hon. Gentleman knows, the pension that one draws out is proportionate to the contributions one makes in national insurance payments, and that is why one draws it out by right.

If national insurance contributions are not taxes, will the Prime Minister tell that to the Financial Secretary to the Treasury, who almost every week so classifies them in Hansard? I shall gladly give her the references. Or is the difference between the Prime Minister and the Financial Secretary that he answers questions according to facts and she answers them according to party propaganda?

My hon. Friend the Financial Secretary answers questions on national insurance contributions. As one who was in the Department for three years, I know that one draws unemployment benefit, sickness benefit or pensions by virtue of having made contributions over the years. Unless those contributions are fully paid, one does not draw out the full amount in pensions. It is not a tax, but an insurance contribution.

Why has the Prime Minister forbidden senior civil servants to discuss the workings of Whitehall with the freedom of information campaign?

I am not aware that that has taken place, but I should have thought it was reasonable to do so. I do not know whether the right hon. Gentleman has any objection.

asked the Prime Minister what are her offical engagements for 9 February.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Will the Prime Minister explain why she seems to favour the granting of contracts to a firm such as Trafalgar House, whether for building a university in Oman or for the asset-stripping of Scott Lithgow, which will throw nearly 3,000 workers out of their jobs? Will she intervene now to ensure the job prospects of Scottish workers, or is she willing to intervene only to help improve the job prospects of her son?

The British taxpayer has paid about £165 million in respect of the Scott Lithgow shipbuilding yard since nationalisation. That is a very large sum, and the amount paid last year was equal to a subsidy of £13,000 for each worker in the yard. As the hon. Gentleman knows, the future of the contract for the Britoil rig is in question. There have been discussions about the whole of Scott Lithgow between British Shipbuilders and Trafalgar House and those discussions have made good progress. A number of parties have expressed interest. Trafalgar House has pursued its interest and has reached conditional agreement with British Shipbuilders. It is open to others to make offers to British Shipbuilders, but time is short. I deplore the unions apparent rejection of the chance of retaining between 1,000 and 2,000 jobs on the Clyde.

Is my right hon. Friend aware that her speech at the small business conference yesterday at Frimley will be widely welcomed by entrepreneurs and investors in free enterprise throughout the country? Will she assure the House that she will not yield in her drive to dismantle the monopolies and other obstacles to investment and enterprise in Britain?

Our objective is to increase competition, believing that that serves the consumer best, and to maximise the amount of denationalisation, all the while offering opportunities to those who work in former nationalised enterprises to purchase shares so that they may have a stake in the business in which they work.

asked the Prime Minister if she will list her offical engagements for Thursday 9 February.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Will the Prime Minister comment on the Government's decision to allow the Central Electricity Generating Board to pre-order component parts for the pressurised water reactor project, bearing in mind that the decision of the inquiry is some 18 months hence? Does she agree that this either makes a mockery of the inquiry or means that the Government are prepared to write off possibly £12 million?

If there is to be any chance of that project going ahead it is vital to order those component parts now. If the decision eventually is to let the project proceed, it will turn out to have been a very economical move. The project might not go ahead for a long time. If it does not proceed it will be necessary to dispose of those parts elsewhere.

In view of the reluctance of the French police to give protection to British lorry drivers going about their lawful business, does my right hon. Friend consider that the thousands of tourists who propose to visit France this year should find some other destination than France or some other route than via the French Channel ports?

We shall consider giving advice nearer that time. I point out that the President has been adamant that the law must be obeyed and has been very helpful in that respect.

Having gone back on the proposal for the introduction of postal ballots in trade union elections, will the Prime Minister explain why the Government appear to be going back on the proposal to introduce contracting-in for the political levy?

The Government are carrying out the undertakings in their manifesto to the effect that we would try first to reach voluntary agreement with the unions. Only if we were unable to reach that agreement would we introduce legislation.

Does my right hon. Friend agree that the recent 50 per cent. increase in profits by the National Freight Corporation Co. Ltd. in which more than half the employees own shares, demonstrates not only that we must do even more to encourage employees to have a stake in that business but that denationalisation, works?

That increase shows two things. It demonstrates the wisdom of denationalisation which helps to make profits and serves the consumer, and shows that it is a good deal for those who work in the business.

asked the Prime Minister if she will list her official engagements for Thursday 9 February.

I refer the hon. Gentleman to the reply that I gave some moments ago.

In view of the right hon. Lady's oft-repeated claim that the economy is looking up, how does she think that squares with the recent survey by the Merseyside chamber of commerce which said that

"Home deliveries and orders static or dropping … More firms working at 60 per cent. to 80 per cent. capacity only … liquidity worsening—"

"Reading."

I am quoting—

Order. The hon. Member must not quote.

I am sorry, Mr. Speaker, but I believe that the point has been made. The chamber of commerce went on to talk about more labour-shedding in future. What hope do the right hon. Lady and her Government have for the people of Merseyside after the Government's disastrous four years in office?

I am not sure that I heard all of the question, but I got its general drift. As the hon. Gentleman is aware, the Government have made great efforts with regard to Merseyside. Since May 1979, about £20 million of taxpayers' money has been spent on Merseyside. Inevitably, there will still be redundancies as companies become more efficient. If they are not efficient, there is not a proper basis for expansion.

Is my right hon. Friend aware that those in Scotland who are genuinely worried about the possible social and economic consequences of the complete closure of Scott Lithgow deplore the politically prejudiced remarks from the Opposition now that the possibility of averting total closure is emerging? Will she ensure that every possible step is taken to carry through the hope that now exists for the future?

I believe, with my hon. Friend, that the hope for Scott Lithgow lies in getting that Britoil rig, and the yard, into the private sector, and in that yard having a new start under totally new management. Scott Lithgow could then get rid of the reputation, which it has unfortunately obtained, of not fulfilling orders on time and within budget. If Scott Lithgow goes into the private sector and makes a good job of the rig, it may obtain other orders and the work force will have a good future.

asked the Prime Minister if she will list her official engagements for Thursday 9 February.

I refer the hon. Gentleman to the reply that I gave some moments ago.

In view of the Prime Minister's well-known crusade against extravagance and waste, can she find time to tell the House whether the Ministry of Defence's estimate of the cost of the flight by the Secretary of State for Defence from the Falkland Islands was a gross underestimate at £90,000? If it was, how much did the flight cost?

My right hon. Friend the Secretary of State for Defence went there in a Hercules and came back in a Nimrod. It seems to me to be right for the Secretary of State for Defence to avail himself of one of the regular flights—down in a Hercules—and to find exactly what it is like flying back by Nimrod. I am glad that he did it.

On a point of order, Mr. Speaker.

I shall take points of order afterwards.

My point of order is to do with Question Time. You will recall, Mr. Speaker, during exchanges on questions to the Chancellor of the Exchequer, that I referred to the Duke of Devonshire managing to find a tax incentive scheme so that he does not have to pay tax—

Order. We cannot deal with that question again.

It is important.

Order. We have a big day ahead of us, with important debates. That is not a point of order.

I made a mistake.

You made a mistake! Oh, well.

I referred to tax dodging, and so on, but I forgot to mention that the Duke of Devonshire—

Order. I give the hon. Member full marks for ingenuity—but that is enough.