Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1967 Jun 13 Tu
Margaret Thatcher

HC PQ [National Finance]

Document type: Speeches, interviews, etc.
Document kind: House of Commons PQs
Venue: House of Commons
Source: Hansard HC [748/275-95]
Journalist: -
Editorial comments: MT spoke at c287.
Importance ranking: Minor
Word count: 6195
Themes: -
[column 275]

NATIONAL FINANCE

Taxation of Royalties (Court Actions)

1. Sir R. Russell

asked the Chancellor of the Exchequer if he will state the total cost to date of the court actions taken by the Inland Revenue to establish a claim for taxation of royalties against Mr. Hammond Innes.

The Chief Secretary to the Treasury (Mr. John Diamond)

The Crown's costs in the Chancery Division and the Court of Appeal totalled £1,220. Following the order for costs made in the Court of Appeal, the Crown will also have to defray Mr. Innes 's costs in that Court and in the Chancery Division, but details have not yet been received from him.

Sir R. Russell

Is not this a waste of taxpayers' money, since no precedent was likely to be created by the action? Has a decision been taken as to whether the case is to go to the House of Lords?

Mr. Diamond

A very important principle was involved, otherwise the matter would not have been pursued as [column 276]far as it was. The decision has been taken not to take the matter to the House of Lords.

Government Contracts (Racial Discrimination Clause)

2. Mr. Winnick

asked the Chancellor of the Exchequer what further progress has been made in inserting a clause into Government contracts that would forbid any form of discrimination on grounds of colour or race.

Mr. Diamond

I would refer my hon. Friend to the Written Reply I gave on 5th June to my hon. Friend the Member for Hampstead (Mr. Whitaker).—[Vol. 747, c. 131–2.].

Mr. Winnick

Is it not clear that neither the T.U.C. nor the C.B.I. will agree to such a clause? In those circumstances, may we be told whether the Government intend to pursue this matter?

Mr. Diamond

My hon. Friend misunderstands the position. Industry is in full agreement with the principle that there should be no discrimination in employment, but is properly concerned to discover the best means of putting it into practice. It is not a question of ends; it is purely a question of means.

Institute of Economic Affairs

3. Mr. Peter M. Jackson

asked the Chancellor of the Exchequer if he will give a direction to the Bank of England to stop subscribing to the Institute of Economic Affairs.

6. Mr. Dickens

asked the Chancellor of the Exchequer if he will give a direction to the Bank of England that they should cease to subscribe to the Institute of Economic Affairs.

The Chancellor of the Exchequer (Mr. James Callaghan)

No, Sir.

Mr. Jackson

Is my right hon. Friend aware that much of the research of this organisation is of a highly tendentious nature and that it has published such titles as “Journeys to Coercion: From Tolpuddle to Rookes v. Barnard” and “The Inconsistencies of the Health Service” ? Would not my right hon. Friend agree that much of this research is contrary to the economic principles for which we on this side of the House stand and that it is outrageous that a [column 277]public body should subscribe to such an organisation?

Mr. Speaker

Order. Questions cannot be speeches.

Mr. Callaghan

According to its own formulation, the Institute is

“a research and educational trust that specialises in the study of markets and pricing systems as technical devices for registering preferences and apportioning resources. Micro-economic analysis forms the kernel of economics … in the public and private sectors … Where the macro-economic method is used its results are verified … in the light of micro-economic analysis.”

That is what the Institute says it does. But the real question is whether this is a matter of national interest in which I should issue a direction, and, on the whole, I think that it is not.

Colonel Lancaster

Does not the Chancellor of the Exchequer think that this and other relevant questions might well form part of an inquiry by the Select Committee on the Nationalised Industries into the functions of the Bank of England?

Mr. Callaghan

I should have thought that that was a rather heavy conclusion to hang on a question of this sort.

European Economic Community

4. Mr. Gardner

asked the Chancellor of the Exchequer what is his latest estimate of the effect of joining the European Economic Community on the British balance of payments position.

Mr. Callaghan

I would refer my hon. Friend to the statement made by my right hon. Friend the Prime Minister in the debate on 8th May.—[Vol. 746, c. 1077–80.]

Mr. Gardner

But has my right hon. Friend seen the reports in some responsible national newspapers that the figure could be as high as £800 million? If that is the case, what kind of growth rate does he think he should allow?

Mr. Callaghan

On the first part of my hon. Friend's supplementary question, I am glad to say that I do not take responsibility for what appears in the newspapers. On the second part, the growth rate up to 1970, which is before any entry could have a major effect, is [column 278]estimated at 3 per cent., and I see no reason to depart from that.

Mr. Ronald Bell

Has the right hon. Gentleman seen the conclusion in the report of the London and Cambridge Survey last week that even if the cost were only £500 million a year it could not be carried at the expected growth rate by 1970?

Mr. Callaghan

No, Sir. I did not see that, but as the expected growth rate up to 1970 would not affect that calculation it is not very relevant.

7. Mr. Ridley

asked the Chancellor of the Exchequer in view of Her Majesty's Government's proposal to join the European Common Market, what proposals he has for encouraging the distribution, rather than the retention, of profits by fiscal means.

Mr. Callaghan

I would refer the hon. Member to the Written Reply given by my hon. Friend the Financial Secretary to the hon. Member for South Angus (Mr. Bruce-Gardyne) on 6th June.—[Vol. 747, c. 161.]

Mr. Ridley

In addition to that reply, would the Chancellor not accept that it would show a good earnest of our intentions if we were to move in the right direction in this matter? Secondly, as the Common Market has been more successful economically than this country, might we not with benefit copy some of the more successful policies in the fiscal sphere?

Mr. Callaghan

That is a matter of argument and one which is not susceptible of a reply at the moment. I should not have thought that it was right at this stage to start revising our fiscal system until we see more clearly the course of the negotiations.

9. Mr. Ridley

asked the Chancellor of the Exchequer in view of Her Majesty's Government's policy of entering the European Economic Community, if he will amend the Selective Employment Tax so that it ceases to subsidise labour.

Mr. Callaghan

No, Sir. The Selective Employment Tax helps redress the balance of taxation between services and manufacturing. Premiums are payable to all manufacturing industry and do not favour particular forms of production.

[column 279]

Mr. Ridley

But has the Chancellor asked the Commission in Brussels for its views about this subsidy on labour? Is he really so pessimistic about our chances of getting in that he is not prepared to alter the fiscal system to suit that obtaining on the Continent?

Mr. Callaghan

As far as I can see, the selective employment premiums are not inconsistent with the Treaty of Rome and the aims of the Six. Therefore, there is no reason to make the adjustment which the hon. Gentleman suggests.

15. Mr. G. Campbell

asked the Chancellor of the Exchequer if he will now reconsider his policy on the introduction of a value-added tax, in view of the negotiations to enter the European Economic Community.

Mr. Diamond

I would refer the hon. Gentleman to the statement made by my right hon. Friend the Prime Minister on 8th May.—[Vol. 746, c. 1089.]

Mr. Campbell

As it is clear that the six countries of the E.E.C. are going to have a value-added tax, will the Chancellor now examine seriously the implications of such a tax, despite the inconveniences of a change?

Mr. Diamond

The implications of all problems related to going into Europe are a matter for the consideration of the Government, and they are not behind the times in giving consideration to them, but I think the hon. Gentleman would be well served if he would read the relevant passage of my right hon. Friend's statement, which deals with this point precisely.

Mr. Barnett

Would not my right hon. Friend agree that the Richardson Committee's Report found, for example, that the value-added tax did not stimulate exports for growth, and also that the Purchase Tax system was more economic and efficient than the value-added tax system? Does he not think that it might be better to try to persuade the Common Market countries to accept our simpler system of Purchase Tax?

Mr. Diamond

There is a good deal in what my hon. Friend says, and if he reads what my right hon. Friend the Prime Minister said he will see that this point, too, was in mind.

[column 280]

Balance of Payments

5. Mr. Molloy

asked the Chancellor of the Exchequer if he is satisfied with the progress made in dealing with the balance of payments problem; and if he will make a statement.

Mr. Callaghan

I am glad to say that figures published today show that the balance of payments was once more in surplus in the first quarter of 1967–the current account in particular showed a surplus of £41 million, seasonally adjusted. There is a good prospect of an overall surplus in 1967 and a larger surplus in 1968.

Mr. Molloy

While congratulating my right hon. Friend on the efforts which he has made in making this remarkable achievement, will he bear in mind, when he starts his policies to lessen the loads on people, that the biggest contributions in achieving this remarkable recovery have been made by working people and that they should enjoy the benefits of any reliefs which he is prepared to give?

Mr. Callaghan

I accept the second part of that statement, at least. There is no tribute due to me on the first part. It is the efforts of the British people which, broadly speaking, either create a surplus or result in a deficit in our balance of payments. As regards the future, I repeat that I think that a growth rate of 3 per cent. per annum will enable there to be a progressive improvement in our standard of life. If we keep the growth rate at 3 per cent., on the basis of the calculations which I have, it seems that we shall also have a balance of payments surplus.

Mr. Bruce Gardyne

Would the Chancellor not agree that all the latest evidence, including the latest trade returns, suggests that we now have a combination of stagnating output, stagnating exports and sharply rising unemployment? Does that not suggest that there is a need for a fundamental change of policy?

Mr. Callaghan

No, Sir. That is not true. Exports are nearly 7 per cent. above the corresponding months of last year. That is a very considerable improvement, and I see no reason to depart from that [column 281]estimate for the latter months of this year. As regards the other factors referred to by the hon. Gentleman, the Index of Industrial Output shows that there was an increase in the first quarter of a small amount, which looks as if it will grow during the latter part of this year. As for unemployment, the measures which the Government have taken and are taking, including the long-term structural changes in the regions, are designed to lower that rate.

23. Mr. Hooley

asked the Chancellor of the Exchequer what special factors operate in the month of July to cause exceptional pressure on sterling in that particular month.

Mr. Callaghan

Both the United Kingdom and the overseas sterling area move at about this time from a seasonally favourable to a seasonally unfavourable period of the year. This should not cause any undue difficulty if the underlying balance of payments position is sound.

Mr. Hooley

But as we have had a sterling crisis in five successive years under three successive Governments, does not this seem to indicate some lack of forward planning in the Treasury?

Mr. Callaghan

That is a large question on which I would be very interested to dilate at some length, but the basic position which I think it is important to understand this year is that during the last six months there has been an overall balance of payments surplus of £151 million, and therefore any adverse seasonal movement this year should not unduly affect the position of sterling.

Mr. Bruce-Gardyne

Would not the right hon. Gentleman agree that the recurrence of this exceptional pressure during each of the last three years, and the prospect that it is going to recur again in July of this year or next year, suggests that one of the special factors must be Her Majesty's present Government?

Mr. Callaghan

The hon. Gentleman keeps on making these points. I will say only that we have not had such a favourable balance of payments surplus as we have now for several years of the last Tory Administration.

[column 282]

Educational Expenditure (Rate Burden)

10. Mr. Gwilym Roberts

asked the Chancellor of the Exchequer what plans he has for removing the financial responsibility for some sections of the educational service from the shoulders of the rate-payers; and if he will make a statement.

Mr. Diamond

I have no further plans in relation to Local Government finance in advance of the report of the Royal Commission.

Mr. Roberts

Does my right hon. Friend realise that we on this side expect a substantial increase in expenditure on education during the next few years due to a considerable advance in all spheres, and that it will get to something beyond any amount which can be raised by the rate revenue?

Mr. Diamond

My hon. Friend is as fully aware as I am of the increase in the size of the child population and the need, therefore, for increased expenditure on education.

Mr. Frederic Harris

Does the right hon. Gentleman not remember that at the last two General Elections there were guarantees that the large proportion of the salaries of teachers would be removed from the shoulders of the ratepayer on to the taxpayer? What is happening about those promises?

Mr. Diamond

We have gone much further than that and done something much more radical than merely transferring that part of teachers' salaries which is not already carried on central Government finance.

Industrial and Office Workers (Expenses Allowances)

11. Mr. Gwilym Roberts

asked the Chancellor of the Exchequer if he will take steps to bring the tax position of industrial and office workers into line with that of companies by making expenses incurred in the course of their employment such as lunches, travelling to and from work, and wear and tear on clothes all allowable against personal taxation.

Mr. Diamond

I am afraid that I could not adopt my hon. Friend's suggestion [column 287]before they reduced the proportion of Australia's international reserves held in sterling from 80 per cent. to 63 per cent. in the period between December 1964 and March 1967; why this reduction has taken place; and what estimate he has made as to the extent to which the trend will continue in 1967.

Mr. Callaghan

The composition of Australia's international reserves is a matter for the Australian authorities; but naturally close contact is maintained with them about these matters.

Sir C. Osborne

When the Australian Government reduced their large holding of sterling in this country to such an extent, did they consult the Chancellor? If so, did they give him a reason why they were withdrawing their currency?

Mr. Callaghan

I think we can assume that these changes are not made without serious discussion and consultation. In view of Australia's growing trade with Asia and the United States, there is certainly a case for some redistribution in her reserves.

Gross National Product

27. Mr. Biffen

asked the Chancellor of the Exchequer by what amount he estimates the total gross domestic product in 1967 will exceed the corresponding figure at constant prices for 1966.

Mr. Callaghan

By about 1½ per cent.

Mr. Biffen

Are we to understand from that Answer that the Chancellor is disagreeing quite categorically with the comment of the hon. Member for Edmonton (Mr. Albu), who concurred with my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) that the rise will not be very much more than ½ per cent.?

Mr. Callaghan

That is a little too complicated, and I do not know the context in which the statements were made.

Mrs. Thatcher

Will James Callaghanthe Chancellor say whether that was his Budget estimate or a revised estimate since then, taking into account the inflationary measures announced and expected to be announced, according to Press hand-outs?

Mr. Callaghan

This was the Budget estimate. I hope the hon. Lady will [column 288]soon grasp the point that it is possible to make an assessment of growth in February based on measures not then announced and not likely to be announced for some months later.

Mr. Ian Lloyd

Since the forecast that the Chancellor has made is well within the statistical limits of error of any gross national product series, what significance can the figure of 1½ per cent. possibly have?

Mr. Callaghan

A figure of 1½ per cent. of the gross national product would be between £400 million and £500 million, and that would be a significant figure. If the hon. Member is asking me what degree of accuracy can be attached to this forecast I would refer him to my previous comments on this subject.

Public Expenditure

28. Mr. Biffen

asked the Chancellor of the Exchequer by what amount he intends to revise the projected expenditure of £13,295 million for 1969–70 in the public sector, excluding nationalised industries, at 1965 Survey prices, on account of the underfulfilment of the National Plan targets; and if he will make a statement.

Mr. Diamond

I would refer the hon. Gentleman to what my right hon. Friend said in his Budget statement.—[Vol. 744, c. 990.]

Mr. Biffen

The right hon. Gentleman's right hon. Friend said that we would have to wait, and we are still waiting. While we are still waiting, will the Chief Secretary take this opportunity to confirm that if we are to have the expected recovery in private investment some room must be made for it by a moderation in the rate of expension of public expenditure?

Mr. Diamond

My right hon. Friend said in his Budget statement that when private investment grew room must be made to accommodate it.

Selective Employment Tax

29. Mr. Shinwell

asked the Chancellor of the Exchequer what is his policy regarding the continuance of Selective Employment Tax as a permanent feature of the tax system.

[column 289]

Mr. Callaghan

The Selective Employment Tax is an important addition to the tax structure. It helps to redress the balance of taxation between goods and services and should have valuable long run effects on the performance of the economy.

Mr. Shinwell

Is my right hon. Friend not concerned at the limited success achieved in the transfer of labour from service to manufacturing industry, and also at the resentment caused in the country because of increased prices due to the tax? Is not he going to amend the tax in some way in order to remove the anomalies?

Mr. Callaghan

The first important effect is that the tax raises £200 million approximately that would have to have been raised in some other way. As for the shift of labour, I certainly never expected, nor did I indicate, that it would take place in a period of 12 months. This is a long-run change. It is bound to take some time to have its effect because the balance of taxation is adjusted. As for the anomalies, my right hon. Friend will have seen that a substantial change has been made in relation to the payment of tax by part-time workers, and this has now had a valuable effect and has lessened a great deal of the criticism.

Mr. Costain

How many years does the Chancellor expect will go by before he realises what a stupid tax this is?

Mr. Callaghan

I do not think that any tax which collects £200 million as cheaply as this can be described as stupid.

Mr. Woodburn

Can my right hon. Friend ask his Treasury experts if they can devise a tax which does not take money from the general public? If this does not prove possible, will he investigate the offers of alternative forms of contribution which will eliminate the necessity for this tax?

Mr. Callaghan

I am much obliged. If any Select Committee of the House went to work on this problem, I should be glad to lend my assistance.

Sir Harmar Nicholls

Is the Chancellor aware that it dangerously weakens confidence in Treasury statements when he gives such an obvious example of changing ground? This tax was supposed to [column 290]move people from the distributive trades to the manufacturing trades. It has not done so. Is it to be a permanent tax, or only temporary?

Mr. Callaghan

This is a permanent tax. If the hon. Member would refer to the White Paper published on Budget day, 1966, he would see that the statement I have made today is in line with the statement made in that White Paper.

Mr. Arthur Lewis

Is it not a ludicrous situation when those supplying milk, bread and the basic necessities of life have to pay this tax while those who manufacture juke boxes, one-armed bandits and the like receive a rebate? Is this the sort of society we want to see.

Mr. Callaghan

The selection of grotesque illustrations of that sort on the extremities of a tax can always be construed to make it look as though the general body is not working properly, but in fact, as is well known in the House, the tax on manufacturing goods from which we derive most of our exports has been relatively much heavier than the tax on services for many years.

Mr. Iain Macleod

Will the Chancellor accept that this tax is permanent only so long as we have a Socialist Administration? Secondly, does he realise that this is the worst piece of folly that has come out of the Treasury, even in recent years, and that a Conservative Administration will abolish it?

Mr. Callaghan

It was precisely because I recognised that it would need a Conservative victory to change the tax that I was so confident in saying that it was permanent.

Mr. Bellenger

Can my right hon. Friend say whether there is not some simpler way of collecting this tax on part-time workers? Why not reduce it to half-price straight away, instead of paying the full amount and at some later date this year claiming it back?

Mr. Callaghan

Because part of the simplicity and cheapness of the Tax is that it is related to the National Insurance stamp. This is why it is the cheapest of all possible taxes to collect. Therefore it would be administratively more complicated and costly to do it the way my right hon. Friend suggests. I have no doubt that as the years progress and as [column 291]this Socialist Administration waxes in strength further adaptations will be made in it.

Mr. Stratton Mills

Has the Chancellor of the Exchequer any evidence of the effect of the tax on the cost of living?

Mr. Callaghan

Yes, but I do not carry it in my head at the moment.

Mr. Speaker

Mr. Biggs-Davison, to ask Question No. 30.

Mr. Biggs-Davison

On a point of order. As Question 45 is on all fours with this Question may I ask a supplementary question?

Mr. Speaker

The Minister did not decide to answer them together.

Rhodesia (Bank Notes)

30. Mr. Biggs-Davison

asked the Chancellor of the Exchequer what was the basis for assessing the compensation of £250,000 paid by the Reserve Bank of Rhodesia in London to Giesecke and Devrient for banknotes printed for the Reserve Bank of Rhodesia in Salisbury and now deposited with a German bank.

Mr. Callaghan

This figure was settled in negotiation between the Board of the Reserve Bank of Rhodesia and the German printing firm.

Mr. Biggs-Davison

Is it not the case that these bank notes amounted in value to £100,000 rather than £250,000? Why, then, did the Government agree to this exorbitant settlement? Will not the printers be free in any case to deliver these bank notes to Rhodesia after October 1969? Is not this a great nonsense and a waste of time and money?

Mr. Callaghan

No, Sir, I do not think that is so. The matter has been debated. The Board of the Reserve Bank entered into negotiations on the directions of the Secretary of State and a good settlement was reached.

Added-value Tax

31. Mr. Barnes

asked the Chancellor of the Exchequer whether he will publish a memorandum on the social and economic implications of the introduction of an added-value tax.

[column 292]

Mr. Diamond

I will bear this suggestion in mind. As my hon. Friend is no doubt aware, a Committee of the N.E.D.C. is at present considering the value-added tax.

Mr. Barnes

Does not my right hon. Friend agree that if tax reform is to proceed smoothly it is important that it should be possible for objections to be raised and discussed in advance before a tax becomes a fact? If the Government decide to introduce an added-value tax, can they draw the legislation in this way?

Mr. Diamond

I will bear what my hon. Friend says in mind. He realises that this is the procedure adopted on what has now come to be known as the Green Paper.

Laundries (Selective Employment Tax)

32. Mr. Boyd-Carpenter

asked the Chancellor of the Exchequer why Selective Employment Tax is imposed in respect of workers employed in laundries.

Mr. Diamond

Laundries are a service and the tax is payable by service industries in general.

Mr. Boyd-Carpenter

Is not that a somewhat theoretical answer? Is not work in laundries analogous to that of work in factories? Are not laundries short of labour, and are not they also hit both by the withdrawal of the investment allowance and the price limits imposed on them? Will not be consider this question a little more from the practical angle?

Mr. Diamond

The right hon. Gentleman may know that I did receive a deputation. I have sympathy with the difficulties which this industry is facing, but I regard those difficulties as stemming mainly from the transfer to domestic laundering rather than from any other main cause.

Mr. Grimond

Is the Chief Secretary aware that in some of the under-developed areas, which the Government claim to be helping, service industries are the only form of major employment, and there is no alternative employment? Among those service industries laundries bulk quite largely. Will the right hon. [column 293]Gentleman look at this matter again, because it is not the case that they are losing business to domestic laundering but are being put out of business by this tax?

Mr. Diamond

No, Sir. With respect, that is not an accurate analysis either of the situation for any given region or of the circumstances affecting this particular industry. In most regions there is a distribution, and I agree that it is different in some regions from others. This industry was fully investigated by the Prices and Incomes Board, and what I am saying is accurate.

Land Valuation (Derby)

33. Mr. Boyd-Carpenter

asked the Chancellor of the Exchequer whether he has now considered the information sent him by the right hon. Member for Kingston-upon-Thames relating to the practice adopted by the district valuer, Derby, in respect of transactions which it was desired to complete before April 1967; whether this practice has his approval; and what steps he proposes to take to compensate citizens whose property as the result of this practice was subject to payment of part of an impost not then in force and operation.

Mr. Diamond

Yes, Sir. I am writing to the right hon. Gentleman. I do not agree that the district valuer, Derby, has acted in the way he is alleged to have acted, and the question of compensation does not arise.

Mr. Boyd-Carpenter

Is the right hon. Gentleman aware that it is clear, on the evidence of a highly respectable firm of professional surveyors that I submitted to the right hon. Gentleman, that the effect of the district valuer's action was to impose the levy under the Land Commission at half-rate two months before it became legally in force, and is that in accordance with the instructions of the Inland Revenue?

Mr. Diamond

No, Sir. The evidence does not indicate that. I want to make it absolutely clear. This is a very serious allegation and, therefore, I—as the right hon. Gentleman would no doubt have done in my position—have gone into it very carefully indeed. The surveyors acting for the right hon. Gentleman's client are under a complete [column 294]misapprehension. No such thing as he has alleged has happened. No damage has been suffered.

Mr. Rippon

Is the Chief Secretary aware that there is very strong feeling about this particular case, which, it is felt, is perhaps not an isolated one? Would he publish a full report of the circumstances?

Mr. Diamond

I am grateful to the right hon. Gentleman for what he has said, because this matter is extremely difficult to deal with simply by Question and Answer. I have gone into the case very carefully, and I shall be answering the right hon. Gentleman. With his permission—he is acting on behalf of his constituent—I am sure that it would be helpful if this matter could be published.

Mr. Boyd-Carpenter

In order to facilitate the right hon. Gentleman's public discussion of the details of the matter, Mr. Speaker, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Mr. Speaker

Adjournment notice must be given in the conventional way.

New Taxes

34. Mr. Stratton Mills

asked the Chancellor of the Exchequer what has been the total sum raised in new taxes since 15th October, 1964; and if he will state this as an approximate annual percentage of Government taxation.

Mr. Callaghan

The broadening of the tax base through the Capital Gains Tax, the Selective Employment Tax, the general betting duty and the gaming duties has yielded net revenue of £281 million, up to the end of 1966–67, or 3 per cent. of total taxation in that year.

Mr. Mills

But the right hon. Gentleman has substantially underestimated the increase in taxation of over £1,000 million by the Socialist Administration—an average of 23s. per week for every family in the land. Will he say whether it is his intention to reduce taxes over the next few years?

Mr. Callaghan

I was answering the Question on the Order Paper, but if the hon. Gentleman wants to ask a supplementary on a different question I would refer him to the large increase in wages that has taken place since October, 1964.

[column 295]

£50 Travel Allowance

35. Mr. Stratton Mills

asked the Chancellor of the Exchequer if he will make a statement reviewing the results of the £50 travel allowance; and what proposals he has for increasing it.

Mr. Callaghan

No, Sir. Meaningful figures will not be available for some time after the main holiday season is over. In reply to the second part of his Question, I refer the hon. Member to the reply given to the hon. Member for Blackpool, South (Mr. Blaker) on 6th June.—[Vol. 747, c. 162.]

Mr. Mills

Will the Chancellor of the Exchequer confirm that the British travel allowance is one of the lowest in the Western world, and will he say whether it is his intention to increase this travel allowance during the year 1967–68?

Mr. Callaghan

No, Sir. I have no statement to make today on 1967–68. I am satisfied that the travel allowance is certainly adequate for the holiday needs of most families in this country when they go abroad.

Children (Tax Relief)

36. Dr. David Owen

asked the Chancellor of the Exchequer what is the estimated cost of Income Tax and Surtax relief for children in the year 1967–68.

Mr. Callaghan

About £630 million.

Dr. Owen

Is my right hon. Friend aware that this reply shows an increase of over £50 million, and that the previous year showed an increase of £80 million? Is not this a very strange inequality when one considers that family allowances have remained unchanged since 1956?

Mr. Callaghan

No, Sir. I do not think that tax allowances, which determine the residual sum that is left to a man after he has earned his income, can be compared with an allowance that is given by the State out of the general taxation.