Sterling (Floating Exchange Rate)
1. Mr. Biffen
asked the Chancellor of the Exchequer if he will commission a study to determine the advantages of a floating exchange rate for sterling.
The Chancellor of the Exchequer (Mr. James Callaghan)
Is not the Chancellor aware that there are ominous signs of our yet again running into balance of payments problems, and, further, is he aware of the widespread and substantial advocacy of many non-party people that a floating rate of exchange is one way of curing the endemic sterling crises?
I am aware that a number of people feel that, but it is not the policy of the British Government.[column 1686]
Private Investment Overseas
2. Mr. Sheldon
asked the Chancellor of the Exchequer what action he is taking to reduce the level of private United Kingdom investment overseas.
17. Mr. Dickens
asked the Chancellor of the Exchequer what further steps he proposes to reduce the level of private United Kingdom investment overseas.
The Government's policy is to reduce the cost to the balance of payments of private investment abroad has been implemented by measures under the Exchange Control Act, the Control of Borrowing Order, and the voluntary programme introduced in 1966. In addition, the establishment of the Corporation Tax system will exert a growing and permanent influence in this field.
These measures are working satisfactorily. I have no present proposals for further restriction.
Does my right hon. Friend recall that in last year's Budget statement he spoke of certain proposals whereby the return on investment would need to come within a period of two or three years? Will he now say how these stringent tests are being applied at present, and how successful they are?
There is evidence of their success and their value in determining the real return to us. The figures show a net disinvestment overseas in each of the past three years, and that continued in the first quarter of 1967.
Is my right hon. Friend aware that the outflow of £432 million of direct private investment, including oil, from this country abroad in 1966 was about £35 million higher than in the crisis year 1964? Will he reconsider his decision not to impose further restrictions on the outflow of direct private investment abroad, quite apart from the question of disinvestment or reinvestment or the question of the inflow of private capital to this country?
No, Sir. It is possible to select various indices, but, to take the general one which enters into the balance of payments, it shows a decline from 1964 to 1966 in the following [column 1687]terms: minus £405 million; minus £356 million; minus £315 million—a diminution in each year—and for the first quarter of 1967, minus £73 million.
Mr. Patrick Jenkin
The right hon. Gentleman referred to the Corporation Tax. Does not he recognise that what the Government have done is clean contrary to what the Reddaway Report suggested would be appropriate, that is, they have imposed long-term disincentives and have alleviated this by a few short-term palliatives?
The Reddaway Report did not support the view that there should be a continuing unrestricted outflow of investment from this country, and I know of no one who suggests it.
Tax System (Simplification)
3. Mr. Sheldon
asked the Chancellor of the Exchequer what studies he is making of the simplification of the tax system.
The Financial Secretary to the Treasury (Mr. Niall MacDermot)
I would refer my hon. Friend to the answer I gave on 7th March to the hon. Member for Chelmsford (Mr. St. John-Stevas).—[Vol. 742, c. 1239–40.]
Is my hon. and learned Friend aware that there are pressures to increase the complexity of taxation to march hand in hand with the increasing complexity of industry, and will he do his utmost to resist these pressures, realising that it takes a great amount of energy in these matters just to stand still?
Every year, on the Finance Bill, Treasury Ministers spend a large part of their time resisting pressure for adding to the complexity of our tax system.
Tax Relief (Spastic Children)
4. Mr. Eadie
asked the Chancellor of the Exchequer what representations he has received from organisations and individuals asking for additional tax relief to the parents of spastic children, and what reply he has sent.
I know of no representations apart from a letter from my [column 1688]hon. Friend about a particular case, to which I replied on 19th May.
Some tax dispensation to the parents of these children would be greatly appreciated. Will not my hon. and learned Friend give favourable consideration to it?
It is a matter on which we all have sympathy, but the difficulties were discussed in a debate on a new Clause on the Finance Bill this year, on 15th June last, to which I refer my hon. Friend.
6. Sir J. Gilmour
asked the Chancellor of the Exchequer whether he will vary the provision of Purchase Tax under Group 11(a) of the First Schedule of the Purchase Tax Act, 1963, so as to exempt school desks from the payment of Purchase Tax even if they do not have holes bored in them for ink-wells.
No, Sir. The tax on furniture is confined to articles of a kind used for domestic or office purposes. Desks specialised for school use are not taxable, even if they have no ink-well holes.
Sir J. Gilmour
I thank the Minister for that reply, but is he aware that it is in great conflict with the information sent to me by my local education authority, which said that there was insistence that the holes must be bored if Purchase Tax was not to be paid?
It may be that in the case of the particular desks it was suggested that they would pass the test if some ink-well holes were bored in them, but there are other ways of making desks specialised for school use.
7. Mr. Boyd-Carpenter
asked the Chancellor of the Exchequer what action he has now taken to curtail public expenditure in 1968–69.
The Government are examining forecasts of Departmental expenditure in 1968–69 as well as in later years in the course of the scrutiny of public expenditure programmes to which I referred in my Budget statement.—[Vol. 744, c. 989–92.][column 1689]
Surely, if the Chancellor is to convince anybody that he is going to take effective steps to curtail expenditure in the next financial year he must already have reached some decisions? Is the only reason for not disclosing them his desire to get the House up before he does so?
I doubt whether anything I say will ever convince the right hon. Gentleman who asked the Question. He will know from his past experience that the examination of Departmental Estimates is now taking place, and will no doubt reach its fruition during the autumn months.
Will my right hon. Friend confirm or deny reports that the decisions are being taken and are not to be announced in a comprehensive form? Should he perhaps consider issuing a White Paper setting out the various alternatives, so that the House can come to an informed view based on the facts and figures of the situation?
No, Sir. It is not my responsibility to confirm or deny statements in the newspapers, but I see no reason to depart from the normal manner of examination of the Estimates.
Mr. Iain Macleod
The Chancellor will be aware from the two supplementary questions from each side of the House of the anxiety in this matter. Will he or will he not make a statement in the House on public expenditure before the House rises?
I should have thought that it was highly unlikely, because the process of Departmental examination of Estimates for 1968–69 will certainly not be completed by that time.
Mr. William Hamilton
Is my right hon. Friend aware that he will get unanimous support on this side of the House if the bigger proportion of the reduction in public expenditure is in defence rather than the social services?
Yes, Sir. I am aware that there is a feeling that our defence commitments are too heavily stretched. But I am not altogether convinced that the operation on which I am engaged in examining the Estimates will result in cutting expenditure. It is more a case [column 1690]of how far it shall be allowed to grow, and the Government took a decision in February, 1965, that it should grow at 4¼ per cent. per annum. That broadly remains the Government's policy.
Sir G. Nabarro
The Question relates to public expenditure. Did the Chancellor of the Exchequer deliberately refer to Departmental expenditure in his reply in order to exclude the crass extravagance of the nationalised industries, which come within the ambit of public expenditure but not of Departmental expenditure?
No, Sir. There was no deliberate omission. It is well known that the nationalised industries are now making a reasonable return on capital employed, and there is absolutely no justification for the hon. Gentleman's strictures.
Mr. Iain Macleod
Would the Chancellor clear up a most important statement he has just made? He said that the Government's intention was that public expenditure should rise by about 4½ per cent. per annum. But that was based on growth projections which have now been abandoned by the Government. Do we understand that it still remains?
There is no particular connection between the growth rate—[An Hon. Member: “There ought to be.” ]—it is a matter of political philosophy whether there ought to be. There is no particular connection between the growth in public expenditure and the growth in the national product. One may be either faster or slower according to the political philosophy involved.
Valuations (Land Levy)
8. Mr. Boyd-Carpenter
asked the Chancellor of the Exchequer what directions were given to district valuers of the Inland Revenue as to the effect on valuations prior to 5th April, 1967, of the coming into operation on that date of the land levy under the Land Commission Act.
Does the Answer mean that the Minister envisages that values were not directed to anticipate the coming into effect of the tax?[column 1691]
No direction was given either way. Valuers were, of course, fully informed about the levy and, in so far as any anticipation would affect the market value at the time, they would take it into account.
Selective Employment Tax
9. Mr. Stratton Mills
asked the Chancellor of the Exchequer if he will make a statement on the effect of the Selective Employment Tax on the cost of living.
I estimate that the effect has been to raise the retail prices index by about one-half of 1 per cent.
Mr. Stratton Mills
Surely the Treasury must be most concerned that the tax has a growing effect on the cost of living over the next year to 18 months? Would the Minister consider getting the Prices and Incomes Board to undertake a study of the effect on the cost of living of this ridiculous tax?
I should have thought that this figure shows how much hon. Members opposite inflated and exaggerated the effect of the tax upon the cost of living.
Mr. Robert Cooke
Has the Minister any figures of those who are drawing unemployment benefit because their jobs have disappeared because of the incidence of the tax?
No, Sir, and I should be very interested to receive any figures which the hon. Gentleman has.
Mr. J. Rodgers
Is the Minister aware that the number of people employed in manufacturing industries has gone down by about 300,000, although the object of the exercise was to increase the numbers of people in manufacturing, particularly of exports?
It was not the object to achieve that in the short term. I am confident that the Selective Employment Tax will make its contribution to that objective in the long term.
19. Mr. Ridley
asked the Chancellor of the Exchequer whether he has considered the recommendations of the Economic Development Council for the distribution trades that nationalised industries should not receive the refund [column 1692]under the Selective Employment Payments Act in respect of electrical contracting staff; and what reply he has sent.
Earlier this year this Economic Development Council recommended a review of the decisions in respect of staff of nationalised industries, but it made no specific proposals in respect of electrical contracting staff.
What is the point of setting up these development councils if the Government are not going to take any notice whatever whenever they make recommendations which are politically inconvenient to the Government.
As I indicated in my original reply, the hon. Gentleman is mistaken in thinking that the Economic Development Council made a recommendation and we ignored it.
Australia (Double Taxation Agreement)
10. Mr. Onslow
asked the Chancellor of the Exchequer what improvement in the liability for taxation of British war widows resident in Australia is expected to result under the new double taxation agreement, now being discussed between Her Majesty's Government and the Australian Government.
Discussions about a new agreement are in progress and I cannot make any statement at present.
Is the Minister aware that as matters stand, and because war widows' pensions are exempt from tax in Australia, British war widows living there and Australian war widows living here both have to pay British tax? Would he do something to remove this anomaly or allow the Australians to introduce a token tax so that they can achieve their purpose?
I am aware of the matter, and must ask the hon. Gentleman to await the outcome of the negotiations.
London Airport (Documentation and Control of Imports)
11. Mr. Onslow
asked the Chancellor of the Exchequer what decision he has reached concerning the participation of [column 1693]Her Majesty's Customs in the proposed Scheme for the installation of electrical data processing facilities for air freight at London Airport, Heathrow; and if he will make a statement.
26. Mr. Hastings
asked the Chancellor of the Exchequer what progress has been made in the discussions being held by Customs and Excise about the installation of data processing equipment for freight handing at London Airport.
A joint group representing Customs and airlines has drawn up a technically feasible scheme for applying modern computer methods to the documentation and control of imports at Heathrow. The view of other interested parties are now being ascertained, and the financial and management aspects of the scheme are being examined.
Does the Minister understand the importance of pressing ahead with the scheme, which is most valuable and the initiative for which came from the airline side? Is he aware that it should save the Customs several hundred employees and greatly expedite the handling of imports and exports by air?
I am well aware of both the potentialities and the urgency of the scheme.
Is the Minister also aware that the French Government have apparently taken a decision to install a similar system at Orly which will be in operation as early as 1970, and will it not raise possibilities of sales of hardware and “know-how” as long as we press ahead as fast as possible? Has the Minister any comment on that?
The target date for the scheme referred to in the Question is also 1970.
Tax Revenue (Collection Costs)
12. Mr. Ridsdale
asked the Chancellor of the Exchequer, what is the present annual cost of collecting all forms of tax revenue.
About £115 million, or just over 3d. for every £1 of net revenue.[column 1694]
Does the figure include all the work done by individuals filling up a whole host of tax forms, and by chartered accountants and others trying to avoid taxation?
No, Sir. This is the cost to the Exchequer.
Decimal Currency (Scottish Banknotes)
13. Mr. Dempsey
asked the Chancellor of the Exchequer what are Her Majesty's Government's proposals, after the introduction of decimal currency, for the printing of Scottish banknotes by the Scottish banks; and if he will make a statement.
No, Sir. I see no reason to change the current arrangements for the printing of notes by the Scottish banks.
Do I take it that Scottish banks will continue to print notes and that they will be part of the decimal system when it is introduced? Can my hon. and learned Friend say if he will take advantage of the situation to make Scottish banknotes legal tender?
On the first point, there is no reason for decimalisation in any way to affect the right of Scottish banks to issue their own notes. On the question of making Scottish notes legal tender, I can only refer my hon. Friend to the answers I gave him the last time he raised the matter.
Earl of Dalkeith
Is the Minister aware that people in Scotland will generally welcome the decision to allow Scottish banknotes to go on being printed, and that as long as the Government adhere to the £ basis for the decimal system this should have no effect on the position?
I quite agree.
14. Mr. Bruce-Gardyne
asked the Chancellor of the Exchequer if he will now publish a revised short-term economic forecast in the light of the failure of exports to rise and unemployment to stabilise as previously forecast.
No, Sir.[column 1695]
Will the Chancellor subscribe to the philosophical proposition that the combination of stagnating exports, rising imports and rising unemployment suggests a prima facie case for adjustment of the exchange rate? If not, what condition would he regard as indicating the need for devaluation?
I see no occasion—if the hon. Gentleman is hinting that we should devalue—for the British £ to be devalued. The slackening in exports at the moment is not due to any result of failure of competitive power on the part of the British economy but to slowing down in the growth of world trade, particularly in Germany and the United States. I am glad to say that my current discussions with the Finance Ministers in London show that they believe that there is an indication that trade in both their countries is likely to resume a faster pace towards the end of this year.
Balance of Payments Surplus
15. Mr. Bruce-Gardyne
asked the Chancellor of the Exchequer what is his latest estimate of the overall balance of payments surplus in 1967 after allowing for the year-end payments in respect of the post-war United States of America and Canadian loans.
I would refer the hon. Gentleman to my reply to my hon. Friend the Member for Newark (Mr. Bishop) on 4th July.—[Vol. 749, c. 217–8.]
Would the right hon. Gentleman say whether he still expects a massive surplus in 1968? Can he also confirm that his target of 3 per cent. growth rate year in year out has been postponed in the current year?
I have never used the word “massive” and so I see no reason to take responsibility for it. I still see the prospect of a substantial balance of payments surplus in 1968. [Hon. Members: “Answer the question.” ] That is the question that I was asked. The hon. Gentleman asked me whether I could foresee a massive surplus in 1968. I am replying that I have never used the term “massive” , but I can still see a substantial surplus in 1968. As to the question of growth rate, as far as I can see the growth rate will continue broadly on course as we expect.[column 1696]
Mr. Stratton Mills
Will the right hon. Gentleman deal with the point as to whether he expects, as he has already forecast, a surplus on balance of payments for 1967? Is he aware that he has got the forecast wrong for three different years and that overseas opinion has very little confidence in his forecasting accuracy?
I do not know that anybody has any confidence in forecasting the balance of payments. That is why, as is the case throughout the world, I do not publish forecasts. As to this year, we had a healthy surplus in the first quarter. The present position is made more complex by the Middle East situation, and I am not able to forecast how this is likely to develop in the coming months.
On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.
Foreign Travel Allowance
16. Mr. Hunt
asked the Chancellor of the Exchequer why he has decided to retain the limit of £50 for the foreign travel allowance for 1967–68.
33. Mr. Stratton Mills
asked the Chancellor of the Exchequer if he will make a statement on his decision to retain the limit of £50 for the foreign travel allowance in 1967–68.
35. Mr. Goodhart
asked the Chancellor of the Exchequer when he expects to increase the limit of £50 for overseas travel.
42. Mrs. Renée Short
asked the Chancellor of the Exchequer for what reasons he decided to continue the limit of £50 on foreign travel allowance for the year 1967–68.
I would refer my hon. Friend and the hon. Gentleman to the Answer given to the hon. Member for Worcestershire, South (Sir G. Nabarro) on 29th June, 1967. This restriction is making a useful contribution to the recovery of our balance of payments.—[Vol. 749, c. 123.]
Does not the right hon. Gentleman realise that this petty and [column 1697]foolish decision means that British holiday-makers abroad are being ridiculed and regarded as the poor relations of Europe? How much longer is the Chancellor going to cling to a policy which combines the minimum of savings in foreign exchange with the maximum of irritation and inconvenience to everybody concerned?
I do not accept this. I recognise that any limitation on foreign travel allowance is an inconvenience, but if it is likely to make a substantial saving in foreign exchange during the course of the year it seems to me that it is an inconvenience that it is my responsibility not to allow to go by. As to the adequacy of the allowance, I think it is still true that the average person who goes abroad and is entitled to £50 plus £15 in sterling notes and £25 if he takes a car find it possible to have a holiday in reasonable comfort.
Does the Chancellor realise that a Rhodesian citizen may have a travel allowance of £100? If we are doing so well financially, why are we more heavily restricted than Rhodesians are?
Perhaps more Rhodesians wish to leave their country.
Mr. Stratton Mills
Has the right hon. Gentleman any figures in respect of the increased amount of holidays taken in the overseas sterling area, which is an equal drain on the balance of payments, and are not people going on their holidays there because of these miserable restrictions?
Yes, Sir; I have some estimate, but as we are in the middle of the holiday season I do not think it would be helpful to the House to give figures. The hon. Gentleman would be the first to criticise me if they were found to be inaccurate in any way. Clearly, the net balance of payments effect is not as great as the saving of foreign exchange but it is the foreign exchange element of the balance of payments which is of significance.
Sir G. Nabarro
On a point of order Mr. Speaker. Is my Questions No. 29 on the travel allowance being answered with this mass of Questions?
Apparently not.[column 1698]
Is my right hon. Friend aware—
On a point of order, Mr. Speaker. Did the Chancellor answer Question No. 37?
The right hon. Gentleman did not answer that Question. These questions are wasting Question Time.
Is my right hon. Friend aware of the widespread abuse as a result of the very marginal use made of the business foreign travel allowance? Would he not think it worth making it more equitable by allowing the concession to carry forward so that any not used one year could be used the next?
I think that that is dealt with by another Question on the Order Paper.
20. Mr. Barnett
asked the Chancellor of the Exchequer if he will permit all or any part of an individual's foreign currency allowance not used in one year to be carried forward to the next.
I apologise, Mr. Speaker. I thought that this Question had been taken with a previous Question. May I, therefore, say “ditto” in respect of the supplementary question that I put to my right hon. Friend just now?
Order. An hon. Member should not anticipate a Question of his own.
On a point of order, Mr. Speaker. I ask a supplementary question earlier of the Chancellor, and he said that he would deal with it, presumably on a later Question. May I ask him whether he will now deal with it?
It has never been the practice when there has been a controlled travel allowance to allow a carry-forward, and to do so would give many people an additional allowance to spend in the following year and reduce the expected savings.
Is the hon. and learned Gentleman aware of the very great damage done by the present restrictions to British airlines, both nationalised and independent ones, and would not a slight [column 1699]extension of this kind be of marginal help to them?
If any such action were required I do not think that this would be the way to do it.
27. Mr. Kenneth Lewis
asked the Chancellor of the Exchequer whether the £50 foreign currency restriction applies to Ministers' wives when travelling abroad with Ministers on official business.
Yes, except when a wife is travelling at public expense, in which case she is entitled to a personal allowance from her own moneys of up to £2 a day or £10 a week, whichever is the less.
Is the hon. and learned Gentleman aware that I have no objection to a Minister taking his wife with him on limited occasions when it is necessary in the national interest, in the same way as businessmen can take their wives on limited occasions, but, in view of the sacrifices being asked from the general public, should not there be a reduction in the number of these occasions and should not part of the £50 allowance be used as an extra contribution above what would be considered to be reasonable?
The question of a reduction in the number of these occasions is a matter for my right hon. Friend the Prime Minister, to whom the hon. Gentleman should direct his question. In the amount of the allowance made available in such cases, we are following the precedent of what is allowed in other, similar cases.
29. Sir G. Nabarro
asked the Chancellor of the Exchequer what further information he now has concerning the saving in foreign exchange resulting from the £50 limit for British travellers outside the sterling area during 1966–67 travel year; and what is his estimate of such saving during the new travel year commencing 1st November, 1967.
On the current travel year, I would refer the hon. Gentleman to my speech in the Adjournment debate on 19th June. I expect that the limit will continue to procure a useful saving in the coming year.—[Vol. 748, Col. 1085–90.]
Sir G. Nabarro
For the umpteenth time, may I ask the hon. and learned [column 1700]Gentleman how he arrives at his choice of words, “a useful saving” , when he has not available statistics, on his own confession, to support that choice of words? Again, will he avoid side-stepping until 23rd October and give the House a truthful answer?
For the reason I gave the hon. Gentleman in an Adjournment debate, there is plenty of evidence that we are making a saving running into many millions of pounds.
Has the hon. and learned Gentleman considered the powerful argument by the former Governor of the Bank of England, Lord Cromer, in a recent later to The Times, to the effect that this restriction was not resulting in substantial savings to the balance of payments? Will not the hon. and learned Gentleman pay attention to such advice from one who has served the Government very well indeed?
I read that letter with considerable surprise. I would have thought that Lord Cromer would have been the first to recognise the importance of our giving absolute priority to our balance of payments.
Mr. Frank Allaun
Will my hon. And learned Friend not the experience of travel agencies—which is that, to ordinary people, this does not matter a damn, since they can take £130 for a couple, plus £30 in cash, which is quite enough for any reasonable couple?
I would not adopt my hon. Friend's choice of language but I certainly agree with his sentiment. The area in which we are expecting to get the saving is among the 25 per cent. of the travellers who spend over 50 per cent. of the foreign exchange.
37. Mr. Ridley
asked the Chancellor of the Exchequer for what period of time is the permission for the £50 travel allowance valid.
Any unused foreign exchange must be turned back into sterling within one month of the date of issue or immediately on return to this country if that is later.
If we are to have rationing, just as we had rationing of practically every other commodity under the [column 1701]previous Socialist Government, could we not at least have an entitlement, a ration card, for the travel allowances so that those who did not want to use their ration in one year or in one month could use it in future?
As I have explained, it cannot be used in another year but can be used in another month in the same year, and returned moneys can be credited in the traveller's passport.
38. Mr. Charles Morrison
asked the Chancellor of the Exchequer what special travel allowance he intends to allow for British visitors to the Olympic Games in Mexico City in 1968.
My right hon. Friend has received representations on this subject and is considering them.
Could the hon. and learned Gentleman make sure that an announcement will be made in adequate time for people to make plans for visiting the Olympic Games if they decide to do so?
Yes. We will have regard to that.
18. Mr. Wall
asked the Chancellor of the Exchequer what is the estimated total cost direct and indirect to the British economy of the campaign of sanctions since Rhodesia's declaration of independence.
The direct cost to the Exchequer for the period from I.D.I. to 30th June is now estimated to be about £23 million.
With regard to the cost to the balance of payments, I would refer the hon. Gentleman to the Answer my right hon. Friend the Chancellor gave on 7th March and to that given by my right hon. Friend the Prime Minister on 16th March.—[Vol. 742, c. 1232–4; Vol. 743, c. 151–2.]
Would the hon. and learned Gentleman reply to the Question on the Order Paper, which asks what the total effect is on the British economy, including visibles and invisibles? Would he not agree that it is now between £100 million and £150 million?[column 1702]
I have given the figures of the direct cost of the effect on the Exchequer, of which we are able to make precise estimates.
21. Mr. Higgins
asked the Chancellor of the Exchequer whether he will bring up to date the figure of £100,000, which at 22nd November, 1966, represented sales of gold coins under Statutory Instrument 1966, No. 438, to the five members of the London gold market.
I would refer to the Answer given to the hon. Member for Essex, South-East (Mr. Braine) on 23rd June, 1967.—[Vol. 748, c. 358–9.]
As there has been no change since that date, can the hon. and learned Gentleman tell us what has been the effect on the balance of payments of the collections made so far?
The question of the effect on the balance of payments is a separate question of which I should require notice, and I do not think that the hon. Gentleman would want me to revise figures given as recently as 23rd June.
22. Mr. Higgins
asked the Chancellor of the Exchequer whether the Government intend to continue the practice of not asking the Director of Public Prosecutions, whose consent is necessary, to proceed against those who make voluntary disclosures of gold coins under Statutory Instrument 1966, No. 438.
Is it not very unsatisfactory? If an Order is being passed through the House, should it not be consistently enforced or else withdrawn?
We will keep this matter under review. We want still to encourage people who may be holding coins without permission to apply for permission.
Regional Employment Premiums
24. Mr. Elystan Morgan
asked the Chancellor of the Exchequer if he will cause a survey to be made of localities suffering from acute economic difficulties, with a view of seeking to vary the rate of payment of regional employment premium in those areas.[column 1703]
I cannot at this stage usefully add to the reply given to my hon. Friend on 21st June.—[Vol. 748, c. 306–7.]
Does not my hon. and learned Friend agree that, once a uniform pattern of assistance is imposed, it will be more and more difficult to have that pattern varied? While over a year has elapsed since the strong suggestion was made that Selective Employment Tax might be varied on a geographical basis, this has not yet come about.
We have taken power in the Finance Act to make variations of this kind by order if they prove necessary, but we believe that it would be premature, until we have had experience of the effect of the regional employment premium on development areas as a whole, to take any action of this kind.
30. Mr. Wingfield Digby
asked the Chancellor of the Exchequer what representations he has received from the South Western Development Association criticising employment premiums for their effect on the South West Region; and what corresponding measures he now proposes to take to help this area.
The Association has written to my right hon. Friend about the needs of areas, outside the Development Areas, with above average unemployment and have made various suggestions. The problems of areas such as these will be taken into account in the study by Sir Joseph Hunt's Committee whose terms of reference my right hon. Friend the First Secretary of State announced on 6th July.—[Vol. 749 Col. 275.]
Is the hon. and learned Gentleman aware that there is increasing anxiety in the South-West at the way in which its problems are ignored?
I do not agree that the problems are ignored. We are aware of the anxiety on this matter and, as I have indicated, this question will be considered by Sir Joseph Hunt's Committee.
Nationalised Industries (Capital Requirements)
25. Mr. Ridsdale
asked the Chancellor of the Exchequer if he will issue general directions to the nationalised industries for which he is responsible to finances capital developments in those [column 1704]industries in the private investment market, rather than by price increases.
It has been Government policy for many years that the nationalised industries should borrow long term only from the Exchequer and that the industries should contribute a substantial proportion of their new capital requirements from their own earnings. My right hon. Friend is reviewing nationalised industries' borrowing arrangements but is not yet ready to make a statement on this subject.
Is it not iniquitous that old age pensioners and others who cannot afford it should be forced to contribute to expensive capital requirement, such as has happened with the electricity industry, when there has been a 10 per cent. price increase?
If it is an iniquitous policy, it was laid down by the hon. Gentleman's party when they formed the Government.
Oil Taxation (Revenue)
28. Sir G. Nabarro
asked the Chancellor of the Exchequer, having regard to his estimated revenue from all oil taxation of £877 million in 1967–68, of which approximately £600 million derives from motorists, what estimate he has made of the short-fall in revenue due to the rationing of oil and petrol after 1st October, 1967.
No decision to ration petrol or oil has been taken.
Sir G. Nabarro
But the coupons have been printed and as the mileages to be permitted are shown on the coupons, presumably the Treasury is in a position to know how much petrol and oil consumption will be reduced. In the circumstances, would not the hon. and learned Gentleman now answer the Question and not side-step it until 23rd October?
I have answered the Question. The hon. Member must not complain if he phrases his question so badly.
Her Majesty's Stationery Office (Purchases)
31. Mr. William Hamilton
asked the Chancellor of the Exchequer how much of the £26.3 million worth of purchases [column 1705]made by Her Majesty's Stationery Office in the financial year 1965–66 was incurred in Scotland.
Of the Stationery Office expenditure of £26.3 million on goods and services, the value of contracts placed in 1965–66 was £22.1 million, of which £2.3 million was incurred in Scotland.
What consideration are the Government giving to increasing the proportion of Government purchasing power spent in development areas? To many of us, this seems one of the additional mechanisms that could be used by the Government in the development of regional policy planning.
We are aware of that aspect and opportunities are given to Scottish firms to quote for work required in England and Wales as well as for work required in Scotland. Due regard is paid to the policy when tenders are received from firms in development areas.
Exchange Control (Rhodesia)
34. Mr. Christopher Price
asked the Chancellor of the Exchequer if he will take action, under exchange control, to prevent the sending of money out of the country to pay for Ian Smith sterling silver medallions.
Exchange control already prohibits any remittance from this country to Rhodesia for this purpose. If these medals are made in Rhodesia they may not be imported without a specific import licence, which will not be given.
Is my hon. and learned Friend aware that some of these medallions are being held to the names of purchasers in South Africa? Is it not obvious that this money is passing out of the country for the benefit of the Rhodesian economy? Will he consult the Attorney-General to see what can be done about it?
If my hon. Friend is suggesting that we should prohibit payments from the United Kingdom to South Africa in connection with these medallions, I can only say that it could not be done without excluding South Africa from the list of scheduled territories, and we have no intention of doing that.[column 1706]
Bank of Rhodesia (Securities)
36. Mr. Goodhart
asked the Chancellor of the Exchequer whether he will now instruct the directors of the Bank of Rhodesia appointed by the British Government to pay the dividends due to holders of Rhodesia Government securities.
No, Sir. Her Majesty's Government have no power to give directions of this kind.
When will the Government realise that the use of this economic weapon is hurting innocent British stockholders, many of whom have very small savings, more than it is hurting the Rhodesian Government?
What is hurting them is the illegality of the actions of the Rhodesian Government.
Can the hon. and learned Gentleman tell us exactly what these Directors of the Bank of Rhodesia are doing in view of the fact that the Rhodesian balance of payment appears to be satisfactory? Would it not be better to retire them?
Public Revenue (Direct Taxation)
39. Mr. Leadbitter
asked the Chancellor of the Exchequer what estimate he has made of the effect on the public revenue of reducing all direct rates of taxation by 3d. and 6d., respectively.
The cost for a full year of reducing all the rates of Income Tax by 3d. would be £134 million and by 6d. £267 million.
Is my hon. and learned Friend aware of the speech made by the Leader of the Opposition some few days ago indicating a reduction of direct tax rates across the board, the policy statement by the right hon. Gentleman to get rid of S.E.T., and the statement made in the House this afternoon suggesting that we get rid of all forms to collect Income Tax, and does he not consider that the Opposition at the moment are getting themselves into an impossible position, least of all achieving any success in politics?[column 1707]
Yes. We debated these matters fully in the Finance Bill, when the hollowness of the Opposition's proposals was exposed.
Retirement Pensions (Income Tax)
40. Mr. Farr
asked the Chancellor of the Exchequer if he will take steps to exempt the forthcoming increases in the retirement age pension from Income Tax.
Would the hon. and learned Gentleman agree that it is very unfair that these small pension increases, which really replace the purchasing power of pensions eroded by the inflation, should have the little value which can be placed upon them further cut away by Income Tax?
These pensions are taxable in the same way as pensions generally. The general principle is to levy Income Tax from all sources. This matter has been considered under all Governments, and no reason has been seen for departing from that principle.
Decimal Currency (Machine Conversions)
41. Mr. Leadbitter
asked the Chancellor of the Exchequer on what criteria the payment of compensation will be made in special circumstances with respect to expenditure or losses incurred arising from machine conversations following the change to decimal currency.
It will be for the Decimal Currency Board to consider representations about special circumstances. The Government will decide what, if any, compensation to pay in the light of such recommendations as the Board may make.
Does my hon. and learned Friend agree that it has been calculated on the basis of the conversion of machines, in particular, that there will be an expenditure in terms of replacement or conversion of something like £80 million? Since the Labour Government will be in office in 1970, could we now have some understanding with the traders involved about some pertinent criteria in which compensation can be paid—[Hon. Members: “Too long.” ]—because the present conditions—[column 1708]
Order. Even the Hartlepools must be brief.
—because the present conditions are causing concern?
I would remind my hon. Friend that there are no present conditions other than that we do not intend to have a general scheme for compensation. Anyone who considers that he has a special claim for compensation is entitled and is asked to make out his case to the Decimal Currency Board.
Value Added Tax
44. Mr. Patrick Jenkin
asked the Chancellor of the Exchequer whether he will expedite his consideration of the possible introduction of a value added tax in the United Kingdom.
I have nothing to add to the statement made by my right hon. Friend the Prime Minister on 8th May.—[Vol. 746, c. 1089–91.]
While recognising that the Government cannot determine their policy on the basis of a single speech by a member of the European Commission does not the hon. and learned Gentleman recognise that the point made by Mr. Von der Groeben that the sincerity of our application will be judged by our readiness to harmonise our legislation makes it important that we should press ahead with measures for fiscal harmonisation such as a value added tax with the utmost expedition?
As my right hon. Friend the Prime Minister made clear, we do not see any barrier in these provisions of the Treaty and will be fully ready to take and play our part in the harmonisation of taxes within the E.E.C.
Mr. Brian Parkyn
Will the Government bear in mind, in relation to this matter, that one of the major reasons for the vertical integration of industry in Holland has been the value added tax, and that it would give us the same kind of benefit in this country?
I can assure my hon. Friend that we are considering all these relevant matters in connection with this tax.[column 1709]
Maintenance Payments (Remission to Rhodesia)
46. and 47. Mr. Worsley
asked the Chancellor of the Exchequer (1) what is his policy towards the payment by divorced persons resident in this country of money for the maintenance of their children resident in Rhodesia;
(2) why Mr. S. I. Posen has not been allowed to remit in full the £50 alimony ordered to be paid in 1958 after divorce proceedings before a British court sitting in Southern Rhodesia.
Under present policy, United Kingdom residents are not allowed to remit funds to Rhodesia for the maintenance of persons in that country except in cases of severe hardship. The amounts which Mr. Posen has been allowed to remit have been calculated in accordance with the normal rules applicable to hardship cases and take into account the financial circumstances of his former wife.
Is this not absolutely shameful? Will the hon. and learned Gentleman look at this again? Whatever the issues and rights or wrongs about the Rhodesian crisis, can it be right to punish children for the failure of Her Majesty's Government's Policies?
I cannot accept that this is punishing children—
Of course it is.
I have looked carefully at this case myself, and we have applied the hardship test to it. The remission of some money has been allowed, but we have taken into account the financial circumstances of the former wife.
Income Tax Act, 1952 (Section 408)
asked the Chancellor of the Exchequer what decision he has reached with regard to amending Section 408 of the Income Tax Act, 1952, in view of the comments in the Bates case.
I would refer the hon. Lady to the reply which I gave [column 1710]on 6th July to the hon. Member for Hertford.—[Vol. 749, c. 293–4.]
Is Niall MacDermotthe Financial Secretary aware that an opportunity has already passed to improve this Section in the Finance Bill? Why did he not take advantage of it then?
As I indicated in my former reply, we do not think that the Section is in need of amending, and the decision that has given rise to these suggestions was made in conformity with the policy underlying the Section.