§ Mr. Cockeramasked the Chancellor of the Exchequer what changes will be made to the sterling effective exchange rate index in view of the International Monetary Fund's recent revision of its multilateral exchange rate model.
Estimated cost, £ million Life assurance relief Mortgage interest relief Approved pension schemes Employers' contributions to approved pension schemes Retirement annuity relief Age allowance 1979–80 430 1,450 550 1,150 110 290 1980–81 540 1,960 600 750 135 370 There is no specific price index for converting figures of tax reliefs to constant price basis; but in order to give a broad indication of movements in these amounts in real
546W
Estimated cost, of tax relief at 1975/76 constant prices £ million Life assurance relief Mortgage interest relief Approved pension schemes Employers' contributions to approved pension schemes Retirement annuity relief Age allowance 1960–61 150 200 — — — — 1961–62 160 205 — — — — 1962–63 160 200 — — 15 —
§ Mr. LawsonThe Bank of England uses weights derived from the IMF's multilateral exchange rate model (MERM) to calculate the official sterling effective exchange rate index. The IMF has recently revised the MERM and updated its weights to take account of 1977 rather than 1972 trade flows. Effective exchange rate indices using the new weights have been published by the IMF in the January 1981 edition ofInternational Financial Statistics.
The Bank of England will use the new weights in calculating the official sterling effective index from 2 February. The index will also be rebased so that 1975 average exchange rates = 100—instead of 18 December 1971 = 100—so bringing it into line with related United Kingdom economic series and the IMF series of effective exchange rates. The series of sterling effective exchange rates published in table 50 of Economic Trends and table 13.4 of Financial Statistics will be recalculated on the basis of the new weights from 1975.
In addition, monthly averages of two new indices will in future be published in Financial Statistics. The first of these will show sterling's performance against the United States dollar and the second against the currencies participating in the EMS exchange rate arrangements. Normalised MERM weights will be used in the calculation of the latter.