§ Mr. Peter BottomleyTo ask the Chancellor of the Exchequer what is the relationship between the balance of payments cost of an increase in overseas aid and the domestic balance of taxation and net public spending.
§ Mr. MellorOverseas aid in the form of cash grants counts as a transfer debit in the invisible trade balance of the current account. An increase in such aid would therefore reduce the surplus on invisibles and so increase the current account deficit. It would count as public expenditure. To the extent to which it added to the planning total, it would need to be financed from general taxation.