It was just one of a number of proposals announced in his "little Budget" statement in the Commons. Other proposals included a new gambling tax - the proceeds from which will be used to fund cheaper mortgages for the less well off.

Loud cheers greeted Mr Callaghan's announcement of the switch to decimal currency.

'Considerable benefit'

He said: "It is the government's conclusion, shared I know by large sections of industry, commerce, science and banking, that the change to a decimal coinage will bring considerable benefit to the economy at large."

Preparations for the change-over will begin at once, with the introduction of a Decimal Currency Bill. One of its functions will be to establish a new Decimal Currency Board to oversee the switch which will take place in February 1971.

There were more cheers as Mr Callaghan confirmed the pound would remain the major unit of currency. It will be divided into 100 units, to be called either cents or new pennies.

Preliminary estimates suggest the cost of switching to decimal coinage may be as much as £120m. However, Mr Callaghan said he hoped the long change-over period may mean the total cost was lower than this.

Companies obliged to invest in new equipment will not be compensated, but they will be entitled to tax relief.

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