I announced in my Budget speech my intention to discuss with our creditors, including the International Monetary Fund, the phasing of our repayments of external debt.
As a method of refinancing these repayments, including the repurchases which are falling due this year in respect of our 1965 I.M.F. drawing, there have been discussions in recent weeks with the staff of the I.M.F. of the possibilities of further stand-by facilities.
I have every reason to expect a satisfactory conclusion, but no formal application has yet been made, the documentation has not yet been finally settled, and the matter will have to go to the executive board of the I.M.F.
A full statement will be made to the House when the arrangements are complete, and my hon. Friend the Financial Secretary has already announced that any Letter of Intent will be published.
In the meantime, it would be wrong for me to give piecemeal indications of matters which are currently under negotiation beyond saying that there will be nothing contrary to the policy outlined in my Budget speech.
I have three points to put to the Chancellor. First, since we are to rise next week for the Whitsun Recess, will the right hon. Gentleman do everything he can to ensure that the statement and the Letter of Intent are released before we rise, and, in particular, will he make the Letter available in the Vote Office a few hours before he makes the statement so that there can be no misunderstanding as between the two?
Second, does this approach mean that payments now becoming due will be postponed for up to four years and, therefore, become the responsibility of the next Administration?
Third, does not this humiliating approach mean that for the fifth consecutive year the Government's targets have been destroyed? What new proposals has the Chancellor in place of those which have proved so disastrous for our country?
I think that the timetable is such that the processes to which I referred will not be completed—certainly not before the House adjourns—before the House comes back. It will, therefore, be possable to inform the House as soon as they are complete.
I shall consider the right hon. Gentleman's point about putting the Letter of Intent in the Vote Office or publishing it in a way which is most convenient for the House.
Next, the matter of the payments now becoming due. We paid the February instalment of 200 million dollars. We propose to pay the May instalment. The effect will be to reduce and not to increase our debt to the I.M.F.
On the general matter, I believe that it is right to continue with the policies which I have stated. I have never underestimated the difficulties of putting our balance of payments right.
Will my right hon. Friend bear in mind two points during the course of his negotiations: first, that any attempt to impose further restrictions on economic growth in this country will have the most damaging long-term effects for the future of the economy; second, as our total short-term borrowings since October, 1964, almost exactly equal the private outflow of capital, will my right hon. Friend bear in mind the need to restrict the outflow of that capital to advanced industrial countries abroad?
I understand my hon. Friend's anxieties about economic growth, to which I attach the greatest possible importance, but I recollect, also, that great concern was expressed about the effect on economic growth of the Letter of Intent of November, 1967, and that in the year following we had the most rapid economic growth for the past four years.
On my hon. Friend's second point, it is possible, as he points out, to take a very exaggerated view of our net indebtedness problem, but difficult issues are involved in drawing the conclusion which he draws, which I do not fully share, which he and I have debated on many occasions, and which, no doubt, we shall debate again in the future.
Does the right hon. Gentleman recollect that on the last occasion when a Declaration of Intention was published, it referred to certain domestic policy undertakings, such as the statutory incomes policy? Can he confirm that the Letter of Intent which is now proposed to be signed will confirm that the Government intend to proceed with legislation on trade union reform?
The hon. Gentleman must not try to compete with his hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). I will not be put in the position of having either to deny something or confirm it. [HON. MEMBERS: "Answer."] No, I shall not answer. I have made quite clear that if, in advance of the publication of a full document—the same applied to a Budget statement—one is asked to confirm or deny something, it is often easy to deny something but by so doing and then refusing to confirm or deny something else one immediately creates a prejudiced position. With respect, therefore, I regard the hon. Gentleman's question as in the same category as that of the hon. Member for Worcestershire, South on a previous occasion.
Can my right hon. Friend say whether he will refuse to accept any arbitrary figure of money supply which might be part of the conditions of this loan, as that involves a sphere about which very little is known as it applies to this country? Further, will he say that, if the conditions of the loan involve an increase of the deflationary policy which, in the past, has led only to fresh loans, he will reject that as a possible solution?
The first part of my hon. Friend's question falls into the same category as that of the hon. Member for Oswestry (Mr. Biffen). On the second part, I repeat to my hon. Friend that there will be nothing which will be contradictory to the policy outlined in my Budget Statement.
The right hon. Gentleman labours his Budget statement. Will he now confirm or deny—repeat: confirm or deny—that, when he framed his Budget statement, he anticipated the progressive decline in our balance of payments as manifest by the March deficit of £52 million and the April deficit of £59 million? Will he confirm or deny that he foresaw this declining and worsening position?
I know that the hon. Gentleman has great experience of the witness box, but he should not put his questions too much in that form. It is certainly true that, when I framed my Budget Statement, I did not expect, bearing in mind that the ending of the United States dock strike was likely to be difficult and the effects of the Ford strike, that the April trade figures would be substantially better than they were.
In view of the timing of the negotiations which my right hon. Friend has now described to the House, is not the speculation about the content of the negotiations extremely untimely in itself?
It is somewhat premature. Of course, I understand the attitude of hon. Members, on both sides, towards this important matter. I do not in the least feel that this should not be the case. I also feel, however, and I think that this will be generally accepted by the House, that any Government indulging in international negotiations must do so confidentially and then must defend the position to the House, which I am fully prepared to do.
Will the Chancellor make it clear to the House whether the facilities for which he is making application do or do not carry with them certain trigger clauses, as is popularly said, and whether he is prepared to accept these clauses if they are imposed?
The hon. Member should not—as, I am sure, he does not—believe everything that he reads in the newspapers. I must again repeat that I am not disclosing the Letter of Intent beyond saying that I reiterate, as my hon. Friend the Financial Secretary said yesterday, that there is no question of my signing anything which is contrary to the policy I outlined in my Budget statement, or which does not enable me to be responsible to this House for Government economic policy.
Does my right hon. Friend understand that it seems to many of us, as has happened before in these matters, that perhaps he is being asked to shut the stable door after the horse has bolted and to declare his views only when they are too late to be effective? Does not my right hon. Friend agree that this practice contains serious dangers for the effectiveness of Parliamentary democracy?
The House is taking, and I welcome the fact, certain opportunities of expressing its view, and I take note of its view as expressed in various ways. It would not, however, be correct or sensible constitutional doctrine to say that any Government, in engaging in international negotiations, should do so through the channel of the House of Commons. This is not possible constitutionally and has never been the case. The Government must negotiate and must take responsibility for the results.
Will my right hon. Friend make it clear that there is no need to get hysterical about applying for a re-phasing of debts which are massively exceeded by our assets? At the same time, will he assure the House that the level of growth to which he referred in his Budget speech will not be reduced and that he still plans to go for a level of growth of at least 3 per cent. in the forthcoming year?
I must point out, as I said in my Budget speech, that estimates of future levels of growth are, like all estimates, subject to a margin of error both ways. I must also point out that last year we substantially exceeded the target of growth which I aimed at in my Budget.
The important point here is that, as I have indicated to the House, any Letter of Intent which I may sign will not be contradictory in any way to the policy outlined in my Budget speech.
Since the Chancellor says, and I accept his statement, that the Letter of Intent will go no further than and will not contradict his Budget Statement, would it not be possible to refer the International Monetary Fund to his Budget Statement?
Secondly, will my right hon. Friend deal with this point? Many of us are very much concerned, before any Letter is sent, to debate other matters which have appeared in previous Letters of Intent, such as Article 13 of the previous Letter, which made certain assurances about capital movements, which have greatly contributed to our economic difficulties.
What I said was that the Letter of Intent will be in no way contradictory to my Budget Statement, but I would not claim that my Budget Statement pointed out everything so perfectly that it should be repeated in all circumstances.
I see that I carry the House with me on that.
Referring to the previous Letter of Intent, about which my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) made such a striking speech in the first debate to which I had to reply after taking up my present office, I can say without hesitation that there was nothing in that Letter which has in any way dictated my actions since then. I have had to take difficult measures since then, but I have taken all of them, and they have gone beyond the Letter of Intent, not because I had to do so because of the Letter but because I regarded them as right in the circumstances.
Is the Chancellor aware that we note his undertaking to lay before the House the details of any arrangement which is arrived at? Is he further aware that it is quite impossible for any Government, of any complexion, to discuss the details before any arrangement is arrived at? Is he also aware that it is the hope of most of us that he will get the best possible arrangement for this country and that in that we wish him well?
I am most grateful to the right hon. Gentleman, who appears to me to express the correct constitutional doctrine with all the authority of the leader of a party which has had great experience of government.
While I agree with my right hon. Friend that the Government must make up their own mind, take part in the negotiations, arrive at a decision and report back to the House, may I ask whether he would not accept that, at the same time, there is grave anxiety in the House that the Letter of Intent or the discussions may lead to possible interference in our domestic policy and an effect upon deflation and, possibly, unemployment? Therefore, will not the Chancellor try to have written into the Letter a policy for growth and expansion, which is the only way out of our economic difficulties?
I have said before that I understand the anxiety of hon. Members, on both sides. I have made it clear that the object of my policy is to maintain the highest possible level of growth combined with an improvement in the balance of payments. I believe it to be necessary to pursue both those objects. It is also necessary to appreciate that during the past year we were more successful in growth than in the balance of payments. I have these points in mind all the time. I have them in mind in framing the Letter of Intent.
The point made by the hon. Member is neither very relevant nor original. I certainly envisage that the Letter of Intent will be published, as I have undertaken that it will be and as was the case with the last Letter of Intent, which I did not sign but which it fell to me to carry out, and as was not the case with the numerous previous Letters, three of them written by the right hon. Member for Barnett (Mr. Maudling) and one by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), which were not published. We have every intention of publishing it.
Can the Chancellor clarify one point? The last two sets of trade figures have been very bad. One of them was available yesterday and the other only on the morning of Budget day. In the light of that deteriorating situation, how can the right hon. Gentleman still claim today that his Budget judgment and proposals are as valid today as he thought they were then?
While we fully appreciate the Chancellor's reluctance to deal piecemeal with any aspect of the Letter of Intent, he has referred repeatedly to negotiations. Will he say whether those negotiations are concerned with the mechanics of the facilities to be offered that is, repayment, and so on—or with aspects of policy to be pursued by the Government?