The relative strength of sterling since the Conservative Government took office has enhanced the reputation of this country abroad, reduced the sterling value of imports and, by contributing to the fight against inflation, will help our future export performance.
Does the Secretary of State appreciate that the reputation of sterling abroad does not necessarily bring jobs at home? Does he accept that the high and escalating value of sterling—according to the latest figures—will lead to cheap imports, expensive exports and the consequential de-industrialisation of these islands? Taken in conjunction with the lifting of restraints on the export of capital and the high interest rates on home manufacturing industries, does he agree that the value of sterling is having a devastating effect on the country?
The strength of sterling is a by-product of the new Government's economic policies. I find it strange that when the House has complained for years and years about the weakness of sterling and its accompanying problems—including a high domestic inflation rate—many hon. Members now start to complain because sterling is strong. They cannot have it both ways. It must be for the benefit of the country that our currency is highly regarded overseas. That plays an important role in reducing the cost of imports. For that reason, it is beneficial in the fight against inflation.
I agree with my hon. Friend. Trade follows overseas investment. The example of the United States is a good one to illustrate that point. The National Economic Development Council considered these matters, as did the sector working parties on which the trade unions were represented. The majority view was that overseas investment helped to provide jobs at home.
Mr. J. Enoch Powell:
Will the right hon. Gentleman give his support to what appears to be the developing policy of Her Majesty's Government, to run down the currency reserves so that they can no longer be used by the Bank of England and others in the silly game of rigging the exchange rate?
I think that the right hon. Gentleman is slightly confused in his question, if I may say so. If he is suggesting that we should not support the value of sterling, or we should not intervene in the foreign exchange market—I think that was his point—I would agree with him. There may be some reason for the Bank of England being in the market in some minor way, but I would certainly agree with him that it is markets, not the Bank of England, which decide the value of sterling.
I believe that our recently announced policy for the abolition of exchange controls is an extremely important one for the balance of payments. It is absolutely fundamental that we invest some of the proceeds of North Sea Oil in overseas income-producing assets. This will provide great benefits for this country in future years, just as overseas investment has provided enormous benefits to this country throughout its recent history. That aspect of our policies will bring great benefits over future generations.