Exchange Controls

Oral Answers to Questions – in the House of Commons at 12:00 am on 24th July 1980.

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Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian 12:00 am, 24th July 1980

7. Mr. Dalyell asked the Chancellor of the Exchequer if he will make a statement on his latest assessment of the effect of dismantling exchange controls.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Capital outflows since the dismantling of exchange controls seem to have been running at about £ 1 billion a quarter, for the greater part representing repayment of foreign currency debt by United Kingdom companies. Overseas purchases of sterling assets over the same period have more than offset these outflows.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

To use the Chancellor's words and to telescope a series of economic propositions into a single sentence, is it not none the less true that it would be more comfortable to make moves towards a less strong pound if there were a fallback of some sort of exchange control machinery? Given the reply to my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry), do we take it that the 1964 and 1977 machinery is adequate to bring back exchange controls should outside events unwelcome to the Government make that practicable and necessary?

Photo of Mr John Biffen Mr John Biffen , Oswestry

I should require notice of the latter part of the hon. Gentleman's question.

Photo of Mr John Biffen Mr John Biffen , Oswestry

It will be asked in good faith and answered in good faith. The residual law is kept in being on account of European Community obligations. I do not believe that it is to the advantage of the economy to try to proceed towards a situation in which either the inflow or outflow of capital is more restricted. I believe that we should move to a regime that seeks greater liberalisation.

Photo of Mr Keith Wickenden Mr Keith Wickenden , Dorking

Does my right hon. Friend accept that those of us who bear the responsibility of trying to create employment and who are doing so take great pleasure in the fact that we have been set free from the shackles of exchange controls and enabled to create employment?

Photo of Mr John Biffen Mr John Biffen , Oswestry

I take account of my hon. Friend's remark. Although this is a fairly esoteric subject, it sharply divides in the starkest philosophic terms the differences between the two sides of the House.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Is the Minister aware that the motor car manufacturing industry is in great difficulties? Is he also aware that at the same time almost all foreign car manufacturers are advertising their cars for sale on 5 per cent. loans, a rate that is a third of the going rate in Britain? Will he examine the terms of this financing to ascertain the extent of the manoeuvring and manipulation of exchange controls that is enabling foreign firms to sell their cars in Britain at the expense of British manufacturers and to manoeuvre interest rates so that they can advertise loans costing only 5 per cent?

Photo of Mr John Biffen Mr John Biffen , Oswestry

I shall have that matter investigated. I am not immediately certain that there is any Government responsibility.