§ 18. Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what adjustments to his forecast of domestic credit expansion contained in paragraph 9 of his letter of intent to the International Monetary Fund he expects to result from his decision to seek authority for renewal of the import deposits scheme.
§ Mr. Roy JenkinsAs I said in the House on 21st October, there is no way of quantifying the precise effect of import deposits, but the continuance of the scheme is a new factor to be taken into account in considering the course of domestic credit expansion.
§ Mr. Bruce-GardyneOn that occasion, 21st October, the Chancellor seemed to infer that he was continuing this scheme because the banks had failed to keep down to their lending ceiling. Is he not aware that most authorities regard the lending ceiling of the banks as being completely irrelevant to control of the money supply? Can the right hon. Gentleman tell us how he justifies the additional squeeze when already the Managing Director of the I.M.F. has told us that monetary direction in this country has gone further than the adjustment process really requires?
§ Mr. JenkinsThe hon. Member always asks so many questions at once.
§ Mr. Bruce-GardyneJust answer one or two.
§ Mr. JenkinsI will endeavour to answer one or two or three of them. I do not think it has anything to do with the statement of the Managing Director, which the hon. Gentleman has raised on previous occasions. I think that the continuation of the import deposits scheme at the modified rate was desirable in order to continue to fortify our strongly improving balance of payments position. I do not regard it as necessarily having an increasing effect on the stringency of the credit squeeze, because I am taking it into account with other considerations; nor certainly do I regard the bank ceiling as being irrelevant from the point of view of the total of domestic credit expansion.
§ Mr. HigginsYes, but arising from the original Question, can the right hon. 818 Gentleman say whether he got the agreement of the I.M.F. in terms of the I.M.F. treaty, and if he cannot quantify it, how can he hope to achieve the substantial figures in the Letter of Intent?
§ Mr. JenkinsThat which is not quantifiable can none the less have important qualitative results, and the figure set out in the Letter of Intent was a ceiling it is not something which is intended to be precise within £1 million or £2 million or £10 million. I can certainly assure the hon. Gentleman that I have informed Mr. Schweitzer of my intention, and he raised no objection.
§ Mr. CantWould it not be worth reminding the personal representative of Professor Friedman, in view of the fact that his estimate of money lags varies from six months to 18 months, that my right hon. Friend might be very wise in exerting a little more pressure now and perhaps a little less pressure in 1970?
§ Mr. JenkinsWell, I will certainly bear it in mind. I am not quite sure whom my hon. Friend regards as the personal representative of Professor Friedman. There are several possible alternative candidates for the role. But it is certainly true that, on the whole, I regard monetary management as an art, not a science.
§ 22. Mr. Wingfield Digbyasked the Chancellor of the Exchequer what communication he has sent to the Secretary General of the European Free Trade Association about his decision to continue import deposits; and what reply he has received.
§ 29. Mr. Richard Wainwrightasked the Chancellor of the Exchequer what explanations he has made to the European Free Trade Association and the General Agreement on Tariffs and Trade about his plans to continue import deposits into 1970.
§ Mr. Roy JenkinsThe Secretary General of the European Free Trade Association and the Director General of the General Agreement on Tariffs and Trade were informed on 21st October of the Government's decision to continue the import deposit scheme, and its reasons for so deciding, in the terms in which I informed this House.
§ Mr. DigbyWill the Chancellor of the Exchequer bear in mind the importance of restoring the confidence of our valuable E.F.T.A. partners which, as many of us know, has been sadly undermined in recent years?
§ Mr. JenkinsWithout necessarily accepting the hon. Gentleman's premises, I certainly think that it is important that we should have good and close relations with E.F.T.A. The most important part in the restoration, if restoration be necessary, and the building up of these relations is the rapid improvement in our foreign trade position in recent months.
§ Mr. WainwrightWill the right hon. Gentleman undertake to see that by the time the House debates the legislation for renewing the import deposits scheme, details of the exchanges with G.A.T.T. and E.F.T.A. on this subject are published to the House?
§ Mr. JenkinsI am not sure whether there will be formal exchanges to publish. There is a Ministerial meeting this week and the matter will be there discussed, but I cannot give any undertaking because I am not sure that there will be any formal exchanges.