HC Deb 16 December 1976 vol 922 cc1704-6
2. Mr. Michael Marshall

asked the Chancellor of the Exchequer what is the United Kingdom's current indebtedness to the International Monetary Fund.

8. Mr. Hoyle

asked the Chancellor of the Exchequer if he will make a statement on the recent negotiations with the International Monetary Fund.

9. Mr. Atkinson

asked the Chancellor of the Exchequer if he will make a statement on the progress of his discussions with the International Monetary Fund and on any developments which may have occurred since his Letter of Intent.

The Chancellor of the Exchequer (Mr. Denis Healey)

United Kingdom drawings on the International Monetary Fund now amount to 1,700 million special drawing rights. On the negotiations for a further standby, I would refer the hon. Members to the statement I made to the House yesterday.

Mr. Marshall

Will the Chancellor confirm that the standby which he announced yesterday is to involve a number of tranches? Is that not an unprecedented and humiliating position for our country to be in? Will he confirm that these tranches will necessarily require a review of our performance against the current projections which he has been making and which in the past have been so far adrift? In those circumstances, will he do the honourable thing and resign?

Mr. Healey

The answer to the last question is "No, Sir". On the serious part of the hon. Member's question, it is quite normal for the International Monetary Fund to pay three whole tranches of standby in stages. We are applying for three tranches from the International Monetary Fund, not for a single one. In fact there is a great degree of front-loading, since two-thirds of the $3,900 million will be paid by the end of the first financial year concerned. On the question of performance, we are not on this occasion inviting the Fund to monitor our performance by visits every quarter. We have told the Fund how we hope to achieve our targets in the early stages of the programme, and, therefore, we shall be subject only to the normal annual visits of the members of the Fund which all members agree to accept.

Mr. Hoyle

Instead of acting as Scrooge at this time, will my right hon. Friend act as the Santa Claus of the Labour movement by adopting an alternative strategy—a Socialist strategy—which would wipe the smiles off Conservative Members and delight the Labour movement? Does he accept that it is a question of having not a siege economy but a planned economy which would put us on the road to recovery?

Mr. Healey

Nothing would please me more than to be the Santa Claus of the Labour movement, even if it meant wiping the smiles off the faces of hon. Members opposite. On the alternative strategy, I would draw my hon. Friend's attention to the remarks of the TUC Economic Committee which considered my announcement of yesterday at its meeting this morning, when it said: It has to be accepted that there was no real alternative to seeking financial support from abroad if the pound were to be protected against continuing downward pressure, the consequence of which would have been even more difficulties on the balance of payments and even more unemployment. If my hon. Friend disagrees with that judgment, perhaps he will let the TUC Economic Committee know.

Mr. Atkinson

When my right hon. Friend was discussing with the IMF the particular currencies that he would need to draw, did he have in mind the fact that the oil countries would be charging a further £500 million or £600 million this year for their oil supplies to this country? Will not that disrupt his calculations about consequential unemployment and price rises?

Mr. Healey

I am grateful to my hon. Friend. The currencies to be drawn are drawn from the members of the General Arrangements to Borrow, and it is not a matter of great consequence to Her Majesty's Government what are the proportions of the various currencies at any particular time. Account has been taken in all the figures that I gave the House yesterday of the possibility of an increase in oil prices as a result of the current deliberations of OPEC.

Mr. David Howell

Will the right hon. Gentleman tell us more about the $500 million special facility from the United States Treasury and the $350 million from the Bundesbank? Are they new facilities or an extension of the facilities that were started in July?

Mr. Healey

The arrangement to which the hon. Gentleman refers—it was, in fact, the June standby—terminated completely with the full repayment of all drawings on 9th December. The facilities offered to us by the United States Treasury, the Federal Reserve Bank and the Bundesbank in Germany are entirely new. The American facilities—$500 million divided equally between the Federal Reserve Bank and the United States Treasury—are a normal swap arrangement. The $350 million offered by the Bundesbank is a standby to be drawn only if we wish to draw it.