§ 2.54 p.m.
§ Lord BOYD-CARPENTERMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what is the present cost of the administration of Exchange Control.
1003§ The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)My Lords, exchange control is administered by the Bank of England as the agents of the Treasury, using powers delegated under Section 37 of the Exchange Control Act 1947. For the year to 31st March 1979 the Bank of England's expenses for the administration of exchange control are expected to amount in total to £13 million. These expenses are met by the Treasury from voted funds. In addition, the cost of Treasury staff engaged full-time on exchange control, including its enforcement, is about £300,000 a year. The cost of exchange control work done by officers of Her Majesty's Customs and Excise as part of their duties cannot be separately identified.
§ Lord BOYD-CARPENTERMy Lords, while thanking the noble and learned Lord for the courtesy of that Answer, may I ask whether he would also agree that additional expenditure is incurred by companies and by individuals in the process of seeking permission to use their own funds for the purposes which they judge most expedient; and at a time when the Government are priding themselves on the oil-generated strength of sterling, is it not time to consider whether it is necessary to maintain this control at all?
§ Lord McCLUSKEYMy Lords, I am certainly aware that there is additional expenditure of the character referred to by the noble Lord. Of course I cannot assess the amount of it. In relation to the more important matter which has been raised, I do not think your Lordships would want me to go into an extended answer about what my noble friend Lord Goronwy-Roberts called "the philosophy of all this"; but in relation to North Sea oil it is certainly very doubtful whether the best use of the benefits of North Sea oil would be to encourage funds to flow overseas rather than into investment in productive industry at home. I may say in addition that the Government look at this matter continuously. As the noble Lord and the House know, it has been in operation for some 40 years and on the basis of a short term, or even indeed a short-medium term, increase in the value of sterling or improvement in the balance of payments, one must not take a decision which might have very serious adverse consequences for this country.
The Earl of GOWRIEMy Lords, without for a moment wishing to go into "the philosophy of all this", is it not the case that capital monies exported abroad, earning dividends there which are then remitted to this country, are just as valuable an export as subsidised shipping, for example, and go just as far to ameliorate the problems of unemployment?
§ Lord McCLUSKEYMy Lords, of course I accept that there is an advantage in exporting capital abroad and thus increasing invisible earnings; but the disadvantage is that if one suddenly, or too quickly, dismantles all these barriers which have existed for so long, one is likely to create a short term or medium term balance of payments problem which is liable to have a serious effect upon the problem of inflation, and we all regard that as being the most important problem facing us at the present time.
§ Lord BALOGHMy Lords, is it not more convenient in serving the national interest if the capital which is coming in is used to buttress our national reserves and not the speculative activities of some crazy people?
§ Lord McCLUSKEYMy Lords, I really do not want to go into that either because it is really a byway in relation to this Question.
§ Lord BOYD-CARPENTERMy Lords, in replying to my noble friend on the Front Bench with reference to rapid dismantling of these controls, is the noble and learned Lord indicating that the Government are considering doing so by stages; and in that context are the Government considering our obligations under Article 67 of the Treaty of Rome in so far as capital movements within the Community are concerned?
§ Lord McCLUSKEYMy Lords, if I may take the two points together, in the first place I am not saying that the Government are contemplating relaxation by stages, but I am saying that we have already relaxed; in October 1977 we made a relaxation which allowed more sterling borrowing by non-resident investors, and at the beginning of 1978, as your Lordships will recall, we abandoned the 25 per cent. surrender rule. These have been important 1005 moves in the direction and it is right that they should be gradual. In relation to Article 67, the noble Lord will be aware that we have an authorisation under Article 108 of the Treaty which allows us not to obtemper the terms of Article 67. I may say that in that authorisation we are in good company because Denmark, France, Italy and Ireland—the five of us constituting a majority of the EEC membership—also have authorisation under Article 108.