HC Deb 05 April 1951 vol 486 cc382-4
The Chancellor of the Exchequer (Mr. Gaitskell)

With permission, Mr. Speaker, I should like to make a statement on the gold and dollar position of the sterling area.

During the first quarter of 1951, the sterling area's net gold and dollar surplus amounted to $360 million compared with a surplus of $398 million in the fourth quarter of 1950, and $187 million in the third quarter of 1950. Receipts under the European Recovery Programme in respect of allotments made before the end of 1950 amounted to $98 million compared with $145 million in the fourth quarter of 1950 and $147 million in the third quarter. The central gold and dollar reserves of the sterling area rose, therefore, during the first quarter of 1951 by $458 million and amounted to $3,758 million on 31st March, compared with $3,300 million on 31st December and $2,756 million on 30th September.

As a result of the continued increase in the reserves, an issue of sterling to the Exchange Equalisation Account will shortly be necessary, and a further issue of £300 million will accordingly be made to the account during the current month.

As far as can be seen at present, the substantial gold and dollar surplus in the first quarter of 1951 is mainly due to high dollar earnings by countries in the rest of the sterling area which have no doubt also been reflected in an increase in our sterling liabilities to those countries. The United Kingdom itself appears to have remained in deficit with the dollar area, while at the same time our total balance of overseas payments has certainly been much less favourable in the last few months, because of the sharp increase in import prices.

Mr. Lyttelton

I think it would be inappropriate to comment or ask questions now upon this statement, which carries us very wide. I think the right hon. Gentleman will understand if we refrain from commenting until the Budget debate.

Lieut.-Colonel Lipton

Does the statement mean that there is little or no substance in the repeated allegation that the increase in our gold and dollar reserves is largely due to the running down of our stocks?

Mr. Gaitskell

There is no substance in that allegation.

Mr. Lyttelton

Surely the right hon. Gentleman would agree that much of the favourable balance-of-payments position that we have enjoyed is due to the restriction of imports which now, on looking back, seems to have been an unfortunate policy. I am not blaming the right hon. Gentleman.

Mr. Gaitskell

During the last year it is certainly not true to say that shortage of dollars has restricted our imports.

Mr. Baker White

Will the Chancellor agree that in regard to the attainment of this result full praise should be given to some 2,000 men who are producing and managing rubber and tin estates in Malaya, in constant danger of their lives?

Mr. Gaitskell

Certainly, we are all indebted to the splendid output of rubber and tin from Malaya.

Sir Richard Acland

Can my right hon. Friend be more specific, and at some time publish a statement showing what are the dollar earnings of those other parts of the sterling area, particularly of the Colonial Dependencies?

Mr. Gaitskell

My hon. Friend has asked that question a number of times, and I have given him my answer. We do publish the total earnings of the rest of the sterling area, and these figures will be available in due course.

Mr. Shepherd

The right hon. Gentleman says that the run-down of stocks has no part in the increase in our gold and dollar reserves. Why then is the rundown referred to in the Economic Survey for 1951?

Mr. Gaitskell

If the hon. Member reads the Economic Survey, he will see that the run-down is ascribed to inability to obtain supplies from non-dollar sources.

Mr. Osborne

The Chancellor has said that the United Kingdom share of this increase is not substantial, and he also admits that we have run down our stocks, particularly of raw materials and foodstuffs; therefore would he not agree that it would be wrong to give the country too optimistic a picture of our own position as regards this statement?

Mr. Gaitskell

If the hon. Member reads my statement, especially the last paragraph, I think he will see that I was careful not to give too optimistic an impression.