GOLD AND DOLLAR RESERVES AND ECONOMIC SITUATION (Hansard, 4 December 1956)

§ Mr. Snow
The new viscount.

§ Mr. Macmillan
With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
The customary monthly announcement on the gold and dollar reserves is being issued to the Press today and will be circulated in the OFFICIAL REPORT. It shows a fall of 279 million dollars in the reserves to 1,965 million dollars, and a deficit of £24 million in E.P.U. I think it is right that the House should have an immediate explanation from me both of the significance of these figures and of Government policy.
First, then, the figures. During the first half of this year our gold and dollar reserves rose by 265 million dollars. For a number of reasons, of which the House is well aware, the pressure on the reserves is always greater in the second half of the year, but at the end of July I had no reason to suppose that this would be more than normal. In fact, in the third quarter the fall was 57 million dollars and would have been about 230 million dollars had it not been for the special receipt from the sale of the Trinidad Oil Company. In October, the fall was 84 million dollars and in November, as I have said, the figure was 279 million dollars.
These falls in the reserves and the deficit in E.P.U. started after the date of Colonel Nasser's seizure of the Suez Canal and have not been caused by any weakness in our trading position. The United Kingdom trading position has been and continues to be essentially sound. But the closure of the Suez Canal and of the Iraq Petroleum Company pipelines must adversely affect our balance of payments, especially if these interruptions are prolonged
The most realistic forecast which I can at present give the House is that over the year 1st July, 1956, to 30th June, 1957, our external current trading account will be roughly in balance. The events of the past four months and the international tension they have caused have increased 1051 the pressure on sterling. It is this factor which has been almost entirely responsible for the recent losses. As the House knows, sterling is particularly affected by movements in world confidence because it is so widely held and used. It finances half the world's trade and payments.
It would be wrong to minimise the seriousness of the losses which the reserves have suffered. It would be equally wrong not to view them against their proper background.
On this I wish to make three points. First, since the losses have arisen primarily from the international situation, they should not be permanent; the trend will reverse itself as the position improves.
Secondly, for some time now there has been a consistent reduction in the total sterling balances, especially those held by non-sterling area countries. Normally, when the reserves rise, the liabilities rise as well. But, in fact, in the first half of this year the reserves rose by £95 million, and the liabilities fell—fell, not rose—by £22 million. Thus our capital position had been strengthened when the Suez Canal crisis broke.
Thirdly, if we take the necessary steps, as we intend to do, to keep our trading position strong, the surplus that we may earn as traders must in due course reflect itself in our improved capital position as financiers. I have no doubt that the rest of the sterling area will approach the situation in the same spirit.
In brief, therefore, the immediate problem which faces us is short-term pressure on the £ rather than long-term defects in our trading position. The immediate task is to repel the attack on the £ sterling. This requires action both externally and internally. In these circumstances, the broad lines of our economic policy are clear. They are as follow.
First, we will maintain the rate for the £ sterling at its present parity. To this end we will take all necessary action to fortify the reserves and to strengthen the internal economy.
Secondly, we must do all in our power to maintain industrial production. The country depends for its livelihood on exports, and these depend, in turn, on the volume and efficiency of our production.
1052 Thirdly, we must do everything possible to maintain and increase the volume of world trade on which we, perhaps more than any other country, depend. For this reason, apart from any others, I would regard it as wrong to extend import controls in present circumstances.
I will now deal specifically with the actions which we propose to take. We must fortify our gold and dollar reserves. We shall mobilise, to supplement these reserves, some of the other resources which are available to us.
First, there is access to the International Monetary Fund. Each country has a quota in the I.M.F. Ours amounts to 1,300 million dollars. Of course, the whole of this quota is not available on demand. It consists of a number of tranches to which different rules and terms apply. We are making an immediate approach to the I.M.F. with a view to drawing on part of these resources.
Secondly, Her Majesty's Government own United States dollar securities to the value of between 750 and 1,000 million dollars. These could be a substantial reinforcement of the reserves and I am prepared to use them for this purpose. Our general policy has been, and remains, to retain the industrial and commercial holdings which form almost all the portfolio, and not to sell them.
But, if need arises, I shall be perfectly prepared to use them as collateral for borrowing to fortify the reserves and I am assured that, if requested, support in the form of a loan against these holdings will be promptly available for dollar requirements from the appropriate agency of the United States. The same objections to sale do not apply to the short-term United States Government securities which form the small balance of the portfolio. These amounted to 60 million dollars of which just over half have now been sold and credited to the reserves.
We have available, therefore, substantial reinforcements. We shall certainly use to the maximum every means at our disposal to maintain sterling as a sound and stable currency and means of payment and exchange. I repeat this is vital, not only in our own interests and those of the sterling area generally but in the interests of the trade of the free world as a whole.
1053 I now turn to the payments due on 31st December to the Government of the United States of some 143 million dollars and to the Government of Canada of some 38 million dollars. Under our respective Agreements with them dated December, 1945 (Cmd. 6708) and March, 1946 (Cmd. 6904) there are provisions under which the annual instalments of the interest included in some of these payments may be waived. This subject has been under discussion between the United Kingdom and the United States Treasuries during the past two years.
I wish to inform the House that Her Majesty's Government have submitted a claim for this waiver of interest to the American Government, as we consider that under all the terms of the Agreements we are entitled to it. We have received a reply from the United States Treasury informing us that, since there have been changes in the conditions envisaged at the time the Agreement was signed, they will present the matter to their Congress, with the definite recommendation that appropriate modification of the present language be made to carry out the spirit of the original intention.
The conditions of the Canadian Agreement do not call for a waiver unless the interest payment under the United States Agreement is waived. We have informed the Canadian Government that on the assumption that a waiver of interest is granted by the United States we are also formally claiming a waiver of interest on the Canadian loan.
We shall, therefore, be paying only the principal on these loans on 31st December next, amounting to 56.2 million United States dollars and 15.5 million Canadian dollars, as compared with the full payments under the loans subject to waiver which, including interest, would amount to 137.8 million United States dollars and 37.7 million Canadian dollars. As the question of the waiver cannot be settled before the payment date, we propose, in order to show clearly that we shall not in any circumstances default on our obligations, to pay the interest instalments out of the reserves into a special account.
But it is not enough to mobilise our external resources. We must fortify our own economy on which recent events have put new strains. The measures to 1054 control inflationary tendencies, which the Government have been pursuing since 1954, have met with considerable success. Nevertheless, the interruption of oil supplies from the Middle East and the dislocation caused by the Suez Canal crisis will add a fresh burden to our balance of payments. We must, therefore, increase our external income, and, at the same time, keep internal demand under restraint.
First, the control over bank and other forms of credit, which has played so important a part already, must be firmly maintained and, if need be, strengthened. The hire-purchase restrictions will continue. There will be no relaxation in the critical scrutiny of applications by the Capital Issues Committee. Also, I ask the banks and all those who provide finance or control its sources to restrict effectively the supply of credit.
So much for credit measures. I next come to fiscal measures It is notoriously hard to form a complete judgment of the Budget out-turn at this time of the year. But all the information available to me indicates that the national accounts will still show a very large surplus above the line; and the deficit below the line will fall short of the original estimate by more than £150 million. Taking the figures above the line and below the line together, the overall out-turn of the Budget will be better, not worse, than I forecast last April.
I do not intend to introduce an interim Budget. At the same time, it would be wrong of me not to convey to the House some considerations relevant to the preparation of the 1957 Budget.
The traditional tax upon which the country relies in times of difficulty and crisis has been for many years the Income Tax. Fortunately, during the last four years, it has been possible to reduce it by 1s. on the standard rate. Owing to the complicated form in which Income Tax is now levied, largely through Pay-As-You-Earn, it would not, in any case, be possible at this time of the year to make an increase in the tax without serious difficulties and hardships: for any substantial rise in this year's rate of tax, when it came to be levied in what remains of the financial year, would fall too heavily upon the weekly wage packet. It would also mean a readjustment of several million direct assessments of tax 1055 which have already been made; and that might well lead to serious delays in the regular collection of revenue.
I do not, therefore, propose to take any immediate steps on the Income Tax, but I must warn the House and inform the world that the Government will not hesitate to use this weapon, if needed, when the time comes. What will be required can far more easily be judged in three or four months' time, when it should be possible more precisely to judge the impact of the last four months on the economy.
But in the field of indirect taxation there is one commodity which is of particular importance at the present time—oil. I believe that the House and the country will accept that it is right that in present circumstances a commodity as precious as oil now is should effectively be guarded by taxation as well as by rationing. Moreover, it is estimated that when petrol rationing takes effect the revenue will drop at a rate of £6 million a month. It is essential to the Exchequer that this should be made good.
I therefore propose, as an emergency measure, to raise the Customs duty on petrol and other light hydrocarbon oils and on derv—that is to say, the heavy oil used as fuel in road vehicles—by 1s. a gallon.
This will be in addition to the increases in the wholesale and retail prices of these products, which I understand the oil companies are announcing today, on account of higher costs—that is, wholesale price increases of 3½d. a gallon on motor spirit, and 3d. on derv, with an additional l½d. a gallon in each case on retail sales.
I shall tomorrow move a Ways and Means Resolution preliminary to a short Bill giving effect to the increased tax.

§ Mr. Harold Davies
Hon. Members on this side of the House missed the Chancellor's words on that point. Will he be kind enough to repeat his statement from the point where he referred to the additional duty of 1s. a gallon?

§ Mr. Macmillan
What I said was that this will be in addition to the increases in the wholesale and retail prices of these products, which I understand the oil companies are announcing today, on account of higher costs—that is, wholesale price increases of 3½d. a gallon on 1056 motor spirit, and 3d. on derv, with an additional 1½d. a gallon in each case on retail sales.
I shall tomorrow move a Ways and Means Resolution preliminary to a short Bill giving effect to the increased tax. The Resolution will provide that the tax increase is to come into effect from 6 p.m. today. Following the precedent of earlier changes in this duty, I expect that the new retail prices will be charged at the garages from tonight. There will be corresponding adjustments in the rates of duty on indigenous oils and on one or two minor products which traditionally move in step with the main rate of Petrol Duty. The increase in Duty will bring in extra revenue of about £30 million in the remaining four months of this financial year.
To sum up, I have described to the House the immediate measures which we are taking to fortify sterling, and the reinforcements which we have at our command. How far we shall have to draw upon them, in fact, or for how long, depends upon the future course of events. To strengthen one's reserves does not mean that one must necessarily call upon them. With regard to the internal measures, the same considerations apply. In particular, I regard the new Petrol Tax as a temporary measure during the present oil shortage. As for the future, it is too early yet to judge of the length or the character of all that we may have to do, but it is clearly right to act now on both external and internal policy.
In addition, recent events have re-emphasised the need for a wide review of our Government expenditure, our defence policy and our future energy policy in this country. This will be done.
The House will be debating during the next two days the broad political and international aspects of the Middle East problem. My duty today is to state the action which is essential if we are to maintain the soundness of our economy and, with it, the strength and power of sterling and of the sterling area.

Mr. H. Wilson
The whole House will agree that we have just listened to an extremely grave statement. Perhaps the one thing that can be said for the Chancellor is that he at least did not try 1057 to dress it up as a triumph. I am sure that the whole House will agree with the Chancellor that it is the duty of all of us to put first the strength of sterling, which is not a party asset, or a Government asset, but a national asset and, indeed, an asset for the whole sterling area and world trade. I think that I should say at this stage, on behalf of my right hon. and hon. Friends, that we would pledge the support of this side of the House, at any rate, to any appropriate measures which the Chancellor chooses to bring forward and which are properly directed towards strengthening the gold and dollar reserves and the position of sterling, which has been under such heavy attack in recent weeks.
Coming to the detailed proposals of the Chancellor, he has announced that the Government intend to apply for relief from the International Monetary Fund. Most hon. Members will agree that he is right in that. In fact, he should have done that three weeks ago, when he made his very lame reply to the debate on economic affairs, when we asked him what measures he was taking then to stop further speculation in sterling. Had he done it then, he might have stopped some of the speculation which has been going on over the last three weeks. The whole House and the Chancellor will realise that in this and the other measures he is taking he is throwing into battle the second line of reserves, which is a very serious thing for the country.
With regard to the right hon. Gentleman's reference to Income Tax, does he not feel that it is a somewhat strange procedure to anticipate his or someone else's Budget in this way? Does he not at least agree that what he has said today about Income Tax is a very far cry from the Lord Privy Seal's Election Budget of last year?
I am sure that the House will want to await the Resolution and the Bill, which we shall be debating, but why does the Chancellor feel that it is necessary to ration petrol by price as well as by coupons? Does he not feel that his coupon rationing will be effective?
If his answer is that he wants the revenue in order to buttress the Budget, does he feel that this is a fair or just method of finding that revenue? Will he tell the House, in particular, what estimate he has made of the effect of this 1058 very severe increase of taxation on road haulage costs, on the cost of the road passenger transport, including bus fares, on his plateau, about which we used to hear so much, and on the production costs of British industry?
Further, if it is true that the oil companies are putting up prices at this time, will the Chancellor not tell us why the Government still refuse to introduce price control on the oil industry which, with all its present difficulties, has been making very heavy profits indeed?
Finally, the right hon. Gentleman said that it is essential to maintain production. That is a change for him, because during the past year he has been trying to cut industrial production by the credit squeeze. By the measures which have been taken and the further measures he has announced, monetary measures, and so on, and having regard to the whole oil and raw material position, is he confident that industrial production can be maintained in full? If not, what will be the effects on exports and on the other questions with which his very serious statement dealt this afternoon?

§ Mr. Macmillan
I am grateful to the right hon. Member for his opening words. We all agree, among our many disagreements, that the maintenance of sterling is an absolute necessity for our country, the sterling area and the trade of the world.
With regard to the application to draw upon the International Monetary Fund, the right hon. Gentleman knows the various regulations which control it and the various courses which may or may not be available to us. I would rather not be pressed upon the precise procedure at this moment. Although the right hon. Gentleman said that we are using our second reserves, this is, after all, a contribution which stands in our name.
I again emphasise that the effect of adding to the reserves is a precautionary measure and does not by any means necessarily mean that we shall have to draw upon them, or may not be able soon to repay them. So far as the external measures are concerned, I gathered that the right hon. Gentleman was broadly in agreement.
As the right hon. Gentleman probably knows, the waiver has been under discussion for several years between us and the United States Government and we feel 1059 that conditions now qualify us, even under the somewhat complicated regulations that were written into the original Agreement. The United States Government is prepared to give a favourable recommendation to Congress that the Agreement should be brought up to date and "more in conformity," to use its own language, with the spirit than with the letter of it. As the right hon. Gentleman knows, an obstacle for many years has been what the precise legal meaning of the Agreement as drawn really was.
What I said about home measures may perhaps be unusual, but I believe that the right hon. Gentleman will agree that it is important to show, not only our own people, but all the rest of the world, that, although it is not suitable and right at this moment to introduce a new Budget, we shall not shrink—and I believe that this is true of both sides of the House, whatever view of these affairs is taken—from the measures which are necessary to maintain sterling and the strength of our economy. I thought it would help to make the statement I did, which is directed not only to the House but to many quarters outside.
With regard to petrol, I feel, though I may be wrong, that the public will agree that for a temporary period, during the shortage, it is wise to buttress this precious liquid, as it is now, by the two methods of rationing and some increase in price. The effect upon the cost of living is calculated to be less than one-third of one point. The extra duty will put between one-fifth and one-quarter of 1d. on a 3d. bus fare.
Although there will, of course, be a charge upon industry, on the whole I do not believe that it will be in any sense a crushing charge on industry, and indeed it will have a very small effect on price. It will, however, show our people and the world outside that we are prepared to take this measure at this time and to fortify the revenue by this sum of money, until the period of the emergency is over, or at least until a new Budget can review the whole position.

§ Mr. Gaitskell
In view of the fact that the gold and dollar reserves are reserves of the whole sterling area, and of the serious situation disclosed by the Chancellor's statement, does he not feel that 1060 it would be wise to call a conference of the Finance Ministers of the Commonwealth to consider this situation?

§ Mr. Macmillan
I should be very happy to consider that. I am grateful for the suggestion. As the right hon. Gentleman knows, it is not always very easy to arrange the precise timing for such a conference, but there are this and other matters to discuss. I met those Ministers in Washington some weeks ago. The right hon. Gentleman's suggestion is one which I will certainly bear in mind.

§ Mr. Gaitskell
I am obliged to the right hon. Gentleman. Could he give us the reasons for the decline of 279 million dollars in the reserves? I understood him to say that that was really on capital account. Could he say, for instance, what the balances here have fallen to, and to what countries the flight of capital has taken place? Can he throw any light upon this?

§ Mr. Macmillan
I think there is some misunderstanding. I said that in the first six months of the year we had the rather unusual, as the right hon. Gentleman knows, picture of the reserves rising without any corresponding rise in liabilities, which happens when short-term money goes, because, at the same time as the reserves were rising, we had paid off some of the long-standing debts, so the increase of the 95 million dollars, coupled with the fall in liabilities of 22 million dollars, represented a very considerable increase on capital account.
What has happened in these four months—[HON. MEMBERS: "Which four?"] The four months since the critical situation and the lack of confidence created by Colonel Nasser's seizure of the Canal—is that in each of those four months, August, September, October, and November, there have been losses. It is very difficult for us to analyse exactly how much of those are on leads and lags, as the right hon. Gentleman knows, how much they result from the desire of the world to change sterling into francs or dollars in a moment of critical situation, and how much of it is the actual payment out, for instance, in the last month, in respect of oil contracts which I have authorised.
Therefore, until a more precise analysis—which I will make as soon as possible—is available, it is difficult for me to say 1061 what proportion is payment out for the purchase of oil which I have authorised and what proportion is the result of world confidence movements which, as the right hon. Gentleman knows, always make so quick an impact on sterling, of which such an enormous volume exists throughout the world, since it finances so huge a part of the world's trade.

§ Mr. Nabarro
May I ask my right hon. Friend two questions about the external financial position? First, to what extent will the substantial purchase of American oil be paid for in dollars, and to what extent in sterling? Secondly, would he bear in mind that Her Majesty's Government have this year authorised the expenditure of no less than 100 million dollars on the purchase of American coal, and, as oil supplies for industry in this country, as a source of power, are being drastically reduced by rationing, exhortation and otherwise, would it not be propitious to bring about a reduction in industrial coal consumption by similar or other methods?

§ Mr. Macmillan
I think that the whole House recognises the need to increase the production of British coal. We hope very much that that will be increased considerably, and, also, that it will be assisted in the form of fuel economy. I am glad now that when, in the last Budget, I had to take off certain advantages in regard to industrial investment, I made an exception of investment allowances for any form of fuel economy. I think that it was wise.
With regard to the purchase of oil, may I put it this way? The first thing that interests me, and certainly all of us in the Government, is to try to get hold of the oil and then, when we have done that, to decide how to pay for it. But in the estimate I gave of the overall balance of trade this year to 31st July, I have taken the most pessimistic view of the method of paying for oil.

§ Mr. Roy Jenkins
The Chancellor of the Exchequer has stated that the underlying balance of trade is not so bad as the gold position, but is it not the case that, on his own estimate, the outlook for the underlying balance of trade for the coming six months is worse than it has been in the past? Is not this a very serious matter, and if so, ought he not to aim at a better balance, however catastrophic the position has been for gold?
1062 I understand from his statement that the two chief immediate measures which are to be taken are: first, to borrow money against our dollar securities in the United States of America; and, secondly, to secure from the Americans a waiver on our obligations to them. May I ask whether this is a symbol of the new Conservative Party attitude to the United States of America?

§ Mr. Macmillan
I will answer the questions which the hon. Gentleman has put to me about the balance of trade. I said that I thought that the underlying situation was good, and that we were gradually improving every quarter and every six months, but the estimate which I gave, that we should be in balance, if not better, was based—and I repeat it—on the most pessimistic estimate of the amount of dollar expenditure we would have to incur on oil. I thought it only fair to base it on the most pessimistic grounds.

§ Mr. Osborne
While I do not minimise the gravity of the situation which my right hon. Friend has put before us this afternoon, would not my right hon. Friend emphasise that the trading position of the country is intrinsically sound, but can remain sound only in so far as our export prices remain steady? Therefore, would he make a special appeal to both sides of industry to keep prices down in the next six months, so that our exports may be maintained and our trading position kept as it is?

§ Mr. Macmillan
I quite recognise my hon. Friend's purpose in trying to assist in every way in the task that is before us. We shall, no doubt, have opportunities for debate, and perhaps party debate, with great conflict on these matters, but I would, in the spirit of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), ask the House to accept my statement. I have tried to make it as factual and impartial as possible, in the sense of a message to the world outside—that, whatever our views may be, we are determined to maintain the value of our currency and do our duty to the world.

Mr. Lee
So far as the right hon. Gentleman's point about the necessity for maintaining productive levels in industry is concerned, we, on his side of the House, will be entirely with him. On the other hand, will he not agree that the policies 1063 which he has pursued in the last year or so have not brought about that result, and that productive levels have been falling? Is he aware that when the quantitative reductions in oil supplies to those industries make themselves felt, that will have quite an effect on unemployment, and that the announcement of further restrictions on credit will bring about a most aggravated position in industry, which will not enable us to maintain production levels at their present standard?

§ Mr. Macmillan
The hon. Gentleman and I have been a long time at this game, and I know that he does not really expect me to answer his questions in the affirmative. They are a little like the question, "When did you stop beating your wife?"

§ Mr. Shepherd
As I know that my right hon. Friend appreciates that the public have a justifiable doubt about temporary taxation, particularly in the indirect field, will he give an assurance that as soon as petrol rationing is over, or at some other convenient time, this additional taxation will be removed?

§ Mr. Macmillan
I used the word "temporary" advisedly, but, of course, all taxation is subject to the review of the House each year. I regard it as an emergency tax. The simple answer to the question is that if the flow of oil returns in full, then, at the old rate of tax, the Revenue will be sustained.

§ Mr. J. Taylor
Would the Chancellor clarify his statement about the incidence of taxation on indigenous oils? Does it mean that those oils which already have a 50 per cent. preference will have an increase of 6d. per gallon? Would he be prepared to discuss with hon. Members representing oil-producing constituencies the incidence of this tax?

§ Mr. Macmillan
I am glad that that question has been asked. I should have made it clear that the same preferential margin will be maintained.

§ Sir I. Horobin
Is my right hon. Friend aware that, while none of us, of course, can relish having, for the first time, to ask for the waiver on the interest on the loan accorded to our predecessors, the clear, courageous and definite statement made by him today commands the overwhelming support of all hon. Members 1064 in the House and people in the country? Would he not also agree that if we had not already, under his guidance, and the guidance of his predecessor at the Exchequer, put this country's current account into order, and if this capital drain had come on an account as seriously out of order as it was when the party opposite left office, the results would have been far more serious?

§ Mr. John Edwards
The Chancellor referred to a total of 1,300 million dollars which we could, in certain circumstances, draw from the International Monetary Fund. He said that we proposed to ask for part, and I should be very grateful if he would tell us what our immediate claim is to be.

§ Mr. Macmillan
I would ask that I should not be pressed on this question. Under the rules and regulations of this Fund, an application is made and the directors consider it. I think that it would be wiser for hon. Members not to press me and to leave the statement at this moment exactly as I have made it. As soon as I have further information to give to the House, I will certainly give it.

§ Mr. Ernest Davies
In view of the disastrous effect which the rise in oil prices and the increased tax will have on road passenger fares, would the Chancellor consider a discriminatory tax in favour of public service vehicles, as suggested during previous Budget debates? That is to say, would he not consider exempting public service vehicles from the increased tax?

§ Mr. Macmillan
No, Sir. I could not do that. One of the reasons, of course, is that that quantity of the oil which we most want to preserve is the one which would be most used—derv.

§ Mr. Speaker
On the question of the petrol tax, I understand that the right hon. Gentleman is moving a Resolution tomorrow. That, of course, will be followed by the Bill, so questions of that sort should really be discussed on the Bill.

§ Mr. Gaitskell
May I put a question to the Leader of the House on procedure? When is it proposed that we should discuss the Ways and Means Resolution? 1065 Has he yet decided when we shall have an opportunity of discussing the Bill on Second Reading?

§ The Lord Privy Seal (Mr. R. A. Butler)
We shall ask the House to take the Committee stage of the Ways and Means Resolution tomorrow night, at the end of the first day's debate on the Middle East. We shall take the Report stage at the end of business on Thursday night and bring in the Bill.
It may be convenient if I inform the House that we propose to take the Bill on Monday next.

§ Mr. Gaitskell
Does the right hon. Gentleman mean the Second Reading of the Bill on Monday next?

§ Mr. Arbuthnot
Is the Chancellor satisfied that the instructions which he has given to the banks have made clear to them that new overdrafts should not be granted, or existing ones continued, where the money from them is being used to finance industrial disputes?

§ Mr. Macmillan
I must be quite frank and say that I do not think that this question has anything to do with my relations with the banks.

§ Mr. Usborne
In respect of the request for the waiver of interest on the American and Canadian loans, the Chancellor said, a little earlier, that, since this could not be granted in time, a gesture would be made and the sum would be put into a special account. Would it not be a better gesture if, in fact, the money were paid over on the understanding that if they granted the waiver the Americans and Canadians would return it?

§ Mr. Macmillan
No, Sir. I think that this will be quite satisfactory. The American Government have made it quite clear to us that they propose to recommend to Congress, in a favourable way, that this new interpretation should be made; but it is not in their hands as an Executive and there is not time, since Congress does not meet until January, to get this through. We, on the other hand, are very anxious that we should not be put in a position, as a country—I am sure that everyone would agree—of defaulting. The sensible thing to do would be to pay into this a special account, which I think 1066 can be arranged in such a way as to say that if this matter is not arranged we shall carry out our obligations.

§ Mr. Langford-Holt
Does the Chancellor's statement mean that he has turned his back on the possibility of taking any action under Article 12 of the General Agreement on Tariffs and Trade, which permits us to take certain discriminatory action to stop a serious drain on our monetary resources, or does the latter part of his statement mean that his mind is still open on that part with regard to the general review which he proposes to carry out?

§ Mr. Macmillan
As I have said, I am anxious to make it clear, although it may not command the general approval of the House, that in my view the best way in which Europe and all other countries will overcome these difficulties is by the increase of world trade. Why I made that particular reference is that I did not wish any country which is in O.E.E.C., or other countries, to feel that we were going to turn our backs on the liberalisation policy which has been pursued during recent years.

§ Mr. Jay
What is the Chancellor's estimate of the additional dollar cost for oil imports into this country over, say, the next three months? Is he asking for the waiver of interest just for this year, or for several years, or for how long?

§ Mr. Macmillan
For this year.
As I explained, on the calculations which have been made for me for the overall position, we have taken the most pessimistic view of what we shall have to pay for oil; but I would prefer not to make a further statement now.

§ Mr. Rankin
On a point of order. May I be permitted, Mr. Speaker, to try to reconcile the statement made yesterday by the Minister of Fuel and Power, in reply to me, with the statement made today by the Chancellor of the Exchequer?

§ Mr. Speaker
If the hon. Member is wanting to make a personal statement he should show it to me first. If he wants to raise a question of debate he must await another opportunity, and not do it now.

§ Mr. McLeavy
Would it not be possible, Mr. Speaker, as the Chancellor has 1067 had only one question put to him on oil taxation, as the Bill is coming forward next Monday, and as the increase will have a serious effect on the country, for hon. Members to have an opportunity of putting a point to the Chancellor which may influence the terms of the Bill? Perhaps, Mr. Speaker, as this is a very important matter—

§ Mr. Speaker
Order. I have said that there will be a Bill, which will go through all its stages. That is the time for putting such points. We have had quite a number of questions already.