HC Deb 26 June 1958 vol 590 cc592-4
28. Sir J. Barlow

asked the Chancellor of the Exchequer to what extent, in view of the reduction of the Bank Rate, he proposes to revise his instructions to the Capital Issues Committee, with a view to alleviating the present restrictions on credit.

Mr. Simon

There is no necessary connection between a change of Bank Rate and the control of capital issues. The latter is covered by my right hon. Friend's statement of 17th June, when he said: … we are determined to keep our policies flexible and to adjust them promptly whenever our assessment of the situation suggests the need for that."—[OFFCIAL REPORT, 17th June, 1958; Vol. 589, c. 1003.]

Sir J. Barlow

Does not my hon. and learned Friend consider that the time has arrived when there might be some relaxation of these instructions?

Mr. Simon

It is not for Financial Secretaries to make pronouncements of that sort.

Mr. H. Wilson

Is the Financial Secretary aware that while we welcome the Chancellor's very halting steps towards a resumption of industrial expansion after three years of stagnation, we believe, as we said in the debate on the Budget, that the time is long overdue for much more rapid steps towards expansion, but that the one proposed by the hon. Member in the Question is not one of those which should be followed?

Mr. Simon

I am quite aware that the right hon. Member and his hon. Friends have proposed various other measures. I certainly cannot agree that there has been stagnation of our economy over the last three years. On the contrary, production has reached the highest level in the history of the country.

Mr. Wilson

Why does the hon. and learned Gentleman say that when, on his own figures, the figure is exactly the same today as it was in the autumn of 1955?

Mr. Simon

It is still the highest figure in the history of the country.

30. Mr. Cronin

asked the Chancellor of the Exchequer if he is still considering steps to prevent the evasion of the requirement to obtain the permission of the Capital Issues Committee for raising fresh capital in excess of £10,000; and if he will make a statement.

Mr. Simon

My right hon. Friend still has this matter under review.

Mr. Cronin

As the Chancellor has been reviewing this for the last six months, is not the situation rather unsatisfactory? Is not it the case now that methods of evasion are so well developed and so well known that the Capital Issues Committee itself is rather reluctant to take unfavourable decisions except in extreme cases? Is not this bringing the law into disrepute?

Mr. Simon

In these matters my right hon. Friend has to reconcile, on the one hand, the effectiveness of the control with, on the other hand, the risks of interfering with normal commercial transactions. It must be a matter of judgment if and when he should intervene to alter the present system.

Mr. H. Wilson

Is not the hon. and learned Gentleman aware that when we have this very harmful credit squeeze in force it is possible for hire-purchase finance companies to raise all the money they want without any difficulty at all? Is he aware that a large number of transactions are going on at the present time both for tax avoidance purposes and to outwit the Capital Issues Committee by simple exchanges of shares and the stripping of cash reserves out of companies? Has he studied the evidence presented during the Budget debate showing where money can be raised for tax free capital gains of 20 per cent., 50 per cent. or 100 per cent. overnight?

Mr. Simon

I think that the first part of the right hon. Gentleman's supplementary question is founded on a gross exaggeration. As for the second part, it is of course true that a number of transactions are now taking place outside the control.

32. Mr. A. J. Irvine

asked the Chancellor of the Exchequer how many applications were made in the last two years to the Capital Issues Committee by shipping companies; and how many of these applications were rejected.

Mr. Simon

The records of the Capital Issues Committee do not distinguish shipping companies from other commercial and industrial applicants and I regret that the figures for which the hon. and learned Member asks could not be obtained without considerable special work which I think would not be justifiable.

Mr. Irvine

Does the hon. and learned Member agree that without this information it is difficult to estimate the practical worth of the concession made by the Government to the shipping industry and announced last Thursday? One has doubts about whether there is any value attaching to that concession. Can the Government indicate what it was worth?

Mr. Simon

The concession was made because the Government were convinced by the representations of the industry that it was justified. It has been welcomed by the industry, and they, after all, are the best people to know.