HC Deb 15 June 1961 vol 642 cc611-2
6. Sir C. Osborne

asked the Chancellor of the Exchequer, since foreign investment earnings in Britain rose between 1958 and 1960 by 60 per cent. whereas British investment earnings in other countries rose by only 20 per cent., what steps he is taking to ensure that a larger proportion of the profits earned by British investment overseas is brought back to this country, so as to help the balance of payments position; and if he will make a statement.

Mr. Barber

In 1958 and 1959 United Kingdom firms remitted about 60 per cent. of their profits, whereas subsidiaries of overseas firms remitted from this country a substantially smaller proportion. The figures quoted by my hon. Friend relate to total earnings and not to amounts remitted to the parent country. It is, of course, in the national interest for profits to be brought back to this country as quickly as possible, except to the extent that these are required for direct overseas investment of a kind for which permission would be granted.

Sir C. Osborne

Would not my hon. Friend agree that it is against the national interest for British firms to export their scarce capital, invest it in overseas companies and then keep reinvesting their profits in new capital development and not bring any of the profits back to help this country with our balance of payments problem? Will not the Treasury look into this matter to see that at least a fair proportion of the earnings are brought back here to help the position at home.

Mr. Barber

In so far as the profits are retained for direct overseas investment, of a kind, as I said earlier, for which permission would in any event be granted, for the export of capital, obviously that is a sensible thing to do. But my hon. Friend is quite right in saying that it is in the national interest that, after taking that into account, as large a proportion of the profits as possible should be remitted to this country. Of course, we have powers under the Exchange Control Act to require the repatriation of profits of United Kingdom subsidiaries and we exercise them, but we try to avoid wherever possible interfering with the normal development of United Kingdom subsidiaries.

Mr. Jay

Is it a fact that, as a result of the O.T.C. provision introduced by this Government and with the double taxation agreement, a rather alarming proportion of the profits accrued abroad are not being returned to this country?

Mr. Barber

The figures for 1958–59 show that in 1959 the United Kingdom subsidiaries abroad remitted 58 per cent. of their profits, whereas the figure for foreign subsidiaries here was only 44 per cent. In 1958 the figures were 62 per cent. and 53 per cent. respectively.

Sir C. Osborne

Would the Treasury fix a period of years in which the profits earned overseas can be ploughed back overseas, at the end of which period some of the profits must be brought back here to help the home position? Surely, that is fair, and something like that should be done?

Mr. Barber

I certainly appreciate the importance of this matter and I am sure that my right hon. and learned Friend will consider my hon. Friend's suggestion.