§ 4.8 p.m.
§ Mr. Gordon Campbell (Moray and Nairn)
May I start, Mr. Speaker, by echoing what you said. Because of this I am able to have the full time for a debate on a subject which I am sure the House regards as extremely important.
I applied for this debate before the announcement by the Chancellor of the Exchequer that he was issuing a White Paper on the decimalising of the currency. I applied for it because I considered that it was a very important question. It has now become a highly topical question, too. As far as I know, since the Government announced the date for decimalisation as February, 1971, and showed a preference for one system, this is the first opportunity that the House has had to discuss decimal currency. There have been announcements from time to time but no debates.
May I make it clear that I am strongly in favour of the decimalisation of the currency. That is why I am extremely concerned that the best system should be chosen. In the White Paper last week the Government indicated that they favoured the £-cent-½ system, but I am glad to note that it is plainly stated in the White Paper that this is subject to Parliamentary approval.
There has been no opportunity hitherto to discuss this subject, although it is a vital question to consider which system, the £ or 10s. unit, should be adopted. I will come to a comparison of the systems later. The decision is one of major importance because it affects the daily lives of the whole population, and I trust that there will be a full debate in Par- 1502 liament on the White Paper sometime after the Christmas Recess. I do not expect today a fully reply of substance from the Chief Secretary, because I recognise that there must be a full debate later. However, I want him to confirm that there will be such a debate and to give certain assurances.
I want the right hon. Gentleman to assure us, first, that no action has yet been taken which would prejudice the decision between the two systems and that, secondly, no action will be taken in the weeks or months before Parliament has fully considered the matter which would prejudge the issue. For example, will he confirm that a go-ahead has not been given to machine manufacturers or others on the basis of the £-cent-½ system? Will he give an assurance that no work has been started at the Royal Mint for coinage of one system which would not be usable for the other system?
I ask these questions for two reasons: first, because it would be a deplorable case of by-passing Parliament on a matter which will, in due course, closely concern every citizen in the land, and, secondly, because it would mean that manufacturers would be financially committed to one system even if they preferred the other. Again this would be inexcusably prejudicing the final decision.
I have no wish or intention to delay decimalisation. It will not be introduced for another four years and we must remember that in South Africa, for example, only two years' notice was given between the choice of the unit and Decimalisation Day—D Day—and in that case the 10s. unit was chosen.
All informed opinion is agreed that the issue is between the two systems I have mentioned, one based on the £ and the other on the 10s. unit. The Government favour the £-cent-½ system. But this is not pure decimalisation, for it includes the fraction of a ½d., which would be equivalent to 1.2d.; and this, the smallest unit in the proposed system, would be required for a least a generation; that is, unless there is runaway inflation. The only excuse given so far for the fraction of a ½d. is that it will eventually disappear—hardly a commendation for such a system.
The Halsbury Committee reported more than three years ago and found the choice between the two systems an 1503 extremely difficult one. However, the Committee narrowed the question, having considered 25 systems, to the choice between these two, and the Committee split in a decision on the two. Four, the majority, favoured the £ system, while two, the minority—who put in a report of dissent—favoured the 10s. unit. I pay tribute to the Committee for the admirable job it did, the immense study it made and the many helpful recommendations it put forward about the carrying out of decimalisation. But on the vital question of the choice between the two systems the Committee was divided.
It is significant that the minority—the two in favour of the 10s. unit—consisted of the industralist and the businessman, the head of a department store. They were men familiar with cash transactions and with the problems arising for industry and commerce. The other four were a scientist, a professor of statistics, a banker and a trade unionist. As I say, they all did a fine job, but on this point the whole Committee said that the choice was a matter of judgment.
It is also significant that at the Press conference on 23rd September, 1963, when the Report was published, it was clear from questions that the members of the Committee were five to one in favour of the 10s. unit, on the basis of efficiency and of its domestic use in Britain. It was clear that substantial weight had been given to the international aspect of retaining sterling, and of having no doubt abroad about its position, and that this was what had led to the majority Report. It has since become clear that what is called the international argument has less weight than was then given to it. Indeed, paragraph 12 of the White Paper, issued this month, states that this argument is not in itself decisive. The minority Report in favour of the 10s. unit contains very cogent arguments that have still not been answered.
The Chancellor has thrown out challenges in the last few days, and I and others will gladly take them up. Paragraph 17 of the White Paper states that powerful reasons would be needed to change to the 10s. unit. Those reasons exist as I shall show. Further, on a television programme on 12th December the Chancellor of the Exchequer said: 1504Those who don't want the £ have got to prove it.He must not be surprised if he receives a vigorous response to his challenge.
There have been changes of view since the Halsbury Committee reported, and many, both in the general public and in various trades and professions, are only now looking at the question, although they will themselves in due course be greatly affected. The Government must not regard this matter as settled.
On 1st March, the Chancellor of the Exchequer announced to the House in a general economic debate the decision on decimalisation and the date for its operation. I would remind the House that the General Election date had just been announced, and the debate followed the course of criticism or defence of the Government's general handling of the economy. It was not concerned with an announcement about something that would happen in five years' time. Naturally, therefore, no one reverted to currency decimalisation during the debate.
The Government were then in no way committed, and I remind the House, again, that in the same speech—only a few minutes earlier—the Chancellor announced a mortgage option scheme. A few weeks later that was withdrawn, and it has reappeared only this month in a quite different form. This question of currency is not, as far as I know, a party matter, or at all political, and if, following that earlier announcement, the Chancellor of the Exchequer were to reconsider the matter, he need not in any way lose face if, on that further consideration, he decided on the 10s. system.
Although it is not a political subject it is none the less essentially a matter for Parliament, because it affects the shopper, the passenger, the bus conductor, the housewife, the cashier and the consumer in general. With the £-cent-half-system there is a fraction and there are three units instead of two. In its Report the Halsbury Committee translated the prices of 1962 and found that no less than 40 per cent. of the prices then existing would involve a fraction. I believe that the percentage is still broadly the same. This means that 800 million transactions a week would involve the fraction.
At present the halfpenny is involved only in about 11 per cent. of transactions. 1505 Moreover, during the transitional period—which is to be about two years—the present currency will be circulating with the new currency. Under the 10s. system there would be fewer new coins. No wonder that organisations representing consumers and retail and distributive trades organisations strongly favour the 10s. unit, as do transport undertakings and many others.
I want to say a word about banks and large financial institutions. They work mainly on paper—with cheques, clearing and accounting. Currency is used only in a small way. It is already clear that they would not use the half-unit at all if it were introduced; it would not affect any of their paperwork. Further, in their non-currency work the banks would change to decimalisation and the new decimal currency—with cheques and accounting—on D-day. They would not be bothered with two currencies during the transitional period.
It must be borne in mind, if some of the large financial institutions show a slight preference for keeping the £, that they will not suffer all the inconvenience they will not suffer all the inconveniences and exasperations of having to deal with a fraction, or with old and new currency at the same time. But outside their doors people will be wrestling with fractions on the buses and at the newspaper stands on the street corner. This will be a sad outcome after London Transport Executive has recently successfully eliminated the halfpenny from its fares.
Such large financial institutions might be influenced by the international standing of the £, but if decimalisation is announced under a 10s. system, with four years' notice at a definite time, no one can possibly imagine that this will amount to devaluation. Sterling has survived more perilous vicissitudes than this during the last two years. The Government have raised the objection that there would be difficulties in choosing a name for a 10s. unit.
§ The Chief Secretary to the Treasury (Mr. John Diamond)
§ Mr. Campbell
The Minister nods his assent. I do not believe that there will be difficulty. What is important is to choose a name which has a distinctive initial, which could not be confused with the 1506 initial of some other major currency. I am not wedded to any particular name, but I propose, as a suggestion, the "Noble". It would be the Noble sterling.
§ Mr. Campbell
This has an excellent antecedent, in that it was suggested in 1696 by Sir Christopher Wren—a man who was well acquainted with practical mathematics and had a very sound sense of proportion, as his work will remind our successors for many years.
§ Mr. Diamond
Notwithstanding the hon. Member's statement about there being no difficulty in choosing a name, the first and immediate response of his mention of a name was "Not my choice".
§ Mr. Campbell
That is the kind of misunderstanding that has bedevilled the whole subject. I was more actuated by Sir Christopher Wren than by my right hon. Friend the former Secretary of State for Scotland.
§ Mr. John Tilney (Liverpool, Wavertree)
Would my hon. Friend also agree that the noble was used in this country long before the days of Sir Christopher Wren?
§ Mr. Campbell
Certainly. I am obliged to my hon. Friend.
The point that I was coming on to in connection with the suggestion of 270 years ago was that it was a decimal currency that he proposed. The proposal was for a noble divided into 100 parts—no fractions or anything like that for Sir Christopher Wren. He was an architect and he had a sound knowledge of practical mathematics.
The transitional period will be the most testing, and the ease with which the change-over can take place is an important factor in the choice of systems. There is no doubt that the 10s. system is the easier and the most practical one. The first reason is that there would be fewer new coins. Under the £-cent-½ system the 6d. and the half-crown must disappear because they would become fractions. Under the 10s. system the 6d., the shilling, the florin and the 1507 half-crown can all stay as needed. One or two of them can be dropped if required, but they can all stay during this transitional period. The ones that would remain would have new markings and the original coins would gradually disappear.
This would be of immense value in all vending machines and meter operations, because similar coins will mean very little if any alteration, and it has been calculated by the vending machine association that the change to the £-cent-½ system would cost as much as £10 million, which raises the whole question of compensation. Of the coins under the 10s. system, only two new coins are required. Under the Government's system four new coins are proposed.
As regards bank notes, I do not believe these matter very much because their life is, in any case, very short. They circulate only for a short time. But the £1 note can clearly continue during the two-year transitional period and would be worth two nobles.
Then there is the question of what the Halsbury Committee called associability. Here the 10s. system has clear advantages. The shopper can see at a glance the close approximate value of an article compared with the shillings to which he has been accustomed. For example, a price of 15s. becomes one unit 50, and under the Government system it becomes 75 cents. Anybody who has been trying to associate fahrenheit and centigrade over recent months will appreciate the advantage of this. It means that the shopper and the housewife can assess prices and compare them quickly.
Then there is the point that there would be no fractions. The fraction would he a bugbear to trade, services and transport. There would be long queues and frustrations. I should not like to be receiving money at the entrance to a football match between Celtic and Rangers during the transitional period.
Let us also consider the increase in the price of a newspaper. To avoid the fraction the price would have to go up by 2.4 of a penny which, even in 10 years' time, one hopes will be far too much. Bus fares would suffer from the same difficulties. Any change which avoided the fraction would have to be by at least 2.4 of a penny.
1508 I draw attention to Appendices 8 and 9 of the Halsbury Committees' Report referring to experiments which were carried out in lifelike conditions under the auspices of the Medical Research Council. The 10s. system was mastered much more quickly and the transactions were carried out and change dealt with more easily. The General Post Office favoured the 10s. system in its evidence to the Halsbury Committee.
Then we come to the argument about the "heavy" unit. The Government say in the White Paper that a "heavy" unit is to be preferred. Paragraph 14 says that other developing countries have major units of lower value but that it is hardly likely that if they were starting afresh with a new system they would deliberately choose "light" units. But this is simply not so, and it is misleading. South Africa, Australia, and New Zealand have all decimalised very recently and have all chosen the 10s. unit. On the television programme on 12th December, Australia and New Zealand were referred to and quoted as supporting the £ system. But, of course, they are exactly the opposite, because they adopted a 10s. unit.
The United States dollar is worth about 7s. 2d., and this is giving no trouble to the United States. It is unlikely to do so even in Texas, where everything is big and where, we understand, there is a lot of money. The dollar is not regarded there as being too light. France, in a recent revaluation, chose a unit worth about Is. 6d. in our money as the main unit.
The Chancellor says that he is planning for 1,000 years. I believe that that is faulty, and is part of the trouble. He may have said it light heartedly, but he ought to plan for from 100 to 200 years, and make sure that we have the really best and efficient system for that.
Some of the bodies which supported the 10s. unit are the General Post Office, the Ministry of Social Security—its predecessory gave evidence to the Halsbury Committee to that effect—British Railways and the London Transport Executive, together with the Passenger Vehicle Operators' Association, retail and distribution trades representative organizations—which includes Marks and 1509 Spencers and Messrs. Sainsburys—organisations representing consumers—the National Chamber of Trade, the Association of British Chambers of Commerce, the Co-operative Union, the Gas Council, and the Automatic Vending Machine Association.
This matter will impinge on every citizen. The users of coins must be considered, especially cashiers and others dealing with coins in their jobs.
§ Mr. Speaker
Order. I hope the hon. Gentleman will remember that we gained a bit of time by the restraint of others. There are still other hon. Members who want to join in the debate.
§ Mr. Campbell
Certainly, Mr. Speaker. I am drawing to a close. There are other bodies who are concerned in all these matters, and the general public should look at this question now and make their views clear to the Government. It is of the greatest importance that the change-over should take place as easily as possible. Apart from reducing and averting dislocation, we must preclude antagonism growing, as a result of exasperation, to this and other changes to the metric system which we ought in due course to carry out. Moreover, it is surely unsatisfactory to build anything into the economy, like the fraction, which would be improved by its disappearance, with inflation. I would deplore this.
There are powerful reasons for adopting the 10s. unit rather than the £. The Economist last Saturday said:Having finally decided to switch Britain to a decimal currency, the Government is proposing to do it in the worst possible way.I would also commend for the right hon. Gentleman's reading comments in the Financial Times. Neither of these papers would say anything that would endanger sterling or put it at a disadvantage. They would be very conscious of any risk of that kind.
As more people become aware of the choice, the issues, and the likely effects, there will be increasing support for the 10s. system. I warn the Chancellor—and this is my final sentence—that he could get into the position, say in a year's time, when most of the country had woken up to what is proposed and would be against it, and by then he would find it far more difficult to change.
§ 4.34 p.m.
§ Mr. Eric Lubbock (Orpington)
The hon. Member for Moray and Nairn (Mr. G. Campbell) has done the House and the country a great service in raising this subject, because it is a matter of very great regret that although the Halsbury Committee reported some years ago there has never yet been a full-scale debate in the House on the question of decimal currency. The Government should have found time for it, hut, as they did not, we are very grateful indeed to the hon. Gentleman for doing so.
As the Chief Secretary knows, I have always been a wholehearted advocate of decimal currency. Indeed, I put it into my first election address in 1962, to the annoyance of my agent, who thought it was not a very important matter. Since I was elected, I have always been very concerned with this question and have pressed the Government to come to a decision. I am delighted that they have done so, but I agree very much with what he has said on this question, that a mistake has been made by the Government in choosing the £ as the major unit rather than 10s.
I endorse every word the hon. Gentleman said about the opinion of responsible bodies in this country having an interest in the conversion, which are almost unanimously in favour of 10s. as the major unit. I see the Chief Secretary shaking his head. Has not he heard of the opinions of the bodies to which the hon. Member for Moray and Nairn referred, some of the most authoritative bodies on the subject? I shall mention one or two more—the Association of British Chambers of Commerce, the Consumer Council, and the Committee of Retailers on whose behalf Mr. Ramage appeared on the television programme to which reference has been made. The hon. Gentleman has already quoted the opinion of the Automatic Vending Machine Association.
The hon. Gentleman pointed out, also, that Australia, New Zealand, and South Africa, which have recently converted or decided to convert to the decimal system each decided in favour of the 10s. unit. In addition to considering the advice given by the Halsbury Committee, has the right hon. Gentleman looked at some of the arguments which were advanced in those countries in favour of the 10s. unit? 1511 In the limited time at my disposal, I shall make only one quotation, this coming from the Report of the Decimal Currency Committee of Australia which reported in August, 1960:The inclusion of a half-cent does weaken the decimal principle or could, in certain circumstances…amount virtually to a three-decimal system.This is an extremely important criticism which is equally valid in this country because, in our domestic situation, we face exactly the same problem as Australia, New Zealand and South Africa did.
The only difference between our situation and that of the Commonwealth countries is the so-called international case for the £. The Chancellor may not attach much importance to this in public. He said in answer to Mr. Mocatta, on the television programme, that he did not consider that it was of overriding importance. But much was made of it by the Halsbury Committee, and I think that one can safely say that, if it had not been for the advice of the Bank of England, the Halsbury Committee would have unanimously, or by five to one, come down in favour of the 10s. system.
Has the right hon. Gentleman studied the evidence submitted by Mr. Wills, which was quoted in the Financial Times of 25th May this year, in a very penetrating article by "Lombard" headed, "The Story behind the Decimal Blunder"? Here is a quotation from the article:As Mr. Wills put in his letter to the Chancellor, while at all other points the Chancellor took detailed evidence and conducted thorough research, in this respect no attempt was made to test the validity of the assertions that were made as to how foreign holders of sterling would react to the abandonment of the £ as the major unit'. 'Certainly,' he adds, foreign financial opinion was not sought by the Committee'.How is this curious fact to be explained? The short answer seems to be that the Committee accepted without question the Bank of England's contention in evidence that there was nothing to he gained by taking evidence from foreign bankers on the international case for the £ because, while some would favour retention, others would minimise its importance, so that in the end an act of judgment would still be required'.This seems to me to be an extraordinary omission on the part of the Halsbury Committee, and a most important one 1512 considering that, as I say, the international case was probably instrumental in bringing the Committee to take the decision in favour of the £.
The hon. Member for Moray and Nairn referred to the question of associability, to which the Halsbury Committee attached great importance. He gave one example of a sum which would have to be done by a consumer. On television, the Chancellor maintained that associability would be easier under the £-cent system than under the 10s.-cent system. He asked Mr. Ramage whether he did not think that translating 13s. 7d. in his way would be easier to understand than in the way which would work under the 10s.-cent system.
The Halsbury Committee was absolutely plain on this point. It said:…the 'associability' advantages of the 10s.-cent system over the £-cent-½ system—easier translation of amounts and easier coin recognition and manipulation—coupled with the absence of vulgar fractions, would facilitate the immediate change to decimal currency working for the ordinary shopper and for the retail and transport undertakings which would have to bear the main burdens of the change-over.It is because of the difficulties consumers will face with the changeover to decimal currency, which were extremely well dealt with by Lady Elliot in her correspondence with the Chancellor, that I beg the Chief Secretary, on behalf of the Government, to think again and make the decision not in favour of the £, for spurious reasons of its international character, but in favour of the 10s.-cent system, which would be vastly more favourable to the people of this country.
§ 4.40 p.m.
§ The Chief Secretary to the Treasury (Mr. John Diamond)
I, too, am very grateful to the hon. Member for Moray and Nairn (Mr. G. Campbell) for raising this important matter, for it gives me an opportunity to remove certain misunderstandings and reiterate the Government's point of view.
The hon. Gentleman asked, first, if I would confirm that the decimal currency is subject to Parliament's approval. It is very much so, and of course he recognises that the White Paper says so in precisely those words:The Government will be bringing forward for the approval of Parliament a Bill to establish the new decimal currency units and to take certain other necessary powers.
§ Mr. Diamond
If the hon. Gentleman will be good enough to give me a chance to reply to each of his points in turn, I shall cone to them. I cannot answer them all in one sentence. I was going on to say hat he asked me about a debate. The Government have considered a debate, and these matters are being considered through the usual channels. I thought that that had been brought to the hon. Gentleman's attention, but can understand his reasons for asking me about it now.
The hon. Gentleman also asked me if I would state that no action had been taken, and could undertake that no action would be taken, to prejudge the issue between the two systems. Certainly no instructions have been given to machine companies or anything like that. The Government's purpose in making the statement was to give guidance, so that those members of the community who are interested in making early preparations, because they require plenty of time, will be able to assess the situation.
Although I have listened very carefully to the arguments adduced by the hon. Member for Moray and Nairn and the hon. Member for Orpington (Mr. Lubbock), and although the Government are, naturally, listening very carefully to the debate and discussion which we are glad is now going on in many learned quarters, no new argument has emerged which the Government did not have in mind when the White Paper was issued, and when the decision was made. The Government see no reason to alter their views on the essential problem of the kind of monetary unit and the number of coins.
Both hon. Gentlemen made clear that the debate is not about decimalisation. That is a matter which we are all glad to say has met with general approval, and I think that the House will agree that the date, February, 1971, is wise, giving plenty of time for people to make the adjustment.
The question under consideration is which of the two runners—there are only two—is the better, and, for reasons which I hope the House will listen to, the Government are convinced that the £ system 1514 is the better. Perhaps it would be acceptable shorthand to refer to it in future as the £ system, as opposed to the £-cent-½system.
I am reminded that I was discourteous to the House in not asking permission, immediately on rising, to speak a second time because this is the second Adjournment debate to which I am replying. I apologise for that omission.
The arguments for the £ system are very solid. It does not help the 10s. case which is also very good—nobody argues that this is a black and white issue—to under-state the arguments for the £, or to put them in their wrong context. Of course, there was division in the Halsbury Committee. There has been division in a good many well-informed bodies.
The majority of the Halsbury Committee came down in favour of this system for reasons which the Government accept, but which we would put in a slightly different order of priority. The Government would regard the domestic arguments as having been slightly understated by the Halsbury Committee and the international arguments as having been slightly overstated. But the same total weight of argument is there, and the Government are satisfied that this is the right decision.
The House must recognise that we have had the £ for a very long time. Everybody inside and outside this country knows of the £.
§ Mr. Diamond
Yes, a good conservative argument.
There is no reason to put people to a lot of trouble unnecessarily. There is no reason for disturbing people unnecessarily. It is not wise for a Government to do that when there is no advantage in it. Those who seek to upset the £ have the onus on them to demonstrate that another system is better and that there is a good reason for it.
§ Mr. Diamond
I hope that the hon. Gentleman will not get himself too worked up so near Christmas.
This is a very good reason which people are inclined to overlook. The £ 1515 is of great importance, and it is of tremendous psychological importance.
The interesting thing about both the recent cases in which there was a change from pounds, shillings and pence to decimalisation in a 10s. unit, in South Africa and Australia, is that there is solid evidence—evidence given to Select Committees and other evidence of that kind—to demonstrate that people still think in terms of the £, and advertisements are made in terms of the £ for items involving the sale of goods at so many £s per item.
§ Mr. Lubbock
If the right hon. Gentleman is arguing in favour of something on the ground that people are used to it, would not he admit that people have become fairly accustomed to the 6d. piece and the half-crown, both of which are to disappear?
§ Mr. Diamond
I am glad that the hon. Gentleman has said that, because he will realise immediately that neither of the coins which he mentioned is anything like as important as the stable anchor On which people base their monetary thinking and calculations, namely the £. The £ is the thing which matters.
In our present system, there are only two units—the £ and the penny. The rest is a combination of the penny or multipliers of the £. The £ is the unit on which money is calculated. People receive their wages in terms of the £plus some smaller denominations. Everybody abroad thinks about our currency in terms of the £. Countries abroad which deal with one another of whom we have no knowledge reckon in terms of the £. The £ is a very solid, important, existing, built-in, accepted idea, and there must be a very solid argument put forward before we uproot it.
I come now to the other major arguments, all of which support the £. There are not many, but they are very solid indeed. The two following arguments I would not put in order of priority. I mention them as being of equal importance. The first is our past. Again, the hon. Member for Moray and Nairn will accuse me of being conservative. I can understand that when the arguments are solid. We have had only a short debate. All of us would have wished to have 1516 further time in which to develop these important matters. We are grateful to the hon. Member for Moray and Nairn for providing us with this opportunity of debating the matter even shortly. I did my best to increase the time available for this debate by helping on a previous Adjournment debate.
All the existing records would be, I will not say wrecked, but of considerably less value if we were to change to a 10s. system. All the existing records would be of full value for us in future, for comparative purposes and for other purposes when we need to look back at the records, if we stay on the £. If we were to move from the £, all the existing records and accounts which are extremely valuable to all of us—businesses, business men and organizations—would be invalidated and there would be great trouble in seeing how the situation compared with the previous situation. If we hang on to the £, all the records will be of considerable value. I shall not get much further if every hon. Member wants to intervene.
§ Mr. Diamond
Having to multiply by two is what it is all about. The hon. Member confirms what I am saying. Every figure would be wrong, no figure would mean what it says, whereas all the existing records would otherwise be valid by continuing in the £.
Then I come to the argument of the heavy unit. It is a very solid argument. The hon. Gentleman either misunderstood or put it out of context for the purpose of his argument and his debate. It cannot be denied that the heavy unit results in greater efficiency in the sense that one is dealing with smaller rather than larger numbers.
With a larger unit, the average article is in smaller numbers than otherwise would be the case. It would be precisely half the size in the present example. It would be much more efficient for all the purposes that go with this, including ease of calculation and ease of matching.
The hon. Member said that the Chancellor should count not in terms of 1,000 years, but in terms of only 200 years. It is the same argument. It must be very lasting indeed. Nobody would claim to 1517 look precisely at what the difference would be in 300 as opposed to 200 years. It must be lasting, and one has to realise that the importance of small units gets less as time goes by, not mainly because of inflation, although that is an element in it, but mainly because, as income increases, as gross national product increases and as the things one buys and consumes become more and more expensive, the money item becomes larger, the smaller figure become less useful and it would be necessary to have tens, twenties, thirties and forties where otherwise, in course of time, one would have singles of a monetary unit.
This has nothing whatever to do with inflation, although when looking at the past one recognises that inflation has its effect. Although every Government does what it can to keep inflation in check, that has happened and one draws whatever conclusion one wishes to draw from it. The major point is that it is lasting, not because of that element, but because of the increasing prosperity of the nation and the importance, therefore, of a larger unit.
I have been asked about the new half-penny. I do not say that it will disappear. The hon. Member may say that this is an argument against the £. those who support the £ say that it will disappear, but the Government do not. The Government say that this is the smallest unit in the £ system. It is exactly the same value as the smallest unit in the 10s. system, and there is no difficulty in coping with the half.
Every housewife—everybody—is used to halfpennies. There is no problem about machines—we have been assured of this by machine manufacturers—by adding on 0.5 and the third decimal place. There is no reason why the half-penny should disappear. In fact, by the very fact that it is there, it is a cushion against increasing prices.
§ Mr. Edwin Brooks (Bebington)
I understood my right hon. Friend to say that the Government are not claiming that this coin will disappear. Paragraph 16 of the White Paper states, however, thatThe £ system will need a half cent (new halfpenny) coin but, with growing prosperity, this coin will eventually disappear.
§ Mr. Diamond
Eventually—that is the point. I have already stated the argu- 1518 ment that in course of time, with increasing prosperity and the greater value in terms of money in terms of the things we buy, the smaller value unit becomes less and less important and gradually will drop out, as the farthing did and would have done with or without inflation. It is the result of increasing prosperity more than inflation.
The argument of the hon. Member for Moray and Nairn was that this halfpenny would disappear overnight, or something like that. I gather that that, virtually, was what he said—a very short period.
§ Mr. G. Campbell
What I was saying was that the argument put in favour of the fraction was that it would soon or eventually disappear.
§ Mr. Diamond
I am glad we have cleared that up. I understood the hon. Gentleman to say—I think that he will perhaps find he did say—that the argument being put by the supporters of the £ was that the ½d. would soon disappear. I am saying it will not.
It is a benefit of quite the opposite kind, and I am grateful to my hon. Friend the Member for Behington (Mr. Brooks) for drawing attention to the fact that the White Paper makes it absolutely clear. The logic of this argument makes it absolutely clear that what we are contemplating is that there will be no reason for the ½d. as a result of rising prosperity.
These are, I think, very solid arguments indeed. Then there is, in addition, the international case, and I do want to put this in perspective. I hope I may read—I shall be as quick as possible—some part of the White Paper dealing with the international case, because the Government have put it absolutely fairly and it is continually coming back to us in these debates. Paragraph 30, on page 9, sets out the various benefits for maintaining the £ so far as the world is concerned. It refers to one-third of the world's international trade as settled in sterling. One-third of the world's trade is an enormous amount of trade.
Rather more than one-half of this covers transactions in trade between third countries—third countries we are not concerned with at all. They all support sterling; they also support the £. Of course. That is what their records are in. They are not asking for a change. It is 1519 of no interest to them that there should be a change. They want their records to continue as before—and why should there be a change from the £ unless there are good reasons for it? On the contrary.
No hon. Gentleman was talking to me of the number of bodies supporting the 10s. I can assure the hon. Gentleman that we know debate is going on about it. We are glad that public opinion is expressed in that debate. I can assure him that the Government are happy—I will not say more than that—that the support for the £ is very solid. It is very widespread. And, of course, because of this, because we make a change of this kind, as is usually the case, those who are opposed are the most vociferous, and those who support are silent in their support.
Then the argument for the international case refers to the earnings of invisible income which depends to some extent on the continuation of the pound as an international unit. Only in paragraph 32 does it touch at all on the fourth point which the hon. Gentleman put as a main point. It says:There is no doubt that a change in the major unit will inconvenience a lot of sterling users who are not concerned with the domestic arguments for decimalisation. Equally it would be idle to claim that a change could benefit the international standing sterling; if there were any effect at all it might prove to be an adverse one.So there is a vast number of solid arguments for the international case, and 1520 I repeat that the international case is a very solid one indeed. I have given what, in my view, are four very solid reasons why the pound should be the unit. The other arguments balance themselves out. The transitional arguments balance themselves out; the machine argument balances itself out—there being advantages to some and disadvantages to others; the 10s. argument, in my view, balances itself out.
This I will give to the hon. Gentleman—gladly: that the transitional period for the pound will take about two to three months for every housewife to become accustomed; the transitional period for the 10s. will take about one month—that is on the best information. I gladly give the extra month of temporary disturbance for a unit which has got all these advantages behind it, and which we are considering for, in the hon. Gentleman's own words, the next 200 years. I hope that the House will be similarly disposed.
§ Mr. G. Campbell
May I, Mr. Speaker, as the initiator of the last debate, be permitted, on behalf of the House, to wish you a happy Christmas and a prosperous New Year.
§ It being Five o'clock, Mr. SPEAKER adjourned the House, without Question put, till Tuesday, 17th January, pursuant to the Resolution of the House yesterday.