HC Deb 13 June 1967 vol 748 cc279-81
5. Mr. Molloy

asked the Chancellor of the Exchequer if he is satisfied with the progress made in dealing with the balance of payments problem; and if he will make a statement.

Mr. Callaghan

I am glad to say that figures published today show that the balance of payments was once more in surplus in the first quarter of 1967—the current account in particular showed a surplus of £41 million, seasonally adjusted. There is a good prospect of an overall surplus in 1967 and a larger surplus in 1968.

Mr. Molloy

While congratulating my right hon. Friend on the efforts which he has made in making this remarkable achievement, will he bear in mind, when he starts his policies to lessen the loads on people, that the biggest contributions in achieving this remarkable recovery have been made by working people and that they should enjoy the benefits of any reliefs which he is prepared to give?

Mr. Callaghan

I accept the second part of that statement, at least. There is no tribute due to me on the first part. It is the efforts of the British people which, broadly speaking, either create a surplus or result in a deficit in our balance of payments. As regards the future, I repeat that I think that a growth rate of 3 per cent. per annum will enable there to be a progressive improvement in our standard of life. If we keep the growth rate at 3 per cent., on the basis of the calculations which I have, it seems that we shall also have a balance of payments surplus.

Mr. Bruce Gardyne

Would the Chancellor not agree that all the latest evidence, including the latest trade returns, suggests that we now have a combination of stagnating output, stagnating exports and sharply rising unemployment? Does that not suggest that there is a need for a fundamental change of policy?

Mr. Callaghan

No, Sir. That is not true. Exports are nearly 7 per cent. above the corresponding months of last year. That is a very considerable improvement, and I see no reason to depart from that estimate for the latter months of this year. As regards the other factors referred to by the hon. Gentleman, the Index of Industrial Output shows that there was an increase in the first quarter of a small amount, which looks as if it will grow during the latter part of this year. As for unemployment, the measures which the Government have taken and are taking, including the long-term structural changes in the regions, are designed to lower that rate.

23. Mr. Hooley

asked the Chancellor of the Exchequer what special factors operate in the month of July to cause exceptional pressure on sterling in that particular month.

Mr. Callaghan

Both the United Kingdom and the overseas sterling area move at about this time from a seasonally favourable to a seasonally unfavourable period of the year. This should not cause any undue difficulty if the underlying balance of payments position is sound.

Mr. Hooley

But as we have had a sterling crisis in five successive years under three successive Governments, does not this seem to indicate some lack of forward planning in the Treasury?

Mr. Callaghan

That is a large question on which I would be very interested to dilate at some length, but the basic position which I think it is important to understand this year is that during the last six months there has been an overall balance of payments surplus of £151 million, and therefore any adverse seasonal movement this year should not unduly affect the position of sterling.

Mr. Bruce-Gardyne

Would not the right hon. Gentleman agree that the recurrence of this exceptional pressure during each of the last three years, and the prospect that it is going to recur again in July of this year or next year, suggests that one of the special factors must be Her Majesty's present Government?

Mr. Callaghan

The hon. Gentleman keeps on making these points. I will say only that we have not had such a favourable balance of payments surplus as we have now for several years of the last Tory Administration.