§ 25. Mr. Dickensasked the Chancellor of the Exchequer if he will seek to impose further restrictions on the outflow of capital to advanced countries within the sterling area.
§ Mr. Roy JenkinsThe voluntary programme already operates in this field and I have at present no proposals for further action.
§ Mr. DickensDoes not my right hon. Friend agree that he is simply frittering away the advantages of devaluation by continuing to allow £190 million worth of capital to leave this country as it did in the first quarter of 1968, the highest figure in any quarter for the past 11 years? Will he now impose a standstill on the outflow of private capital to advanced countries like Australia, to which capital at the rate of £1 million a day has been flowing in the first quarter of this year, principally to buy Australian gold mining shares.
§ Mr. JenkinsI think that my hon. Friend somewhat exaggerates the size of the problem when he refers to £190 million having gone out. As I said, this was to a large extent accounted for by one exceptional transaction. I agree that there has been some disturbing increase in the outflow of private portfolio investment by individuals to Australia in the first quarter, but I have to consider the position of the sterling area as a whole, and also the fact that this is not a net charge on the reserves.
Mr. Brian HarrisonCan we take it from the Chancellor's statement that he does not intend to limit portfolio investment by people resident in the United Kingdom taking shares in Australia?
§ Mr. JenkinsI think that what the hon. Gentleman can take is exactly what I said, that the voluntary programme already operates, and at present I have no proposals for further action.
§ Mr. MacdonaldIs it not regrettable, but still a fact, that the admirable intent of the voluntary programme has not had trie fullest success hoped for, and therefore will my right hon. Friend think again about this matter?
§ Mr. JenkinsI think that my hon. Friend is under a slight misapprehension. The voluntary programme relates to direct investments and to portfolio investments by institutions, and I think that it has worked satisfactorily.
§ Mr. Selwyn LloydDoes the right hon. Gentleman agree that in the interests of the standard of living in this country it is important that we should have some part in the wealth explosion which is taking place in Australia?
§ Mr. JenkinsI think that it is very important to preserve a balance. Overseas investment can be of considerable advantage, but it must not be made at the expense of stultifying our home economy.
§ Mr. BarnettI recognise the difficulties, but would not it be better to face the problem of breaking up the sterling area itself rather than allow this continuation of capital outflow at the expense of our own economy?
§ Mr. JenkinsI have to consider this matter in the context of many other considerations.
§ Mr. Patrick JenkinDoes the right hon. Gentleman accept that the mere act of devaluation has of itself rendered the restrictions on overseas investment that much less necessary, and will he resist the pressure from the benches behind him to tighten up still further the damaging policy he was following before?
§ Mr. JenkinsI am not sure that I follow the hon. Gentleman's argument, but I take note of his final point.
§ Mr. DickensIn view of the unsatisfactory nature of that reply, I am bound to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.