HC Deb 14 March 1968 vol 760 cc1855-62

3.20 a.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman)

Mr. Speaker, I beg to move, That this House do now adjourn.

Mr. Speaker

I have to advise the House that the device of moving the House in order to permit public business to be interrupted for an important Ministerial statement to be made is an infringement of the accepted interpretation of Standing Order No. 15 (Order of disposing of orders of the day).

Mr. Speaker ruled in October, 1944, during the Second World War, that this process should not be regarded as other than emergency procedure. This course, therefore, cannot be taken as a precedent for normal occasions, as it is, strictly, an infringement of our rules. I would allow it tonight only if I thought that that was the general wish of the House in these special circumstances. I am quite certain that that is the general wish of the House. Mr. Roy Jenkins.

The Chancellor of the Exchequer (Mr. Roy Jenkins)

The House will be aware of the events of the past few days.

The heavy and growing demand for gold led the United States authorities to ask last evening—that is, Thursday evening—that the London gold market should be closed at 4 today. In doing so, they have made it clear that the temporary closing of the London market does not affect the United States undertaking to buy and sell gold in transactions with monetary authorities at the official price of 35 dollars per ounce.

They have also called a meeting of Central Bank Governors of active gold pool countries in Washington over the weekend to consider the international monetary situation. The Government have thought it right, in order to prevent the development of disorderly conditions in other financial markets in the United Kingdom, to recommend the Queen to approve a Proclamation appointing Friday, 15th March, to be observed as a Bank holiday throughout the United Kingdom. This Proclamation was approved at a Privy Council held earlier this morning. The banks are, however, being asked to provide their domestic customers with normal cash requirements in sterling, including, of course, the payment of wages.

The Stock Exchanges will be closed. The Governor of the Bank of England has agreed to join in the conference which is being called by the United States authorities, and he will leave for Washington later in the day. I am arranging for representatives of the Treasury to be available in Washington for consultation during the period of the meeting.

We have been in close touch with the United States authorities during the evening. Their objective in all this, like ours, is to secure time in which to make arrangements so as to enable markets to resume business in an orderly way after the weekend.

Mr. Edward Heath (Bexley)

The Statement which the Chancellor has made is obviously one of considerable gravity as well as of great importance. The events which we have seen in the last few days are in fact some of the consequences of the devaluation of the pound—[HON. MEMBERS: "Oh."]—with consequent pressure on the dollar and the run on gold which has resulted.

Could I ask the Chancellor whether other gold markets in the other capitals are also closing, or whether the London market is the only one which is closing? Could I also ask him whether there is to be a similar operation of Bank holidays in other countries as well as in this country, or is this only the decision of the British Government? Could I ask him if he will give firm assurances to the general public, as I am sure he is able to do, that, of course, the stability of the domestic banking system remains absolutely unimpaired—[Interruption.]

Mr. Speaker

Order. This is a serious moment. Noise does not help at all. Mr. Heath.

Mr. Heath

The Chancellor has said specifically that normal banking requirements will be carried on, and in the event of a sudden declaration of a Bank holiday of this kind the British citizens want to be assured that the domestic banking system remains unimpaired.

Could I ask the Chancellor what proposals the Government are prepared to advance for dealing with the problem of the gold run of these last few days?

Finally, will he also come to the House today at 11 a.m. and make a further statement if he has any other information to give?

Mr. Jenkins

On the first part of the right hon. Gentleman's questions, I think it is obvious that we are here dealing with a situation not affecting a particular currency but a world situation.

He asked me whether other gold markets were closing. Certain conversations are taking place, but the London gold market is in a peculiar position. It is much the biggest market, and it is also the market from which the gold pool operates.

Therefore, when the United States authorities put this request to us, we did not think it right to make our acceptance of it conditional on what happened in other lesser markets. It follows from that that the Bank holiday arrangements which we made are as a consequence of the temporary closing of that market, and as far as I am aware, they are special to this country, though if other countries were to close their gold markets it would be for them to consider what action they took.

I can give the right hon. Gentleman and the House the fullest assurance that this in no way affects the stability of the British banking system. There should be no difficulty in drawing cash for normal requirements today, and no question of any hold-up in this way.

The right hon. Gentleman also asked me what proposals I had put forward for dealing with this situation. But I think I would rather wait until representatives of this country get to the conference and are able to discuss with the United States and their representatives the best way of dealing with this very difficult situation for all the countries concerned.

He further asked me whether I would make a statement this morning if there were fresh developments to report. If there were fresh developments to report I would make a further statement, but I would not expect that necessarily to be the case.

Mr. Robert Sheldon (Ashton-under-Lyne)

Would my right hon. Friend go further and say why it is necessary for the banks to be closed tomorrow, since exchange control is fairly well carried out, and although one can see the need for the closing of the London gold market, the consequence of the necessity to close the banks does not appear so obvious.

Secondly, will he say if this will involve any change at all in the timing of his Budget proposals?

Mr. Jenkins

We took the view that it would make for a more orderly position if the banks were closed, subject to the exception that they can deal with normal cash requirements.

This will make no difference to the timing of my Budget proposals.

Mr. Jeremy Thorpe (Devon, North)

Will the right hon. Gentleman recognise that this is a very delicate and dangerous situation? Can he say whether the Paris gold market will remain open, and secondly, whether or not the prime bank rate in America has been raised?

Also can he tell the House whether there is any suggestion that either Britain or America should go out of the gold pool? Finally, could I ask him whether he can say what effect, if any, these matters have had on the value of the £ against the dollar?

Mr. Jenkins

The prime bank rate in America has, I understand, been raised by one-half per cent. in New York this afternoon. I am not able to give the House any information about the Paris gold market; but, as I explained in answer to the Leader of the Opposition, there is a very substantial and significant difference between the Paris market and the London market in this respect.

Mr. James Dickens (Lewisham, West)

Is my right hon. Friend aware that, contrary to the absurd allegation by the Leader of the Opposition, the events of the last few days have shown clearly to everyone the total anarchy of international capitalist finance? Will my right hon. Friend assure the House that he will treat as first priority the need to protect our currency by reintroducing exchange controls to prevent further speculation against the £ of the type we have had recently?

Mr. Jenkins

I do not want to get involved in the wider question raised by my hon. Friend. But it is certainly my desire, as it is that of the United States Government and other countries concerned, if there be any sign of anarchy, to introduce some greater order into the world monetary system. I can assure my hon. Friend that we attach primary importance to looking after our currency, and the United States have reaffirmed their support for existing parities at their present level.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

Is it the right hon. Gentleman's intention that the banks shall open for normal business again on Saturday, according to the normal Saturday hours? Has the right hon. Gentleman any information about the action being taken by other major countries concerning their banks opening today?

Mr. Jenkins

It is the intention that the banks should be open in the normal way on Saturday morning. I am not able to give the right hon. Gentleman any information about what other countries are doing. We have closed the London gold market. They have not been in a position to be requested, as we have been, by the United States Government to close such gold markets. Therefore, they are not in a similar situation in relation to their banking position.

Mr. Joel Barnett (Heywood and Royton)

Would my right hon. Friend agree that it is important that none of us should panic at this moment? Would he also agree that if the members of the gold pool in Washington over the weekend take the sort of rational decisions which are possible, it could not only be not disastrous for Britain, but could positively have a stabilising effect on this country?

Mr. Jenkins

I entirely endorse what my hon. Friend has said, and I detect no tendency to panic in any quarter of the House. I think that it is highly desirable that a constructive meeting should be held in Washington, out of which greater order can come than has prevailed in the last few days.

Mr. Hugh Fraser (Stafford and Stone)

While hoping that from the Washington meeting progress will emerge for the restoration of stability, would it not be proper that there should be political representation at the meeting? It should not be purely a matter for technicians. Very big issues are involved—some of a political character—and to leave this purely in the hands of bankers, who are technical in the matter, could be dangerous for the position of our own interests.

Mr. Jenkins

I can assure the right hon. Gentleman that the Treasury will be represented at a high level in Washington. But it is for the convening country to suggest the level or the form which the talks should take—at any rate in the first instance.

Mr. Alfred Morris (Manchester, Wythenshawe)

Is my right hon. Friend aware that there is a very deep understanding of his difficulties in this situation? Is he also aware that all on this side of the House regard it as petty and repugnant that he should be held personally responsible for what is fundamentally a world monetary crisis?

Mr. Jenkins

I am grateful to my hon. Friend for his remarks, but I am not sure that I need his sympathy, kindly meant though it is. To that extent, we all have our responsibilities, and my responsibility has been to accede to the request of the United States and to send representatives to take part in the conference.

Mr. Peter Emery (Honiton)

As the international side of banking will be closed tomorrow, may I ask the right hon. Gentleman whether the sterling balances will be negotiable, or whether they will be blocked either tomorrow or on Saturday?

Mr. Jenkins

I do not think that those questions arise. The only decision which has been made is to close the London gold market.

Mr. Robert Maxwell (Buckingham)

Does my right hon. Friend believe that the United States can maintain the gold price at 35 dollars an ounce? If not, if the decision is to de-monetise, does my right hon. Friend think that Her Majesty's Government will follow? Or, if gold is revalued, what consequences does my right hon. Friend see for us?

Mr. Jenkins

Those are highly hypothetical questions. What we are doing is taking part in a conference held on the basis of the United States having reaffirmed their full intention to maintain the present gold-dollar parity.

Sir Harmar Nicholls (Peterborough)

The right hon. Gentleman said that he does not expect to make a further detailed statement until he has the report of the meeting in Washington. Can he say whether he is arranging for his Department to give a fuller explanation to the nation? I ask that because if it should be that other banks do not close, and we do, the apprehensions that will arise because of the lack of understanding may be profound. I think the House would like to feel that although he will not be able to talk authoritatively to the House until after the Washington meeting, some sort of public liaison is being decided on in his Department to keep the public informed.

Mr. Jenkins

Of course, I will give thought to that. I do not think that any misunderstanding should, or will, arise. London is in a peculiar position, because it is the major gold market in the world, and because the gold pool operates here, sales in this market have created a situation in which the United States Government asked for them to be suspended. The decision about the banks in this country follows from that, and it would be wrong to put any other deduction on it.

Mr. Austen Albu (Edmonton)

Can my right hon. Friend confirm that the run on gold in this case, and the present situation, are not primarily due in any way to a deterioration in the British trading position or the balance of payments position, since the Governor of the Bank of England reported that in his view the Government's measures were succeeding, and that in fact it is due to pressure on the dollar largely because of the policies of other countries?

Mr. Jenkins

I think that I agree with my hon. Friend to the extent of saying, as I did in reply to the right hon. Member for Bexley (Mr. Heath), that this is a world situation, and it is, I think, primarily a problem of the dollar, as is indicated by the fact that the request has come from Washington.

Mr. Keith Stainton (Sudbury and Woodbridge)

May I ask whether it is still the right hon. Gentleman's intention, in the light of the facts as they stand now, to open his Budget on Tuesday of next week?

Mr. Jenkins

I hope that we are not having questions for the second time round. I answered a question about seven minutes ago and said that it was my intention to open on Tuesday as stated.

Mr. Woodrow Wyatt (Boswell)

Will my right hon. Friend make it clear, in case there is some misapprehension about what a Bank holiday means, that it is not the intention of the Government that people should not go to work?

Mr. Jenkins

It is certainly not our intention that tomorrow should be primarily a day of festivities. In other respects it will be an entirely normal working day, and will, in many respects, be a normal working day for the banks themselves.

Mr. Norman St. John-Stevas (Chelmsford)

Can the right hon. Gentleman assure the House that, while protecting British interests, he will give all the support that he can to our American allies in the present crisis?

Mr. Jenkins

My intention is to do everything I can to uphold the stability of the world monetary system in which we, the Americans, and many other countries have a very considerable interest.

Mr. Crossman

I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.