HC Deb 13 May 1968 vol 764 cc859-64
Mr. Dickens

(by Private Notice) asked the Chancellor of the Exchequer whether he will make a statement on Mr. Cecil King's resignation as a Director of the Bank of England.

The Chancellor of the Exchequer (Mr. Roy Jenkins)

Mr. King's letter to me of 9th May stated that he was resigning because he was becoming more and more involved in political controversy. I accepted his resignation without hesitation.

Mr. Dickens

First, will my right hon. Friend take this opportunity of emphatically repudiating the disgraceful and thoroughly unpatriotic remarks made by Mr. King about this country's international trading position and about the position of our reserves?

Secondly, is my right hon. Friend aware that many of us on this side of the House feel that he and the Government have listened in the past far too readily to Mr. King and to the Mirror newspapers and the policy they have advocated and far too little to the Government's hon. Friends on this side of the House and to the wider Labour movement in the country?

Mr. Jenkins

I certainly thought that Mr. King's article was irresponsible and I certainly repudiate what he said about the reserves, where he touched upon a practice originated by the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) which has been continued unchanged ever since.

To the second point raised by my hon. Friend, I would reply that these are matters of opinion. Mr. King is entitled to his opinion like anyone else, but there is no need to take any more notice of it.

Mr. Iain Macleod

Is the Chancellor aware that, although we have many criticisms of the handling of the economy, these come within the ordinary sphere of political controversy, whereas, to us, matters of sterling and the reserves do not, and that I would wish to keep it that way?

I therefore put simply one question. There are conventions that govern the publication of the reserves. Can the Chancellor assure the House that there has been no change at all in these conventions? If that is the case, why did not he make that clear on Friday morning?

Mr. Jenkins

I note what the right hon. Gentleman says and I am grateful to him for the attitude he has taken. It is slightly different from that which the Leader of the Opposition took, with one of his instant reactions, on Friday. However, in view of what the right hon. Member for Enfield, West (Mr. Iain Macleod) has said, I will leave that point now.

As I have indicated, the practice in relation to the reserves is exactly the same as that started by the right hon. and learned Member for Wirral, continued by the right hon. Member for Barnet (Mr. Maudling), and defined by my right hon. Friend the Home Secretary in 1966 in the following terms: The figures given of the monthly reserves are quite accurate…but the practice has grown up over recent years—and I think that it is a desirable practice—under which central banks, through co-operation, offset the flow of short-term movements. This is desirable in the interests of world trade and the stability of the exchanges, and I see no reason to discontinue the practice"—[OFFICIAL REPORT, 18th October, 1966; Vol. 734, c. 15.]

Mr. Cant

Will my right hon. Friend draw a moral from this experience? Is it not remarkable that sterling should be affected far more by the speeches or articles of a Press baron than by the announcement of a multi-million £ order gained in America by Rolls-Royce? Will not my right hon. Friend see as a solution to the problem not to do anything about the freedom of speech, but to reduce the sensitivity of sterling to the increasing pressures that it is subject to in international financing?

Mr. Jenkins

That raises a wider issue. I have discussed this point with my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) on previous occasions. But it is the case at present that the prospects for a secure improvement of the British balance of payments in future are now, as many independent commentators have said over the weekend, stronger than they have been for a long time.

Mr. Iain Macleod

Will the Chancellor answer the second half of my question, which he passed over? If there has been no change at all and the policy is still the same in that the figures show the trends as trends subject to what the right hon. Gentleman the present Home Secretary said in his statement, why did not the Chancellor make that clear at once, which is what my right hon. Friend the Leader of the Opposition asked for on Friday morning?

Mr. Jenkins

The Leader of the Opposition did a great deal more than ask that. I do not take the view that it is necessary to contradict every irresponsible statement. I thought it perfectly clear that Mr. King was referring to nothing more than the practice started by the right hon. and learned Member for Wirral. Indeed, Mr. King made this perfectly clear on television on Friday evening and the financial commentators on Saturday morning took an extremely sensible view.

Mr. Shinwell

Is my right hon. Friend aware that, although there may be some mystery about why Mr. King resigned his position as a director of the Bank of England, it is less mysterious than the reason for his appointment? Will my right hon. Friend clarify the position? What are the qualifications of a man appointed to a directorship of the Bank of England? Is there any chance for some of us, including me?

Mr. Jenkins

Not while my right hon. Friend the Member for Easington (Mr. Shinwell) remains a Member of this House, which I hope that he will do for a long time. This is a question about a resignation and not about an appointment, and that is my responsibility, but it is the view that it is desirable to have certain outside directors of the Bank.

As Mr. King himself made clear, these directors have no access to any secret official figures. It is thought desirable, however, that we should have certain outside persons—of which Mr. King was one—who are able to bring a wider view, if that is the right description, to the position.

Mr. Sandys

Is it not the case that nothing would do more to strengthen sterling than the disappearance of this disastrous Government?

Mr. Jenkins

No, Sir, and I know of no issue with which I have had to deal, either in my present or in my previous offices, which the right hon. Member for Streatham (Mr. Sandys) has not tried to exacerbate by entirely mischievous comments.

Mr. Barnett

Does not the statement by Mr. King show the most appalling ignorance? Does not my right hon. Friend agree that it indicates the need for courses for directors of the Bank of England?

Mr. Jenkins

Mr. King said quite frankly on television on Friday night that he spoke with no special banking or economic expertise. I am bound to say that I sometimes wish that he would show equally becoming modesty about political questions.

Mr. Hooson

Does the Chancellor take the view that indulgence in political controversy is a bar to the Court of the Bank of England? If it is, why was Mr. Cecil King appointed in the first place, because he was then indulging in political controversy? Secondly, as to the figures, which are part of the public concern, do the reserves include loans from foreign banks?

Mr. Jenkins

The position is exactly as stated by my right hon. Friend the Home Secretary in the reply which I quoted to the House. It is one which has existed for a very long time. I do not think that the position could be taken that a director of the Bank of England should never make a remark which could ever be regarded as controversial by anyone. That would be a very restrictive view indeed. But Mr. King, by submitting his resignation, clearly took the view that the totality of his article was incompatible with his membership of the Court of the Bank, and I agree with him.

Mr. Winnick

As a historian, would the Chancellor agree that a view expressed by a former Prime Minister about Press proprietors will also be applied to Mr. King, namely, that some Press proprietors would want powers without responsibility—the prerogative of the harlot throughout the ages?

Sir A. V. Harvey

Will the Chancellor say on whose recommendation Mr. King was invited to become a director of the Bank? Was it at the invitation of the Prime Minister, or the previous Chancellor? Why are the Government complaining now, when, three years ago, they were as thick as thieves?

Mr. Jenkins

Mr. King was appointed, like many people holding, no doubt, political views very different from those which Mr. King held then or holds now, on the authority of the Government.

Mr. Atkinson

Is my right hon. Friend aware that when Mr. King called for the resignation of the Prime Minister the value of the £ went down? Therefore, would my right hon. Friend agree that the value of sterling would go up if he, together with every other Member on this side of the House, stated unequivocally that the Prime Minister will continue for a long time to come?

Mr. Jenkins

I have no doubt that this is so.

Sir C. Taylor

Is it not a fact that Mr. Cecil King was appointed to the Court of the Bank of England because of the tremendous support that he gave to the Labour Party at the last election?

Mr. Jenkins

I do not agree with that, and I think that if the hon. Gentleman were to look through the list of the other members of the Court of the Bank of England, which I have before me, but with which I will not weary the House, he would find it a little difficult to take the view that it sustained his thesis.

Dr. John Dunwoody

Would my right hon. Friend agree that, in view of his qualifications, a great deal too much notice has already been taken of the views of Mr. Cecil King, and that all that we are seeing is—in a particularly acute form—an example of well-recognised delusions of grandeur which newspaper proprietors have shown over the years?

Sir C. Osborne

While recognising that it would be against the national interest to give the day-to-day changes in the reserves, may I ask the Chancellor to repudiate the second and more important statement by Mr. King, that Great Britain is now faced with the greatest financial crisis in its history? Is that true?

Mr. Jenkins

I agree with the hon. Gentleman to the extent of thinking that this was the more important of the two statements. I do not think that it is true. As I have made abundantly clear to the House ever since I took over as Chancellor, we are facing great difficulties. We are also facing great opportunities, and I stand by what I said earlier, that provided we exploit these properly, the opportunities for a secure balance of payments surplus are greater than for a long time past.

Mr. Roebuck

In the interests of spreading enlightenment in Holborn Circus, and perhaps the Albany, would my right hon. Friend send Mr. King a copy of the recent speech by the Chairman of the British Export Council, which showed that the nation was on its way to having one of the world's strongest economies? Would he at the same time inform the chairman of my favourite newspaper that its 15 million readers prefer the front page when it makes beauty queens and not when it tries to make Prime Ministers?

Mr. Jenkins

Many of my hon. Friends are making comments, as is their right in the circumstances, but ones to which it is not particularly easy to provide an answer. I am sure that the extremely important statement of the Chairman of the British Export Council has been read, even if not entirely digested, both in Albany and elsewhere.

Sir D. Renton

If he would not think it tactless to do so, would the Chancellor care to remind the Prime Minister of the good democratic principle of government by consent?

Mr. Jenkins

I am not sure that there would be particular value in my calling attention to that.—[Interruption.]

Several Hon. Members

rose—

Mr. Speaker

Order. We must get on. Before I call the next item, may I announce that there is a misprint in line 5. The word "development" ought to be "deferment".