HC Deb 29 May 1968 vol 765 cc1823-5
38. Sir B. Rhys Williams

asked the President of the Board of Trade if, as interests, profits and dividends in 1966 earned this country a net surplus of £371 million, he will take steps to ensure that the growth in income from our overseas investments is fully maintained by allowing free movement of British capital into overseas investment.

Mr. Crosland

I am very conscious of the benefits which earnings from interest, profits and dividends bring to the balance of payments on current account, but as my right hon. Friend, the Chancellor of the Exchequer, said in his Budget speech, we must maintain the measures we have taken to minimise the burden of outward investment on the balance of payments capital account.

Sir B. Rhys Williams

Is the Minister aware that it is commonplace for American firms which have invested money in this country to take out, in profits and royalties, 100 per cent. per annum? Is it really necessary that British enterprise should be deprived of corresponding opportunities overseas?

Mr. Crosland

Under present circumstances it is necessary. This is always a question of trying to find the right balance between the individual long-term benefits to be gained from overseas investments on the one hand, and on the other hand the burden that that places in the short term on the capital part of the balance of payments programme. In our present situation it seems absolutely right not to cut it down to zero, which we have not done, but to exercise a certain restraint.

Mr. Cant

Is my right hon. Friend aware that there are a number of hon. Members on this side of the House, on both sides of the Gangway, who are increasingly concerned about the institutional changes in the City which are increasing the pressures on sterling? Would he particularly look at the whole question of the export of capital to the sterling area, and leakages taking place in the non-sterling area?

Mr. Crosland

The question of exchange control is for the Chancellor. I can tell my hon. Friend that in 1967, for the first time for many years, the long-term capital account was actually in balance.

Mr. Boyd-Carpenter

Does the right hon. Gentleman appreciate that the growth of this valuable help to the balance of payments in future is being very much handicapped by the discriminatory provisions of the so-called voluntary arrangement, which largely prevents investment in Australia, where investment possibilities are better than anywhere in the world?

Mr. Crosland

They have not altogether prevented investment in Australia, as one can see from recent figures. If one has control or restraint of this kind, it seems better that it should be discriminatory.

Mr. Hooley

Does my right hon. Friend agree that even £370 million may be a high price to pay for the wild speculative capital movements that have taken place recently and damaged sterling?

Mr. Crosland

The question of speculative movements is an extremely serious one. But it is not the same as the matter of long-term capital investment overseas, to which the Question relates.

Several Hon. Members rose

Mr. Speaker

Order. Mr. Crosland to answer Question No. 65.

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