HC Deb 15 July 1969 vol 787 cc398-401
Q1. Mr. Blaker

asked the Prime Minister whether the public speech by the President of the Board of Trade in Glasgow on 20th June, 1969, about invisible earnings represents the policy of Her Majesty's Government.

Q9. Mr. Patrick Jenkin

asked the Prime Minister whether the speech made by the President of the Board of Trade in Glasgow on 20th June about Great Britain's invisible earnings represents Government policy.

The Prime Minister (Mr. Harold Wilson)

Yes, Sir.

Mr. Blaker

Is the Prime Minister aware that net invisible earnings on private account regularly show a handsome surplus, which last year amounted to £839 million? Has not the time come for the Government to reconsider the relative contributions of visible and invisible earnings to our balance of payments, and what Government policy towards them ought to be?

The Prime Minister

We have had many criticisms about our treatment of those responsible for invisible earnings, and I am glad to join the hon. Gentleman in the tribute he paid to the very big figures for the last year. While there are fluctuations from quarter to quarter, the figure for the first quarter was at a still higher rate. I suggest that that might indicate to the hon. Gentleman that we have been following the right policies.

Mr. Patrick Jenkin

Is the Prime Minister aware that the tribute paid by the President of the Board of Trade to the contribution made by business and financial services is very welcome? Will he now agree to explain, or perhaps, even better, to withdraw, his own slighting reference to those who use money to make money?

The Prime Minister

At the Guildhall last year I paid tribute to those responsible for our invisible earnings, and I expressed the hope that we should see a continuing increase in our invisible earnings. There is a big difference between those who earn money overseas to strengthen our balance of payments and those who gamble at home without helping to fertilise or irrigate the investment source of British industry. The hon. Gentleman will be delighted to know that in the first quarter net invisible earnings were greater than in the whole of the last year of the Conservatives.

Mr. Heath

On the general question of the trade returns, there has been some comment today that the export figures are larger than the figures actually given because of the so-called figure of anything up to 2 per cent. which is not allowed for. Can the right hon. Gentleman say what the Government are proposing to do about this rather vague figure? Are they proposing to return to the original system before 1963 in which there was a double currency check, the first before exports were made? Second, does the right hon. Gentleman recognise that for every increase there must be a corresponding decrease in the balancing item?

The Prime Minister

I recognise the last point. It makes no difference to the inflow of money to the reserves, or things of that kind. It does, however, make a difference to the true figure of the balance of trade as opposed to the balance of monetary movements and the balance of payments. There is another Question on the Order Paper about a statement by my right hon. Friend the Chancellor of the Exchequer referring to those items.

The position, as the right hon. Gentleman knows, is that the change was made in 1963 by his Government—I think probably for a good reason, to cut down the paper work by exporters—which has led to persistent and increasing under-recording. We are now trying, by rather more than the sample checks up to now, to see how great is the extent of it, and whether any changes in practice are needed.

Mr. Cant

Returning to invisible earnings, will my right hon. Friend institute a cost-benefit analysis into the growth and consequences of the Euro-dollar market, to which the City of London contributed too much, some people think at such high cost?

The Prime Minister

With regard to the Euro-dollar market, I remember at Guildhall paying tribute to what the City has done, despite foreign exchange restrictions, in moving quickly into what is an entirely new market in this country, and indeed as it has done since then with certificates of deposit. It has been to the benefit of this country in terms of invisible earnings, but the recent problems of the Euro-dollar, resulting from high interest rates in America, and the outflow from Euro-dollars, I do not think can be laid at the door of our own operators in this market.