HC Deb 13 May 1969 vol 783 cc1215-8
Q3. Mr. John Smith

asked the Prime Minister whether he is satisfied with the allocation of Ministerial responsibility for countering speculation by United Kingdom residents in foreign currency; and if he will make a statement.

Q5. Sir F. Bennett

asked the Prime Minister if he will appoint a Minister with special responsibilities for the prevention of currency speculation by United Kingdom citizens or institutions.

The Prime Minister

I have no plans to alter the existing arrangements.

Mr. Smith

If the Prime Minister is satisfied, and well he may be since Treasury Ministers, questioned in this House, over the past five months have failed to find a single instance of speculation in foreign currency by United Kingdom residents, will he please act responsibly and not continue hinting and saying that such speculation can or does take place?

The Prime Minister

The position has always been clear in this respect, and has been made clear by my right hon. and hon. Friends and myself. British residents are not free to speculate in the sense that there has been this speculation in recent months. They can, of course, hedge their positions in relation to leads and lags, and have done so over many years and under many Governments. What I referred to—and what may have led to the Questions being tabled—in my statement following the fantastic events of last December in the City of London was not speculation undertaken by British residents. But every city editor's report on that speculation and the full investigation done by "Insight" of the Sunday Times made it clear that that speculation was sparked off by a lot of utterly stupid rumours from the City of London, particularly from the Stock Exchange. The thorough investigation by the Sunday Times found that there was no better origin for this rumour than the fact that I had a sore throat at Question Time, which is the right of every Englishman in December.

Sir F. Bennett

The right hon. Gentleman has once again diverted attention from what he said in November to what he said or did in December. My hon. Friend's Question and mine refer to what the Prime Minister said in November, when he condemned United Kingdom speculators in foreign currency. Will the Prime Minister now make it clear that when he made that condemnation all he was talking about were the legitimate activities of those engaged in legitimate international trading operations who do not choose to believe one word of what the Prime Minister or any of his colleagues say about the future of sterling?

The Prime Minister

The hon. Gentleman will recall that he and I have had considerable correspondence on this question, because owing to illness he was not able to ask in the House a Question which he had had on the Order Paper for some months. I fully dealt with that point then, and again this afternoon. Individual British residents are free, within the limits I stated—the leads and lags situation—to speculate, and many of them have done so. I should not say in every case, as the hon. Gentleman does, that it is a legitimate trading interest. What I referred to in November and December was the unpatriotic action of people in this country selling sterling short, with the alarmist rumours which they spread abroad, rumours which it was clear in the December case had no basis whatsoever in fact.

Mr. Cant

While one would accept that leading, lagging and hedging by international corporations is a sort of patriotic duty on behalf of their shareholders, will my right hon. Friend negotiate with the central bankers of Europe to prevent commercial banks offering credit to their nationals to speculate against sterling in crises of this sort?

The Prime Minister

This is one of the many aspects of inter-bank co-operation to which my hon. Friend the Financial Secretary referred in answer to a Question earlier this afternoon, and the success of this was amply demonstrated by the central bankers at Basle this weekend. There has been a tremendous amount of unwarrantable speculation, not in Britain, not against sterling necessarily, but, for example, over the last weekend in the mark. This is beyond the power of anybody to contradict, and what the central bankers have done is to make very clear their reaction against this unwarrantable and damaging speculation.

Sir F. Bennett

Not by the United Kingdom.

Mr. Hordern

As it seems likely that the International Monetary Fund will be responsible for our obligations, will the Prime Minister agree to appoint a Minister directly responsible to that organisation?

The Prime Minister

My right hon. Friend the Chancellor of the Exchequer is responsible within the Government and to this House for the conduct of all British negotiations and other transactions with the International Monetary Fund. I have nothing to add to what my hon. Friend the Financial Secretary said this afternoon. When my right hon. Friend is in a position to make a statement, he will certainly do so. Meanwhile, I advise some of my hon. Friends not to get unnecessarily alarmed at the prospects, because I assure them that a great deal of the speculation—and here I refer not to financial speculation but to philosophical speculation—on this matter is entirely without foundation.

Mr. Dickens

Given that my right hon. Friend was correct in December last, does he now agree that steps should be taken to prevent short-term capital deposits in the City of London attracted here by high rates of interest and subsequent early withdrawal?

The Prime Minister

I do not think that that was the problem in December. The trouble is that all of us have underestimated the extent to which speculation is a force in the world. I am quoting some wise words of the right hon. Member for Barnet (Mr. Maudling) in his comments on the position last November when he was broadcasting on this question. It would be impossible, and indeed, in my view, wrong, to seek to impose any limit, even if one could do it, on the alarmist rumours and messages which some people in this country like to send abroad at moments of difficulty for this country. The real answer is that they should be more responsible in their statements and check their facts. Admitting that my sore throat was a serious problem, it did not justify a run on sterling.

Mr. Iain Macleod

Referring to the Prime Minister's answer to my hon. Friend the Member for Horsham (Mr. Hordern), will the right hon. Gentleman recognise that the anxieties expressed earlier from both sides of the House centre round the fact that if we are to wait until a letter of intent is published it will be too late for the collective wisdom of the House to impress itself on the Government? That is the point which was pressed from both sides of the House on the Financial Secretary this afternoon.

The Prime Minister

The right hon. Gentleman should at least welcome the fact that this Government in 1967, and with the promise in respect of this letter of intent, have at any rate published letters of intent. That was not done by the right hon. Gentleman's Government at the time of Suez, when money was borrowed because of the Suez operation, or on subsequent occasions. Surely the right hon. Gentleman does not expect us to publish the letter before it has been signed?

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