HC Deb 25 April 1972 vol 835 cc1249-50
3. Mr. Dalyell

asked the Chancellor of the Exchequer if he will make a statement on the latest balance of payments situation.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin)

The underlying balance of payments situation remains sound and I have little to add to what my right hon. Friend said in his Budget Statement about future prospects. The March trade figures were distorted by the effects of the coal strike and certain other special factors.

Mr. Dalyell

Have the effects of the coal strike been quantified?

Mr. Jenkin

It is too soon to make a quantitative estimate, but there is no doubt that the strike had a considerable distorting effect.

Mr. Bruce-Gardyne

Does my hon. Friend agree that one aspect of the balance of payments situation which might cause concern is the question of repayment of the Labour Government's debts due to the IMF this summer? May we have an assurance that the Government will not yield to American pressure further to dilute the reserves with unconvertible dollars and that, if need be, we will prefer to defer payment than to yield to such pressure?

Mr. Jenkin

I appreciate the point which my hon. Friend makes but I do not think I can go further than my right hon. Friend in his Budget Statement.

Mr. Cant

Is the hon. Gentleman aware that there will be a serious deterioration in the balance of payments position this year as a consequence of our pricing ourselves out of the market because the Government are stupidly insisting on adopting policies which are causing prices to rise—policies on rents and rates, the premature introduction of VAT, and so on?

Mr. Jenkin

The hon. Gentleman is absolutely right—[Interruption.]—in that there has been some rise in our price competitiveness over the last two years. If this goes on at a rapid rate it must, of course, have an effect on our export performance. However, I am entitled to point out that we have had considerable success in slowing down the rate of internal price rises. They are now rising at half the rate they were a year ago. Furthermore, we have made substantial cuts in taxation and these have helped to hold down prices. We now look for some response from the trade unions.