HC Deb 28 March 1972 vol 834 cc221-2
17. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer if he will make a statement on the progress of discussions with the International Monetary Fund regarding the repayment of United Kingdom indebtedness incurred between October, 1964, and June, 1970, due on 20th June, 1972.

Mr. Higgins

The discussions are at a preliminary stage. There is nothing to report yet. As my right hon. Friend said in his Budget Statement, he hopes a solution will soon be found.

Mr. Bruce-Gardyne

I am grateful for that reply, as far as it goes. Is not the Bank of England somewhat to blame for having got us into this pickle by replacing the gold squandered by the last Government in their fatuous attempts to defend an out-dated exchange rate with virtually worthless dollars? Has my hon. Friend noted the report in today's Financial Times that the United States Treasury is thinking of selling gold from its own stocks on the free market? Will the Government make it clear to the United States Treasury that that would be quite unacceptable so long as it is declining to transfer gold in payment for dollars due.

Mr. Higgins

On the first part of my hon. Friend's supplementary question, we clearly must take responsibility for the general management of these affairs.

The second part of the question concerns complicated issues, and I do not wish to add more to what I said in my initial answer.

Mr. Douglas

Does the Minister agree that it would be injudicious for Her Majesty's Government to embark on discussions in the international monetary sphere which look like taking the posture of being anti-American at the present time?

Mr. Higgins

In all these matters it is important to work on a co-operative basis. The speech made by Secretary Connally on 15th March indicates that there is reason to hope that a solution to the problem will be found.

Mr. Fletcher-Cooke

Will my hon. Friend explain in simple terms why it is that if a debtor offers his debt at the right time and place in the currency arranged in the original contract and it is not accepted that does not make him quit of further obligation?

Mr. Higgins

I am afraid that the simpler the explanation the longer it tends to become. I hesitate to try to do it at Question Time. There are complications in these matters. The question of which currency is used is very important. A number of parties are involved: the United States, because the dollar is not convertible, the United Kingdom as the fund's debtor, and other currencies are involved in the situation as they are at present in a position to benefit from the fund.

Mr. Roy Jenkins

Will the hon. Gentleman confirm that if the United States were to make a drawing from the fund—which would be the normal practice for a country which had incurred heavy deficits if the dollar is not treated as separate from all other currencies—it would break the log-jam and enable the payment, as well as a number of other transactions, to take place without difficulty?

Mr. Higgins

I hesitate to give a specific answer to that question. I will look into the matter and write to the right hon. Gentleman.