HC Deb 26 November 1973 vol 865 cc28-32

Mr. Healey (by Private Notice) asked the Chancellor of the Exchequer if he will make a statement on his weekend meeting with the Finance Ministers of the United States of America, France, Germany and Japan.

The Chancellor of the Exchequer (Mr. Anthony Barber)

The meeting was one on a series at which leading Finance Ministers meet informally. This particular meeting was arranged in September at the time of the Annual Meeting of the International Monetary Fund and the World Bank of Nairobi, and on this occasion our host was M. Giscard d'Estaing. My colleagues from the United States and German were at the meeting and, following the sad news of the death of Mr. Aichi, the Japanese Finance Minister, Japan was represented by the Deputy Finance Finister for International Affairs, Mr. Inamura.

In the course of the weekend's informal discussion we concentrated on the reform of the international monetary system, in preparation for the meeting of the Committee of Twenty in January. We naturally also discussed other matters of common interest, including inflation and the international financial consequences of the oil situation.

Mr. Healey

I am grateful to the Chancellor for his statement. We on this side of the House welcome the fact that the meeting was held and that the Chancellor had something to do with arranging it. We congratulate the right hon. Gentleman on that. There was a great deal to discuss.

Can the right hon. Gentleman elaborate a little on the description that he gave of the agenda? First, can he say whether, as a result of the meeting, he feels that there is any prospect of international agreement to reduce interest rates, which are a major cause of inflation in many countries and at the same time an obstacle to growth?

Secondly, can the right hon. Gentleman say whether he left the meeting with a clearer idea of the effect of the strengthening dollar on sterling? In particular, can the right hon. Gentleman say anything about possible international action to cushion the United Kingdom against the compensation arrangements that he made under the sterling agreement on 6th September?

Thirdly, can the right hon. Gentleman say whether there was any discussion of the circumstances in which countries in serious balance-of-payments difficulties might get international agreement on the introduction of special quotas or surcharges on imports?

Fourthly, on the Arab oil problem, can the right hon. Gentleman say whether there was any consensus on the effect of cuts in Arab oil production and the increase in the price of oil worldwide? Can the right hon. Gentleman say anything about the purpose and result of Mr. Gordon Richardson's visit to Saudi Arabia?

Mr. Barber

The visit to Saudi Arabia of the Governor of the Bank of England was arranged some months ago.

I am grateful to the right hon. Gentleman for what he said at the outset of his remarks about the meeting that was held at the weekend. I think that it is perhaps as well to say that, usually, Ministers of Finance can exchange views only at bilateral talks or at large meetings surrounded by officials and with a detailed record being kept of the proceedings. The unique advantage of the type of meeting which was held over the weekend at the Chateau d'Artigny, and which was the type of meeting which we have held previously, is that, with only ten people representing five countries involved and no record being kept, there is a degree of informality and frank speaking which is invaluable in getting a better understanding of our common problems and of how best to make progress.

The right hon. Gentleman asked about interest rates. He knows that I have always advocated the utmost international co-operation on this matter.

With regard to the other questions, I hope that the right hon. Gentleman will understand it—I am sure the House will appreciate the reasons—if I say that I am not prepared to give details because the advantages of this type of meeting would be lost if the substance of the discussions were made public.

Mr. Ridley

Did my right hon. Friend suggest to his colleagues that it might be a good policy to ask the oil-rich Arab States to undertake a greater proportion of the burden of supplying aid to the underdeveloped world, so that we can reduce our contribution?

Mr. Barber

I hope that the oil-rich Arab States will take note of my hon. Friend's suggestion.

Mr. Pardoe

Will the right hon. Gentleman confirm that these discussions were, in part, about the possibility of the world turning into a deflation as a result of the oil crisis? In this situation, is the right hon. Gentleman aware that the worst possible advice emanates from the official Opposition Front Bench following the unholy alliance that has emerged between certain of his hon. Friends and the City of London, and will the Chancellor therefore ignore that advice?

Mr. Barber

I hope that Finance Ministers of all the leading countries of the world are conscious of the need to avoid any action that would contribute to worldwide depression.

I was asked about the Opposition Front Bench. The right hon. Member for Leeds, East (Mr. Healey) was very generous in his opening remarks and, although there are one or two observations that I might make, I think that today is not the occasion.

Mr. Edward Taylor

Did the Ministers consider the implications for world trade and currency of the recent movements in the selling price of gold? Can my right hon. Friend say what the effect of that movement will be on Britain?

Mr. Barber

That is a much wider issue on which I should be ready to give an answer if my hon. Friend were to put down a Question. The Private Notice Question asked by the right hon. Member for Leeds, East is concerned with the weekend meeting.

Mr. Freeson

I appreciate that the right hon. Gentleman may not wish to tell the House what conclusions were reached at the meeting, but can he say whether the question of sharing or arranging oil supplies to assist countries such as Holland and others which are suffering from the Arab boycott was discussed by Ministers?

Mr. Barber

As I said at the outset, the primary purpose of the meeting was to discuss the reform of the international monetary system in preparation for the next large meeting of the Committee of Twenty in January. On the matter of oil, what we as Finance Ministers were concerned with were the international financial consequences and implications of the problem.

Mr. Lamont

One problem facing the oil-importing countries is that of finding a currency in which to pay the Arab countries which will appreciate or maintain its value at anything like the rate of the value of the oil left in the ground. Was that matter discussed? Was the suggestion discussed which has been made in The Times—the formation of some sort of investment trust for the Arab countries to invest in American and European industry?

Mr. Barber

On a last point, I have not read that proposal in The Times, but that matter was not discussed. There was a general discussion about the international financial consequences, and I think that I must leave it to my hon. Friend to draw what conclusions he likes.

Mr. Dalyell

As the Governor of the Bank of England does not go to Saudi Arabia without agreement being reached and discussions with the Government, may I ask whether proposals were made for the use of funds from Saudi Arabia and other Arab countries to help third-world countries? Have proposals been put forward or not?

Mr. Barber

As regards our weekend discussions, I do not think that there would be any advantage—indeed, I believe that there would be positive disadvantage—in going further than I have, but it is right to say that the visit to Saudi Arabia of the Governor of the Bank of England was arranged some months ago.

Mr. Biffen

My right hon. Friend said that the circumstances of the meeting of the Finance Ministers enabled exchanges to proceed with a degree of frankness that might not otherwise be the case. Can he reassure the House that he took the opportunity to point out the central rôle in the Government's economic strategy played by floating exchange rates and that we shall not be deflected from such affection for this form of exchange rates, notwithstanding any theoretical blueprint for economic and monetary union with the Community?

Mr. Barber

I think that my colleagues at this meeting know what is the policy of Her Majesty's Government.

Mr. Healey

While recognising that this meeting was an informal exchange between a small number of Ministers and advisers, making it impossible for the Chancellor to give us much more information about what precisely transpired, may I ask why, if the meeting were fixed in September, there was such discretion and in the United States secrecy—indeed a desire to mislead—about the fact that it was taking place in France at that time? Can the Chancellor tell us whether a date has been fixed for the next meeting?

Mr. Barber

If these meetings are to have their maximum benefit I believe it is right that, as has happened previously, they should not be announced in advance. As to the future, I expect that we shall be meeting again from time to time.