HC Deb 07 June 1976 vol 912 cc912-27
Sir G. Howe (by Private Notice)

asked the Chancellor of the Exchequer what steps the Government propose to take in the light of the decline in the value of the £ sterling; and if he will make a statement.

The Chancellor of the Exchequer (Mr. Denis Healey)

In the first half of May sterling was fairly steady at a little over $1.80 until a firming of United States interest rates caused the dollar to improve and, in common with most other currencies, sterling fell back a little—to around $1.78. Towards the end of the month there was a slight further fall in a thin market. Last week saw more sustained selling pressure which forced sterling down to $1.71 on Wednesday, and on Thursday the rate fluctuated between $1.70 and $1.73. As the House knows the pound was more stable on Friday with a two-way market beginning to emerge. The rate was up on the day and closed at $1.717. Today the rate improved again, opening at $1.721 and reaching $1.7246 by 3 o'clock.

There is no economic justification for the fall which has taken place in recent weeks. It goes beyond anything required to make good past differences in rates of inflation. This has been recognised by Finance Ministers and central bankers abroad and increasingly, I believe, by the public at home. Those who have sold sterling have done so in disregard of the basic facts of our economic position.

The economy is developing broadly on the lines I foresaw at the time of the Budget. There are now clear signs of an upturn in industrial production and a slowing down in the growth of unemployment. The rate of recovery in GDP since the third quarter of last year may have been slightly above the annual rate of 4 per cent. foreseen in the Budget forecasts.

The balance of payments on current account has been stronger than we expected. In the three months to April the deficit averaged only £52 million a month, compared with £140 million a month for 1975 as a whole. Export volumes in the last few months have grown a good deal faster than the 10 per cent. annual rate I foresaw at the time of the Budget. Total import volumes have grown relatively little despite substantial imports of industrial raw materials and semi-manufactures.

North Sea oil is likely to cut our net imports of fuel by some £1 billion this year and this saving will grow steadily in the years ahead.

In the first half of 1975 prices were rising at well over 30 per cent. per annum. We have already more than halved that rate. The new pay limit agreed between Ministers and the TUC received greater support in the TUC General Council than the £6 limit. I am confident that the same will be true in the Special Congress, and that the new limit will be as successfully implemented during the next pay round as the £6 limit this year. This means we can look forward to a further halving of the rate of inflation in 1977 and to lower wage settlements than in any other industrial country.

This is not a situation in which any responsible British Government could allow themselves to be pushed into hasty and ill-considered changes of policy on public expenditure. Our spending plans were set out in the White Paper on Public Expenditure published in February. There is no economic case for changing the plans for the current year, but we are determined to ensure that the planned total of expenditure is not exceeded. The system of cash limits, and the improved financial information system for Government expenditure will play an important part in this, as will the new arrangements for monitoring the expenditure of local authorities. These have given us early warning that their estimates for the current year exceed the White Paper programmes. But, in agreement with the Consultative Council on Local Government Finance, we have made it clear that they must bring these estimates within the White Paper figures.

New arrangements have been introduced for monitoring claims on the contingency reserve, which of course is included in the White Paper totals for each year. The contingency reserve for 1976–77 was set in January at a level which is £875 million at current prices. By the end of April over £400 million of this had been committed. We shall not allow the contingency reserve to be exceeded. This means that further claims will have to be met within the balance outstanding or by offsetting reductions.

We are now reviewing expenditure programmes for future years in the normal way through the public expenditure survey and work on this is well advanced. I have already made it clear that we shall adjust these programmes in good time as required to meet the prior claims of exports and investment in the light of the expected pace of recovery.

I said in my Budget Speech that, while allowing for the financial needs of industry, I shall not permit the growth of the money supply once again to stimulate inflation. We have been conspicuously successful in controlling the money supply, in marked contrast with our predecessors. I am ready to take further action in the fiscal field as well as the monetary one, if that should prove necessary.

In the monetary field the Governor asked the banks last December to ensure that the needs of manufacturing industry for finance or facilities are fully met and that any expansion of their business is directed to manufacturing industry for the expansion of exports, import saving, industrial investment and working capital. The Governor intends to ensure that this guidance continues to be strictly adhered to.

But the most important objective now is to continue financing a large part of the borrowing requirement by sales of gilts outside the banking system. To this end the Treasury are today announcing the issue of £800 million of a new long-dated stock—13¼ per cent. Exchequer Stock 1996 which yields over 14 per cent. to redemption.

These are our policies. No one who compares our situation today with what it was a year ago can doubt that they have contributed to a massive strengthening of our economy.

Recent pressures in the exchange markets carried sterling to a level which cannot be justified. This is not the view only of the British Government. It is the view which has been expressed this afternoon by the Central Banks of the leading trading nations with whose agreement the Governor of the Bank of England has just issued the following statement: Financial authorities from the Group of Ten Countries and Switzerland, together with the Bank for International Settlements, noting that the recent fall in the value of sterling under exchange market pressure had led to disorderly market conditions which carried sterling to an unjustified level, today agreed, in the common interest of the stability and efficient functioning of the international monetary system, to make available to the Bank of England a standby credit in excess of $5 billion. This is a short-term facility made up of $2 billion from the US authorities and of $3.3 billion from Central Banks in other Group of Ten Countries and Switzerland and from the Bank for international Settlements. My hope and expectation is that any drawing on these funds will be only temporary. But if any drawing on them could not otherwise be paid on the due date, Her Majesty's Government would be prepared to seek further drawing from the International Monetary Fund.

I hope the whole House will welcome this as an impressive demonstration of international banking co-operation in support of sterling against unjustified market pressure.

Sir G. Howe

The whole House will be grateful to the Chancellor for his long and important statement, but it will be deeply concerned that the only significant announcements that he has made will involve substantial additions to the Government's borrowing requirements both at home and overseas.

Will not the right hon. Gentleman recognise that the reason for our troubles in the past two weeks, and indeed the past two years, is not so much lack of confidence in purely economic factors as a total lack of confidence in the political management of our economy under this Government? Does not the experience of the past two weeks make it perfectly plain that, although restraint on pay bargaining is vital, public financial rectitude, for which we still look in vain, is even more important?

The Chancellor referred to the Government's public expenditure White Paper published earlier in the year. Does he not realise the extent to which opinion inside and outside this country continues to be disturbed by the fact that a large part of his party failed to support that White Paper and continues to behave as though it did not exist?

When will the Chancellor announce clear monetary targets? Above all, when will public spending and borrowing be cut instead of increased?

Are the Government prevented from taking these decisions, which are essential in the nation's interests, by some kind of secret agreement with the TUC? What does the right hon. Gentleman mean by his repeated willingness to take action in the fiscal field? Is he prepared if necessary to offset the fiscal part of that bargain?

Does not the right hon. Gentleman recognise that the country is crying out for a Government who will take the necessary difficult decisions, and take decisions not at the behest of a small part of his own party but in the interests of the nation as a whole?

Mr. Healey

I am sorry that once again the right hon. and learned Gentleman has allowed party passion to override the patriotism which we expect to characterise the Opposition Front Bench. The sour and sullen reception he has given to this massive international endorsement of sterling is in line with the sour and sullen reception he gave to the pay agreement the other day. It makes a very shabby contrast with the views expressed by the banking community in Britain and the world about the state of sterling at the present time. If the views the right hon. and learned Gentleman expressed were shared by the international banking community, it would never have made the statement which I have read out, nor would it have offered a standby credit of this nature to the United Kingdom. I think that the House and the country will form a proper judgment of the patriotism and common sense of the Conservative Party in the light of what the right hon. and learned Gentleman has just said.

Mr. Pardoe

Will the Chancellor accept that all who are not totally overcome by party political passion will welcome his determination not to indulge in panic and immediate cuts of public expenditure? Does he recognise that such cuts would be totally phoney and could not be implemented by any Government? However, will the right hon. Gentleman turn his attention to his remark that there is no economic justification for the present level of sterling, the natural conclusion from which must be that there is a political justification, that the world is looking at our ability to govern ourselves, and that a simple change of Government would do nothing to change the world's opinion of that?

Mr. Healey

I am grateful to the hon. Gentleman for expressing the views of the British people on this matter. As for his comments about political and economic justification, as has been made clear by many leading British merchant bankers, such as Mr. Mackworth Young of Morgan Grenfell, and all the central bankers whose views I have quoted, recent market movements and pressures on sterling have not been justified by economic facts. That is often the case. The hon. Gentleman may recall that in March last year, when our inflation appeared to be out of control, sterling went up against the dollar. It is not the case that, as the right hon. and learned Gentleman the Shadow Chancellor appears to believe, the market is always tight in these matters. It was not right then, and it is not right now. It is the duty of central bankers and monetary authorities to intervene when the market gets it wrong, to try to set it back on the right path. I hope that when they do so they will on one occasion have support from the party whose leaders are on the Opposition Front Bench.

Mr. Horam

Is my right hon. Friend aware that there is particularly strong support on this side of the House for the calm way in which he has handled the situation over the past few days? Has he seen the comment of Dr. Emminger, the West German central banker, that this country now has the best opportunity he has seen for 20 years? Does not that underscore the unreality of the remarks of the right hon. and learned Member for Surrey, East (Sir G. Howe), the Tory official spokesman?

Mr. Healey

I am grateful to my hon. Friend. He will also have noticed what Dr. Emminger said about the paramount importance to this country's prospects of the recent pay agreement with the TUC. It makes an interesting contrast with the views expressed by the right hon. And learned Gentleman the other day, that the pay agreement was an onslaught on the British people's standard of living and freedom generated and forced down their throats by ageing, doctrinaire, prejudiced, Socialist trade union leaders. This is a good opportunity for the right hon. and learned Gentleman to apologise for that remark, particularly at a time when Mr. Len Murray is in hospital as a result of his efforts to help the nation's economy.

Sir John Hall

What effect does the Chancellor think the fall in sterling over recent weeks, coupled with the expected rise in commodity prices during the next nine months, is likely to have on the cost of living index? What effect does he think that will have on the Government's timetable for reducing the rate of inflation? Is it not true that at the end of the next 12 months we shall still have inflation running at a rate at least twice that of our industrial competitors?

Mr. Healey

No, Sir. Perhaps I may answer the last point first. I expect inflation to be halved again by the end of 1977. No doubt the hon. Gentleman, who I know studies these matters, will have seen that this is the view of most European central bankers—indeed, all who have commented on the pay policy. On the question of the precise effect of the recent depreciation, broadly speaking, a 4 per cent. fall in the value of sterling adds 1 per cent. to the retail price index within a year, and the bulk of that addition comes through within about six months. For that reason, as I said on the radio the other day, the achievement of an inflation rate of less than 10 per cent. is likely to come rather later than this coming winter unless—[Interruption.] I believe that some Opposition Members have some interest in the future of the British economy. As I say, that is likely to happen unless, as a result of the recent initiative of the Group of Ten Central Banks, we recover some of the recent depreciation, which I believe will be the case.

Mr. Atkinson

Does my hon. Friend recall that it is now nearly four years since the Conservative Government allowed the pound to float downwards on a temporary basis, and that the reason we on this side of the House at that time opposed the free float of the pound was that it would keep domestic lending rates unnecessarily high? Will he now reconsider the situation, in view of our massive unemployment, to get away from a high domestic lending rate, which is now deflationary instead of having the necessary reflationary effects? Will my right hon. Friend even consider introducing a two-tier lending rate in order that we may ensure that industry gets the capital investment that it now needs?

Mr. Healey

With respect to my hon. Friend, I think he has linked together several points which do not necessarily hang together.

On the question of the floating rate, my belief is that the last Conservative Government were right to allow the pound to float and that we are right to allow it to continue to float. Any attempt unilaterally to establish a fixed parity for the pound would be extraordinarily expensive in foreign exchange and would require a very much more rapid return to fiscal balance than I believe my hon. Friend would be prepared to tolerate. If it were not to do so, it would require even higher interest rates than those about which my hon. Friend is complaining. I think the hon. and learned Gentleman the Shadow Chancellor would have done his cause more good if he had referred to the fact which is pointed out in several letters to the Daily Telegraph today, and which is supported by his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), that the insensate increase in the money supply in 1972 and 1973 has been the major cause of inflation in Britain over the last two years.

Mr. Hordern

Does the right hon. Gentleman recognise that countries overseas see very little reason why they should finance a public sector deficit which we are not prepared to finance ourselves, and that until we are prepared to take steps to reduce public expenditure and reduce the increase in the money supply, which is twice the level which obtains in the United States, there will be no return to confidence in the pound?

Mr. Healey

The hon. Gentleman possibly prepared that supplementary before he heard my statement. The first part of the hon. Gentleman's supplementary is totally contradicted by the announcement I made this afternoon about the actual views of the foreign Central Banks in all the major industrial countries in the world. If the hon. Gentleman compares our record on money supply with that of the Government whom he once supported, he will know how immensely superior has been our control of this element in the economy compared with that of the Conservative Party.

Mr. Dalyell

May I congratulate the Chancellor on his package and offer him a helpful suggestion for his public expenditure survey? In the light of UCATT's decision on devolution at Scarborough over the weekend, is it not now time to consider whether expensive paraphernalia such as Assemblies in Edinburgh and Cardiff should be postponed?

Mr. Healey

I do not think that is the case. May I say, with the greatest friendship to my hon. Friend, that I think that anybody who has ever had responsibility for trying to manage the British economy will know that it is not possible to separate economic and monetary components from the political components. I believe, like all my hon. Friends in the present Cabinet, that the Government's policies on devolution are essential if the United Kingdom is to be kept together, and I believe that that is the view of the majority of people in the country.

Mr. Rippon

Will the right hon. Gentleman give an assurance that there are no immediate plans for drawing on the $5,000 million credit?

Mr. Healey

The right hon. and learned Gentleman, who had rather a rough time in the Daily Telegraph this morning for his perfectly accurate remarks about the distasteful business of banking, has asked a question which he knows no Chancellor would ever answer. A very large number of people at this time would dearly like to know how I propose to use this money. I am not going to tell them, so that they may carry the consequences of the actions which they have recently taken against sterling.

Mr. Ashton

Is my right hon. Friend aware that I was a member of a Committee of this House which recently visited the world bankers of Washington, Wall Street, Frankfurt and Amsterdam, that we spoke to the world's bankers at the highest level and that all of them were absolutely certain that the pound was very much under-valued and that the crisis was temporary? Is my right hon. Friend further aware that all of them were quick to point out that the rate of wage inflation in America next year was expected to be 8 to 10 per cent., and in Amsterdam and Frankfurt it was expected to be 6 to 7 per cent., both of which represent a higher rate of wage inflation than ours?

Mr. Healey

Yes, I am aware of that, and I am grateful to my hon. Friend. If hon. Members opposite would like to continue their economic education, I should be prepared to give a list of statements by foreign bankers to this effect.

Mr. Ridley

Is the Chancellor aware that since he announced his deal with the unions, which is virtually in the bag, the pound has moved down by 15 cents against the dollar? Has he not yet drawn the conclusion that that is not the problem and that the problem is the excessive and profligate expenditure of the Government?

Mr. Healey

I think the simple answer to the rather threadbare rhetoric of the hon. Gentleman is "No, Sir."

Mr. Molloy

Is my right hon. Friend aware that statements in the Financial Times Industrial Forecast Survey and Model International support him absolutely in the statement which he made today about the erroneous devaluation of the pound? Is he further aware that the improvement in our situation has been achieved not so much by politicians as by the hard work of ordinary British people who have sacrificed so much? The real contribution from the Shadow Chancellor this afternoon has been to confirm what British trade union leaders say, that a real disaster to Great Britain would be a return of a Conservative Government.

Mr. Healey

I thank my hon. Friend, and I agree with everything he said.

Mr. Reid

The right hon. Gentleman laid great stress on the billion pounds to be expected from North Sea oil. Further to the question of the hon. Member for West Lothian (Mr. Dalyell), will the right hon. Gentleman concede that Scottish resources are largely underpinning the United Kingdom economy?

Mr. Healey

My feeling is that that is not the view of the inhabitants of the Shetland Islands.

Mr. Teddy Taylor

Will the right hon. Gentleman tell me why the clever and wealthy foreign bankers, who take the view that sterling is greatly undervalued, are not buying pounds instead of lending us more money? Is the right hon. Gentleman not rather ashamed that the only positive proposals in his package create more loans and debts for this country which will have a severe effect on the living standards of our children and grandchildren?

Mr. Healey

No debt is involved. I expect over the period as a whole that there will be no net spending from this facility.

Mr. Cryer

Does my right hon. Friend expect that there may well be a need to curb speculation? Does he agree that he has powers to do this under the Exchange Control Act 1947? A Labour Government cannot be subject to the whims of faceless speculators in sterling. Would my right hon. Friend agree that the attitude of the Opposition is well epitomised by a remark of a former Governor of the Bank of England in 1956 when he said, "Although this is anti-British and derogatory to sterling, it makes sense to me"? Is not that the watchword now of the Opposition?

Mr. Healey

I agree with the spirit of what my hon. Friend said, but, if I may correct him, the person who said that it was derogatory to sterling but made good sense to him was, in fact, a member of the Court of the Bank of England and a leading international commercial genius, perhaps I could call him—the late Mr. Keswick.

On the question of speculation, the exchange control operates in such a way that resident holders of sterling are not able to speculate against sterling. If we look at the sources of the recent pressure, we find that about a quarter came from non-resident holders of sterling and that about another quarter came from leads and lags—and the volume of commercial transactions is so great that a change of one day in the date of payment in a massive transaction can lead to a loss of $275 million of the reserves. That is another major factor. The third factor was leads and lags and covering forward commitments by tour operators on invisibles. Another factor of perhaps 15 per cent. was represented by the current account deficit. Speculation, in the sense in which my hon. Friend put his point, in my view played only a minor part in recent events.

Mr. John Davies

Will the right hon. Gentleman accept that the major anxiety in the international market centres on borrowing requirements? The problem, as the right hon. Gentleman must realise, is that when, as must be expected, industry picks up in its demand for finance, the competition between this immense borrowing requirement and industrial needs will provoke problems. What steps will he take to meet that serious future situation?

Mr. Healey

Of course I am aware that this is a problem, and I referred in my statement to the fact that we shall have to review next year's spending programmes in the light of the demands of exports and investment in terms of the expected pace of recovery when we come to undertake this exercise. I accept that this is a problem, but I do not think that there is a simple rule-of-thumb answer.

The right hon. and learned Member for Surrey, East asked whether we could fix a target rate for any increase in money supply, as has happened in the United States. I should like to quote what was said by Chairman Burns to a Congressional Committee the other day, when speaking of the difficulty of even defining what is happening to money supply: Let me go to the month of February. We published an increase of 6.5 per cent. It might have been, using a different seasonal correction, zero and might have been 10.6 per cent. I ask Opposition Members—who, like me, are concerned about the monetary element in our affairs—to recognise that there is no simple rule-of-thumb answer to this problem.

Dr. M. S. Miller

Notwithstanding the sometimes fortuitous and incomprehensible advantages which can accrue to this country, is it not time the Government considered the position of sterling as a reserve currency because of the difficulties into which this country falls, and does not the present situation lead to a dis- advantageous position for the United Kingdom?

Mr. Healey

I assure my hon. Friend that all relevant factors are under continual consideration by the present Government.

Mr. Ian Lloyd

Since the right hon. Gentleman will doubtless wish to exonerate the major trading companies of this country from any charge of speculation, let alone lack of patriotism, what advice will he give them in regard to covering forward exchange requirements?

Mr. Healey

They would be wise to reflect on the importance of my announcement this afternoon. I have no doubt that they will come to a different conclusion in regard to the future course of sterling from that which was produced out of a hat by the right hon. and learned Member for Surrey, East—who is still, I believe, the Shadow Chancellor of the Exchequer.

Mr. Skinner

Does the Chancellor appreciate that his argument about leads and lags would have sense if the pound had fluctuated up and down, but the fact is that it has all been one way—downwards? Is not the real truth of the matter that the speculators who have assisted in flooring the pound are by and large the self-same people to whom we are now going cap-in-hand to borrow money, with the high interest rates and strings that are attached?

Mr. Healey

With respect to my hon. Friend, I do not believe that demonology is a very good guide to economic management. What is certain is that, whoever contributed to the recent pressures on the pound, it was not the Central Banks, which are now contributing the standby facility to the United Kingdom.

Mr. Dykes

In view of the right hon. Gentleman's "no panic" exhortation last week, no doubt confidently expecting that sterling will go up again, if the reverse situation applies, either in the short term or later, will he consider the pros and cons of the idea of having a two-tier market for sterling, one financial and the other commercial?

Mr. Healey

I have considered this matter carefully over the past two years, but I have come to the conclusion, as have previous Governments, that in the circumstances of the British economy it would be difficulty to operate such a system without leakages, which would rob us of all its advantages.

Mr. Watkinson

Will my right hon. Friend enlarge further on the position of sterling balances and say in detail which countries have been selling sterling balances and whether there has been pressure from a certain African country? Will he further consider the question of funding those balances?

Mr. Healey

As I said earlier, I consider all questions relating to the reserve rôle of sterling, and I shall make up my mind in the light of the consideration I am able to give. I can assure my hon. Friend that major depositors have not been the source of pressure in recent months.

Mr. Tapsell

Is the right hon. Gentleman aware that I, for one, for whatever it may be worth, share his view that on any objective analysis sterling at present is considerably undervalued? I have a little commercial experience in these matters. Is he also prepared to accept that unfortunately this market is no longer purely objective but has been overtaken by emotional factors? Will he accept from me that it will not be sufficient for him today just to announce these large and valuable supports from the Central Banks unless that announcement is rapidly followed by other measures?

Mr. Healey

I am grateful to the hon. Gentleman for the reasonable way in which he put his supplementary question. It has been universally recognised by those close to the markets, particularly last week, that markets were influenced more by emotional factors than by rational considerations. That view was widely expressed by some leading private bankers in the City of London. I believe that this demonstration of support for sterling by the world's Central Banks will restore a more rational balance to the calculations of the market. I agree that there are areas of policy which will require most careful consideration in the coming months, and I indicated in my statement what they were.

Mr. Hoyle

Does my right hon. Friend agree that now is the time to consider an alternative economic strategy—namely, the introduction of import deposits?

Mr. Healey

I cannot agree, and I do not believe that import deposits would make any contribution to our underlying problems. I believe that our short-term problems have been enormously alleviated by the announcement I have made this afternoon.

Mr. Alexander Fletcher

Will the right hon. Gentleman confirm that he has given objective consideration to all the ramifications of the present situation by saying what estimates he has of the extent by which sterling would improve if there were immediate cuts in public expenditure?

Mr. Healey

No, Sir.

Mr. Lee

Is it not a fact that every time the Government undertake a major borrowing engagement it has a retrograde effect in terms of domestic policy? What strings are attached to the borrowing? Is it not time that overseas assets were bidded into the reserves, as some of us have recommended for a long time?

Mr. Healey

I do not believe that the acquisition by the Government of portfolio assets would assist us in this situation. As to the other point raised by my hon. Friend, there are no strings to this money at all.

Mr. Michael Morris

As local government is reported to be overspent by up to £500 million in just two months, what practical action does the Chancellor propose to take to restrict the expenditure of those authorities which are overspending?

Mr. Healey

Local government is not overspending. It was overspending in 1973 by 9 per cent., compared with the limits set by the Conservative Government at the time. But we now have an early warning system, which is enabling us to discover two months after the beginning of the financial year that estimates prepared for current expenditure by local authorities may exceed the limits which they have agreed to observe by about 4 per cent. The Association of Municipal Authorities, in the Consultative Council set up by the Government, has already agreed to seek to bring these estimates back into line. If local authorities fail to take such action, they will be aware of the consequences on future programmes and of the potential consequences in regard to relations between local and central Government while the Layfield Report is being considered.

Several hon. Membersrose

Mr. Speaker

Order. I shall allow two more questions. There is a lot of other business ahead of us.

Mr. Kilroy-Silk

Am I right in assuming that the issue of new Government stock will have a deflationary effect on the economy? If so, can my right hon. Friend say by how much he would expect employment to decrease?

Mr. Healey

No, Sir. My hon. Friend is wrong. The effect of the issue of the new stock is to enable us to finance a substantial borrowing requirement this year without printing money outside the banking system. Those who wish us to maintain the current level of public expenditure, more than anybody else, have an interest in seeing that we are able to do this.

Mr. Marten

Can the right hon. Gentleman now answer the question put my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor), namely, if sterling is so under-valued in the view of these bankers, why are they not buying it? Secondly, if it is under-valued, as he says, what in his view is the correct value of sterling?

Mr. Healey

I apologise for laughing, Mr. Speaker. The hon. Gentleman's innocence was, I guess, a little disingenuous. To deal with his first question, we shall have to see how the bankers do react—[Laughter.] Before hon. Gentlemen burst into sniggers may I advise them to wait and see what happens in the next few days. As for the hon. Gentleman's question about the right rate for sterling, if I were to give any indication of that I should be making life very much easier for those very people who have got us into the present difficulty. I do not intend to do so.