Standby Credit

HC Deb 14 October 1976 vol 917 cc606-9

3. Mr. Wyn Roberts

asked the Chancellor of the Exchequer when the standby credit arrangements with foreign bankers come to an end.

Mr. Healey

The standby credit facility expires on 9th December 1976.

Mr. Roberts

As what has been spent of the June loan has to be paid on 9th December, and as the IMF loan is not available until later that month, what steps is the Chancellor taking to ensure that there is not another run on the pound during the intervening period? Will he confirm or deny that he is seeking yet another loan from the EEC countries?

Mr. Healey

On the first question, we shall, of course, repay out of reserves if the IMF borrowing is not fully negotiated by 9th December, but it is far too early to take the view that it will not be negotiated by then. We cannot be sure. As the House will know, the Government are supporting public authority borrowing. The Central Electricity Generating Board is at present negotiating a loan of £500 million from the Eurocurrency markets. I do not expect any pressure on the pound if it were necessary to call on the reserves to repay on 9th December a few days before the IMF borrowing came through.

On the second question, that is not the case.

Mr. Crawford

May I inform the Chancellor very clearly that he will not for much longer be able to rely on Scottish oil revenues to fund any borrowing? Is he aware that the use to which those revenues are put will surely be determined soon by a sovereign Scottish Parliament and not by this House?

Mr. Healey

I am well aware that the inhabitants of the Shetland Isles have some misgivings about the claim made by the hon. Gentleman and some of his friends about the ownership of North Sea oil. However, I assure the hon. Gentleman that the North Sea oil belongs, and will continue to belong, to the people of the United Kingdom.

Mr. Ronald Atkins

Would not our credit be improved and the pound strengthened if we were able to conclude a reasonable offset agreement with Germany on the ever-increasing deficit in the balance of payments arising from keeping the British Army of the Rhine?

Mr. Healey

Of course, it is necessary for us to conclude a satisfactory offset agreement, and we have every intention of doing so.

Mr. Nott

Will the Chancellor confirm that the figure of $1.6 billion which is being suggested in the Press and elsewhere as being the amount of the standby credit that has so far been spent is approximately the figure involved? Will he comment—though not in detail—on what he will be doing in foreign exchange markets? The pound was down this morning below $1.64 to $1.63½ at one time, and the Bank of England has clearly been intervening in the market again. What is the Government's policy? Do they intend to continue supporting sterling, to let it float or to borrow more when our existing credit is exhausted? There is total confusion everywhere about what is going on.

Mr. Healey

The Government's policy on both questions is exactly the same as the policy of the Government of which the hon. Gentleman was a member and a Treasury Minister, and on which he has since turned his back. First, it is that we shall publish reserve figures monthly and figures for drawings at quarterly intervals. The figures will therefore be published in December. Secondly, we shall not comment on intervention policy any more than the hon. Gentleman did when he was a Treasury Minister. He really should not carry his disgust with his own record in the past so far as to suggest that the present Government should overthrow conventions regarding the publication of policies which have stood all Governments in good stead since the war.

Sir G. Howe

Instead of quite unjustly abusing my hon. Friend, will the Chancellor have the courtesy to tell the House what the nation appears to know—namely, whether or not the amount drawn on the standby credit by now is $1.6 billion? The figures were published by the Treasury in September. May we please have an up-to-date figure in the House?

Mr. Healey

Yes, Sir. The right hon. and learned Gentleman can have an up-to-date figure at the time when it is conventional to publish it—namely, in December. We have no intention of changing precedents set by previous Governments in this regard.

Mr. Skinner

Does my right hon. Friend fully appreciate that one of the reasons why he is having this Tweedledum and Tweedledee argument with the Opposition is largely that he chose to follow, not exactly but partially, the advice of the Opposition in policies that have been pursued generally throughout the last two years, particularly with regard to the Treasury? Will he not now understand that if he is to get out of this terrible impasse he must consider adopting the policies that have been advocated not merely by those of my hon. Friends in the Tribune Group but by an increasing number of people inside the Parliamentary Labour Party and in the Labour movement generally?

Mr. Healey

I am not quite clear whether my hon. Friend is posing as Alice or as the monstrous crow in the particular fable to which he refers, but it is not my impression, having attended almost all the debates on the economy over the last two and a half years, that the Opposition would share my hon. Friend's view that we have been following their policy.