HC Deb 08 December 1977 vol 940 cc1635-7
15. Mr. Newton

asked the Chancellor of the Exchequer when he expects to make a further statement on exchange controls.

Mr. Robert Sheldon

When I have some further information to give to the House.

Mr. Newton

Will the Minister accept that some aspects of the existing exchange controls are actively damaging to the efficient management of our existing overseas investment, and that in the long run this cannot be in the interests of the country? Does he agree that it is now time to look at the 25 per cent. surrender rule, which really belongs to a completely different balance of payments and reserves situation?

Mr. Sheldon

There were some matters on which we were able to proceed along the lines suggested by the hon. Gentleman. My right hon. Friend the Chancellor of the Exchequer produced some relaxations in October. These matters are, of course, always open for constant review.

Mr. Robinson

Is my right hon. Friend aware that already a far larger proportion of United Kingdom manufacturing capacity is located outside our own country than is, for example, the case with Japan or our major European competitors? Is he further aware, therefore, that what we need is a bigger industrial manufacturing base here at home in order to create the jobs and the net exports that the economy requires?

Mr. Sheldon

I must, of course, completely agree with my hon. Friend. It was the policy that was pursued over many decades which led to an extension of manufacturing capacity that was very largely in competition with our own and which, to a certain extent at any rate, was responsible for the failure to invest here in this country in some critical years before the war.

Sir G. Howe

Does the Minister appreciate that the maintenance of a rigid exchange control framework does nothing in itself to increase investment in this country? On the contrary, maintaining the exchange rate of the pound at what may be an artificially high level damages the prospects of profitability, damages the prospects of investment and so helps to run the risk of destroying British jobs.

Mr. Sheldon

I am sorry that I cannot be as dogmatic as the right hon. and learned Gentleman. The whole question of exchange control has been of advantage in maintaining a high level of investment in this country compared with what it might otherwise have been. Of course, there is room now and again for examining some of the areas in which certain relaxations may be made. But the general proposition that we have gained in the past as a result of these measures cannot be denied.