HC Deb 27 January 1977 vol 924 cc1678-80
2. Mr. Crawford

asked the Chancellor of the Exchequer, when he next proposes to meet the Governor of the Bank of England.

11. Mr. Hoyle

asked the Chancellor of the Exchequer when he next plans to see the Governor of the Bank of England.

Mr. Healey

I maintain close contact with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.

Mr. Crawford

Will the Chancellor reprimand the Governor of the Bank of England for the remarks he made recently at the dinner in Scotland of the Institute of Bankers in which he was critical of the Government's devolution policies? Can he confirm that the Governor of the Bank of England should maintain a nonpolitical line?

Mr. Healey

I have the impression that a good deal of the criticism of the Government's devolution policies has been expressed in recent days by the hon. Member himself. I do not believe that the Governor said anything at the dinner of the Institute of Bankers in Scotland which I would regard as inconsistent with his relationship with me.

Mr. Hoyle

When my right hon. Friend is next having discussions with the Governor of the Bank of England will he perhaps discuss with him a policy by which a percentage of bank deposit funds and insurance and pension funds might be secured to get enough money behind the National Enterprise Board in order to make it the positive instrument for the reform of and investment in British industry that we promised the nation at our last election campaign?

Mr. Healey

I shall take special care to draw my hon. Friend's views to the attention of the Governor of the Bank of England the next time I meet him.

Mr. Baker

When the right hon. Gentleman next meets the Government, will he clarify with him the position of future inflows of official rather than private funds? Do these official funds also qualify for and benefit from the arrangements announced for the safety net some weeks ago? If so, there is an enormous continuing obligation under the safety net for any official funds that come into the country.

Mr. Healey

I made clear in my statement about the safety net that it involves an obligation by the other participants to replace by medium-term borrowing any further reduction in official funds from the present level. An increase in official funds would not count for substitution if those official funds were later withdrawn. However, we have done our best to discourage a further inflow of official funds, and that is a matter that we shall pursue through diplomatic channels since it is a matter for foreign Governments.

Mr. David Howell

When the Chancellor meets the Governor will he clarify one point concerning the Government's many borrowing activities? In December the Chancellor spoke of a $500 million facility from the United States Treasury and the Federal Reserve which he said was entirely new. Subsequently the Financial Secretary said that it was not entirely new, that $250 million was part of the $3 billion borrowed back in the summer as a standby facility. Recently we have seen another Press release saying that this $500 million is now to be a standby and not a swap. May we know who is right in all this saga, because I am sure that the Chancellor would not wish to mislead the House about the nature of these borrowing facilities?

Mr. Healey

I would not want the hon. Gentleman to confuse himself on this matter, although I do not have great confidence that I can secure his understanding of it. There is no inconsistency between what I said and what my right hon. Friend said. The standby facility which was negotiated in June terminated and was fully repaid on 9th December last year. A further credit of $500 million, which the United States Administration and the Federal Reserve Board made available at the time of the IMF borrowing, has now been converted into a standby. That is because, in the light of the strengthing of sterling in recent weeks and the negotiation of the $1.5 billion new borrowing, we certainly do not need to draw the additional United States credit at this time, and it is not certain that we shall wish to do so during the period of its currency.