HC Deb 10 November 1977 vol 938 cc839-41
8. Mr. Ian Stewart

asked the Chancellor of the Exchequer what changes in regulations governing the movement of capital between the United Kingdom and other member States are due in January 1978 in accordance with the terms of the United Kingdom accession to the EEC.

Mr. Healey

Under the terms of the Treaty of Accession, certain capital movements connected with portfolio investment are due to be liberalised on 1st January 1978.

Mr. Stewart

Can the Chancellor confirm that in the Government's view there are no balance of payments constraints on putting residents of the United Kingdom in the same position as residents of other member States of the EEC as regards movement of capital within the Community?

Mr. Healey

As the hon. Gentleman will know, we have been authorised to maintain our restrictions under Article 108 of the Community Treaty, and we are discussing with the Commission the extent to which we want to continue those derogations in the future. In these discussions we shall be guided, like all Governments in the Community, by the need to maintain a proper balance between our national interests and the ésprit communautaire.

Mr. Higgins

Is not it rather extraordinary that when I asked the Chief Secretary on Monday to give an Oral Answer on what our obligations were to the EEC in this matter, he did not know and had to defer before giving a substantive reply? May I put it to the Chancellor that there is a very real danger at present that the exchange rate which is generated as a result of the effects of North Sea oil revenue results in an exchange rate which is, in fact, not one which will enable British export industries to continue to invest and remain profitable? Therefore, would not, a relaxation in accordance with our obligations to the EEC on these lines do something at least to rectify that dilemma?

Mr. Healey

I am assured by my right hon. Friend the Chief Secretary that the hon. Gentleman is mistaken in views he attributed, or did not attribute, to him. I confess that I would not blame any Minister for being unaware, without notice, of our precise obligations, given the fact that, although the Treaty of Rome is some 120 pages long, there are about 1,200 pages of exceptions to it which are being changed all the time.

On the second question raised by the hon. Gentleman, I know that this is a widely held view, but the fact is that freedom from exchange control in Germany, Japan and Switzerland has not prevented those countries from finding that inflows force their exchange rate up more than they might wish and impose strains on their money supply.

Mr. Jay

Is it, then, the Chancellor's view that there is normally a conflict between our national interests and the esprit communautaire?

Mr. Healey

Tempted as I am to explore the implications of my right hon. Friend's question, what I can say is that one naturally hopes that these two guiding lights will always be shining in the same direction. If there is at any time any potential conflect between them, we shall seek to focus the beams on the same point.

Mr. Budgen

Will the Chancellor of the Exchequer explain to the House why he has allowed the TUC to exercise a veto on the relaxation of exchange controls governing the outflow of money from this country to other countries, including countries in the EEC?

Mr. Healey

I can only suppose that the hon. Gentleman believes what he has read in the newspapers. That particular report is entirely untrue.