HC Deb 10 November 1977 vol 938 cc829-31
2. Mr. Ioan Evans

asked the Chancellor of the Exchequer what consideration has been given to proposals to relax controls on outward investment.

Mr. Healey

Exchange controls in general are kept under review, but this is not, in our judgment, the time for relaxing controls on investment overseas.

Mr. Evans

I welcome my right hon. Friend's assurance and congratulate him on the tremendous improvement in our financial situation compared with 12 months ago, but will he ensure that institutional and other funds are steered towards investment in manufacturing industry in Britain to make our industry more efficient, and not into the industries of our overseas industrial competitors? In particular, will he ensure that there is no further investment in South Africa by British industries?

Mr. Healey

My hon. Friend asked a number of separate questions. I give the assurance that the Government intend to discourage investment by British industry in South Africa. That view is shared by all members of the United Nations—[Interruption.]—of which we are a member, however much the hon. Member Yarmouth (Mr. Fell) may dislike it.

The answer to the other question is that we want to do everything possible to encourage British manufacturers, including those who are subsidiaries of multinational companies, to invest their profits in this country. The maintenance of exchange control on direct and portfolio investment at least prevents them from exporting British-earned capital to other countries. In reply to an earlier question I referred to the difficulties that business has found this year in maintaining the intention that it announced. I hope that it will do better next year.

Mr. Dykes

Whilst it would obviously be wrong to dismantle the remaining exchange controls over-hastily in the near term, for lots of reasons, would it not be a good idea at least to consider the possibility, on portfolio investments, for example, of removing the surrender provision, say, early next year and then see the premium gradually dwindle away in accordance with our European obligations?

Mr. Healey

I keep all these matters under continuing review.

Mr. Robinson

Is my right hon. Friend aware that his reassurances this afternoon were warmly welcomed on the Government Benches? Is he further aware that we share his disappointment at the investment performance of British industry this year, and that in view of our massive backlog of under-investment we shall give him every support in encouraging British industry to invest in Britain, so that we can increase our production and employment?

Mr. Healey

I am grateful to my hon. Friend for that statement.

Mr. Lawson

Is the Chancellor of the Exchequer aware that, contrary to what he said, many of us believe that this is the right time for a further relaxation of exchange controls? Many of us are well aware that he thought that to be the case, but that he was vetoed by the TUC when he tried to do it. Will he explain to his hon. Friends that the prevention of profitable investment overseas acts in no sense as a stimulus to unprofitable investment in the United Kingdom?

Mr. Healey

I am familiar with the hon. Gentleman's views, but I was interested to see that his hon. Friend the Member for Harrow, East (Mr. Dykes) took a different view.