HC Deb 18 January 1979 vol 960 cc1933-5
5. Mr. Hoyle

asked the Chancellor of the Exchequer when he intends next to meet 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. Hoyle

Will my right hon. Friend tell the Governor of the Bank of England, when he next meets him, that he is not prepared to act on all the advice offered by the governor, and particularly on the advice given by the Treasury man- darins? Will the Chancellor instead act on the policies of the Labour Party conference and the TUC, and particularly on the advice given by myself and my hon. Friends? If he had done that, we would not be in the mess we are in today.

Mr. Healey

I find myself subjected to advice from many quarters and from many personalities, including the governor of the Bank of England and my hon. Friend. I came to the conclusion, quite soon after taking up the office I hold that the sensible thing was to make up my own mind on the merits of the cases put to me. That is what I have done and I think that that is responsible for the enormous improvement in our performance over the last 12 months.

Mr. Farr

Can the right hon. Gentleman say whether during his consultations with the governor of the Bank of England,, he was able to make an estimate of the amount of money involved in the decision recently announced by the Irish Government to register, and probably withdraw, all Irish nationals' funds in Britain as a result of Ireland's entry into the EMS while we stayed out?

Mr. Healey

By saying "probably withdraw" the hon. Gentleman recognised the impossibility of making estimates of very uncertain quantities. What I can say is that the decision of the Irish Government to introduce exchange controls on certain transactions between Britain and Ireland is not likely to damage our interests. If we saw any risk of our interests being damaged as a result of the Irish Government's being a member of the EMS, when we were not, we would, as I have made clear to the House, complement their exchange controls with some of our own. At the moment the Irish Government are sticking to their declared policy of keeping their exchange rate parallel with ours. They have succeeded in doing so exactly since they took their decision and I see no reason for our taking the kind of action I have referred to.

Mr. Atkinson

Does not the Chancellor agree that, like the Treasury, the governor has become obsessed with anti-Socialist policies which seek to minimise the public sector borrowing requirement? Does he not recollect that early this week he published figures showing that next year's public expenditure will represent no more than 4½ per cent. of what he estimates to be our gross domestic product, and that, of that 4½ per cent., no less than 2½ per cent. must be deducted for capital expenditure? Is it not an absolute disgrace that a Socialist Government should want to minimise their public sector borrowing requirement to no more than 2 per cent. of the gross domestic product for expenditure purposes?

Mr. Healey

I think, with respect, that my hon. Friend is making a great mistake if he thinks that the views which the Government hold on the appropriate size of the PSBR have anything to do with party politics. The only countries in the world which have a higher percentage of gross domestic product in their public sector borrowing requirement, or their CGBR, are Japan, which has a 25 per cent. savings ratio—about twice the size of ours—and Canada, which has much higher unemployment than ours, high inflation, and a currency which is weaker than the American dollar. I believe that our level of PSBR is appropriate to the level of capacity use and our ability to finance it without excessive increases in interest rates.

Mr. Lawson

In the light of recent events, will the Chancellor give the House an assurance that he will take whatever steps are necessary to ensure that, at the very least, the public sector borrowing requirement does not exceed the figure given for 1979–80 in table 7 of the public expenditure White Paper published yesterday?

Mr. Healey

Yes, Sir.