HC Deb 18 January 1979 vol 960 cc1943-4
16. Mr. Tim Renton

asked the Chancellor of the Exchequer in what range of fluctuation against the basket of Europeon currencies he now wishes to maintain the £ sterling.

Mr. Healey

There has been no change in our exchange rate policy. Our aim is to maintain a stable exchange rate as measured against the currencies of all our main trading partners.

Mr. Renton

In view of the fact that the current public sector borrowing requirement is regarded widely as excessive and is forecast in yesterday's White Paper as remaining excessive, does the Chancellor agree that his exchange rate target will be achieved in the end only by either higher domestic interest rates or higher taxes?

Mr. Healey

If the hon. Member's view were shared by those who help to determine the value of sterling on the foreign exchange markets, sterling would not have been as stable as it has been in the last 12 months. But it is not shared by those who watch our affairs from outside. The hon. Member and his hon. Friends would be wise to look at the value which foreign countries put upon our currency before seeking to denigrate our achievements.

Mr. Jay

Has my right hon. Friend read his own expenditure paper? Has he noticed that our net budget contribution to the EEC in 1980 is to rise to £795 million? Is this not an intolerable burden on our Budget and balance of payments?

Mr. Healey

The Government have made it clear on many occasions that they regard the budgetary burden which falls on the United Kingdom as a result of the current monetary arrangements inside the Community as seriously excessive. They are seeking to renegotiate them both in terms of the budget itself and the common agricultural policy, which is the main culprit.

Mr. Tapsell

if the Chancellor's reply to my hon. Friend the Member for Mid-Sussex (Mr. Renton) has any validity, how does he account for the fact that other countries have reduced the proportion of their reserves which they maintain in sterling to under 2 per cent.?

Mr. Healey

We have asked them to do so because we regard the reserve role of sterling as damaging to the interests of the country. I am glad to say that we were successful.