HC Deb 13 May 1982 vol 23 cc939-40
13. Mr. Mitchell

asked the Chancellor of the Exchequer whether he will now reintroduce exchange control in the light of the latest figures of overseas investment by United Kingdom financial institutions.

Mr. Hayhoe

No, Sir.

Mr. Mitchell

Is the Minister aware that last year pension fund institutions invested £2.3 billion overseas in shares and that last year, for the first time, financial institutions, apart from the banks, bought fewer United Kingdom than foreign ordinary shares? Is he aware that that portfolio investment is in addition to the huge sums of money flowing to investment overseas, which should be invested in this country for jobs? Is not all of that an indication of the degree of confidence that the Government's friends have in the prospect of recovery under the Government?

Mr. Hayhoe

The difference in the figures is not as great as the hon. Gentleman suggests. Portfolio investment overseas was £2.3 billion last year. It was £2.2 billion the year before. Investment in British equities has been at about the same level over that period.

Mr. Eggar

Will my hon. Friend confirm that had exchange control been imposed the value of sterling would have been considerably higher over the past two years than it has been?

Mr. Hayhoe

After 40 years of control, the relaxation of control must have had the effect of keeping the exchange rate lower at a period when it was generally agreed in all parts of the House that it was advantageous to British industry that it be lower.

Mr. J. Enoch Powell

Will the Minister explain that a net capital outflow is the inevitable concomitant of a surplus on current account?

Mr. Hayhoe

I should have thought that that was a statement of the obvious.

Mr. Cook

Will the Minister confirm that, in addition to those portfolio figures, last year direct investment abroad increased by 50 per cent., while investment at home fell? Do not those figures suggest that even the hon. Gentleman's backers in the City have not been convinced by the promises of economic recovery just around the corner, which is offered to the rest of the nation?

Mr. Hayhoe

The vital factor for the British economy, which is shown to have been helped by the figures that were given earlier of the downward trend in inflation, is that we want our industry to be more competitive and to provide the goods and services of the right quality, at the right price and at the right time. In those circumstances more investment will be attracted to home industry.