HC Deb 24 February 1983 vol 37 cc1039-41
3. Mr. Skinner

asked the Chancellor of the Exchequer what recent discussions he has had with representatives of British banks; when next he expects to have further discussions concerning the rescheduling of loans; and if he will make a statement.

Sir Geoffrey Howe

The Bank of England is closely in touch with British banks, and I hold regular meetings with the governor. I discussed the difficulties that many developing countries face in arranging external finance at the IMF interim committee on 10 and 11 February. The committee stressed the importance of the fund's role in providing balance of payments assistance to member countries that engage in adjustment programmes and agreed that fund quotas should be increased from 61 billion special drawing rights to 90 billion special drawing rights.

Mr. Skinner

Will the Chancellor confirm that the British banks and the Government operate different standards regarding loans and their rescheduling for British people and firms in contrast to the large loans that are made to countries such as Argentina and Brazil? Will he confirm that on 20 December Brazil brought together 120 top international bankers and said "You accept our four-point package or else."? On new years's eve Brazil refused to make any capital repayments until the banking system accepted its terms, although it owed £90 billion—

Mr. Speaker

Order. It is Question Time, not speech time.

Mr. Skinner

Does it not show up the Government's policy in that they allow tax relief to British banks for lending such money while refusing tax help to charities and other bodies that have been mentioned today?

Sir Geoffrey Howe

There has been no change in the provisions affecting tax relief for British banks in respect of their debts or prospective debts. The health of the British banking system and the world banking system is a fundamental consideration if they are to be able to offer assistance of the kind suggested by the hon. Gentleman to borrowers in this country.

Mr. Eggar

If rescheduling were not permitted, would that not lead to a fall in the standard of living of many millions of people who are much worse off than we are? Would it not also lead to a lack of export orders for the United Kingdom?

Sir Geoffrey Howe

My hon. Friend is entirely right. The United Kingdom producer has a manifest interest, not just in the health of the United Kingdom banking system, but in the chances of restoring to balance the economies of other countries which represent in practice and prospect potential customers for this country.

Mr. Speaker

Mr. Peter Shore.

Mr. Shore

No thank you, Mr. Speaker.

Mr. Speaker

I thought that the right hon. Member had nodded to show that he was seeking to catch my eye.

Mr. Skinner

I shall nod a lot.

Dr. M. S. Miller

Will the Chancellor explain the rationale of making loans to countries that cannot pay interest on them and then lending them more in order to pay interest on the money we lent in the first place?

Sir Geoffrey Howe

Such arrangements only take place alongside substantial changes in the pattern of expenditure and borrowing of the countries involved. It is a condition of the granting of IMF adjustment loans, for example, that those countries should transform their spending pattern in order that they can improve their chances of repaying the debts that have been accumulated previously. That is precisely what was undertaken in this country when it was being managed, to its great misfortune, by the Labour party.

Mr. Bill Walker

Does my right hon. and learned Friend agree that it comes ill from the Labour party to tell us that we should care more about the Third world and its problems and care more about jobs in this country and about making it possible for those countries' economies to be sustained when, in any event, many of the loans were negotiated during the period that it was in office?

Sir Geoffrey Howe

I agree entirely with both of my hon. Friends. It is manifest that this country and its people have an interest in restoring the balance of overseas economies for the sake of the people who live there and of the people in this country whose jobs depend upon those countries' prospects. One would not expect consistency of any kind from the Labour party. I am not surprised at the silence of the right hon. Member for Stepney and Poplar (Mr. Shore).