HC Deb 17 July 1986 vol 101 cc1167-8
13. Mr. Dubs

asked the Chancellor of the Exchequer what is his estimate of the revenue from North sea oil in 1986–87.

Mr. Norman Lamont

I refer the hon. Member to the forecast my right hon. Friend published at Budget time.

Mr. Dubs

Given the Government's commitment to a market economy, does the Minister agree that a falling oil price should almost automatically lead to falling exchange rates? Why, then, do the Government persist in keeping interest rates higher than they would otherwise be merely to keep up the exchange rate of the pound?

Mr. Lamont

As I am sure the hon. Gentleman knows, interest rates are determined not by oil prices but by the market and also by monetary conditions in the economy at the time.

Mr. Sumberg

Does my right hon. Friend agree that the real strength of the economy is shown by the fact that, with falling oil prices, we have not had a cash crisis or a sterling crisis and we have not had recourse to the International Monetary Fund, as we would have had under a Labour Government?

Mr. Lamont

My hon. Friend is right. If we had pursued the policy advocated by the Opposition of spend, spend, spend, we would undoubtedly have had an enormous crisis at various times when the oil price has been under pressure.