HC Deb 01 March 2001 vol 363 cc1035-6
10. Sir Teddy Taylor (Rochford and Southend, East)

If he will make a statement on the sale of gold by the Bank of England in the past 12 months. [150144]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

In the current financial year, the Government have sold 125 tonnes of gold at five auctions, raising revenue of $1.1 billion. A further auction is scheduled for March. Along with the auctions in 1999–2000, the sales have been successful and have achieved value for money for the taxpayer. Over the medium term, the sales will achieve the Government's overall aim of a better balanced portfolio of reserve holdings.

Sir Teddy Taylor

As the Chancellor has instructed the Bank of England to put 40 per cent. of all the proceeds into euros; as the Bank has been instructed to take over the issue of vast quantities of euro bonds; and as it has been widely reported that Britain, Japan and America have been intervening directly to prop up the euro, would not it be helpful for the Government to announce the size of the mountain of euros now in the Bank? Does not the right hon. Gentleman understand that, instead of engaging in this very expensive exercise, it would be better for the world economy if the Government simply allowed the euro to find its natural level in world markets? Surely that would be far better than all the back-door methods of trying time and again to prop up the euro.

Mr. Smith

I admire the hon. Gentleman's persistence on this issue, which he raises endlessly, as he has the right to do, in the House and the Treasury Committee. He is becoming something of a gold standard in his own right.

The National Audit Office has looked into all these matters and concluded that the Treasury has met successfully its objective to sell in a transparent and fair manner while achieving, value for money. The report said that, in taking income from the foreign currency securities that we have purchased on account, the Government were on 18 December showing a gain of £23 million over what the gold would have been worth.

Such sales have nothing to do with propping up the euro, as the hon. Gentleman suggests. If he reflected for a moment, he would realise that every time there is a gold auction, we are involved in purchasing something like 80 million euro. That contrasts with the $1.5 trillion turnover on the foreign exchange markets on any single day. So, such sales represent a very small pebble in a very large lake.