§ 3.0 p.m.
§ LORD CARRINGTONMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they will give instructions to the Bank of England to treat favourably requests from British companies who, by remittance of funds, wish to take up rights issues in companies in the sterling area in which they have a substantial interest.]
§ LORD SHEPHERDMy Lords, the remittance from the United Kingdom by companies of funds for investment in Austrlia, New Zealand, South Africa and the Irish Republic is covered by the voluntary programme which my right honourable friend the Chancellor of the Exchequer announced in his Budget speech. Special problems of individual companies will be considered on their merits, bearing in mind the general principles of the programme and the overriding need to strengthen the balance of payments, which is the purpose of the programme. Companies have been asked to discuss their investment programmes with the Bank of England. These discussions provide the opportunity to go into any problems.
§ LORD CARRINGTONMy Lords, is the noble Lord aware that I know all that? What I am asking is: will he convey to his right honourable friend the Chancellor of the Exchequer that there really are occasions when this is a serious problem and that the credit standing and status of the company concerned in the 394 Commonwealth countries may depend very substantially on what percentage of the equity is owned by the British company? This goes further than just a question of remitting funds from this country to other sterling areas. I hope that this matter will be taken seriously.
§ LORD SHEPHERDMy Lords, the noble Lord may well have been aware of what I said in reply to his Question, but it is possible that other noble Lords who may have seen the Question did not know quite as much as the noble Lord. This is a matter of importance and perhaps the noble Lord will remember the contents of the letter that the Chancellor of the Exchequer addressed to a hundred companies which, if I remember aright, provide 90 per cent, of the overseas investment, in which he uses the words:
The voluntary programme is a new development in our economic policies. I have asked the Bank of England to keep in close touch with the Treasury and to report to me any special difficulties that may be encountered.The Bank of England has set up a special department to give advice and to have consultations with companies which would wish, as in most cases they do, to adhere to the voluntary programme. But where special difficulties arise the procedure is there: there is this channel of communication, as the Chancellor of the Exchequer has indicated in his letter, between the Bank of England and the Treasury. Therefore, if there are companies that are in the special difficulty which the noble Lord mentioned, the machinery and the opportunity are there.
§ THE EARL OF DUNDEEMy Lords, may I ask the noble Lord whether he has read the speech of the President of the Board of Trade to the Canadian Club at Ottawa a few weeks ago in which he said that the brightest feature of our balance of payments was our receipts from foreign investments? Is it not a pity that this brightness should be dimmed by the restrictions that the Government are imposing?
§ LORD SHEPHERDMy Lords, I have read that speech and I would commend to the noble Earl the speech of his noble friend the Leader of the Opposition in a debate some months ago on the economic position, in which the noble Lord agreed 395 that with the present balance of payments position there was a need to take all necessary steps to protect it.
§ LORD ERROLL OF HALEMy Lords, is it not the case that all the applications made so far have been turned down, which shows anything but a sympathetic approach to the problem? Is it not placing a great strain on the spirit of voluntary co-operation when the applicants know that almost certainly their applications will be turned down?
§ LORD SHEPHERDMy Lords, I would welcome the noble Lord, Lord Erroll of Hale, back to this House from the Soviet Union and hope that all the efforts he made on behalf of British exports will be fully realised. I am not aware of what has taken place between the Bank of England and the applicants regarding this voluntary programme. I will certainly inquire. But at this stage I have no information that I can give to the noble Lord.
§ LORD BYERSMy Lords, would the noble Lord bear in mind that if the British companies are not able to take up their rights, then the British interest will be diluted even to the point of loss of control; and that this could be a very important matter?
§ LORD SHEPHERDMy Lords, I am aware of that, and so is my right honourable friend the Chancellor of the Exchequer. This is one of the points that the Bank of England will take into consideration.
§ LORD CARRINGTONMy Lords, the noble Lord has said that machinery exists for this. I know that the machinery exists. What I have asked, and I am asking again, is whether he will say that these cases will be looked at sympathetically.
§ LORD SHEPHERDMy Lords, if you set up the machinery then it is the intention, as has already been expressed by my right honourable friend the Chancellor of the Exchequer I think, in my earlier statement, that all these applications will be considered on their merits. I do not want to go further than that. I have established that there is this channel between the Bank of England 396 and the Chancellor of the Exchequer. It is to the use of that machinery that we should look.
§ LORD DERWENTMy Lords, the noble Lord used the rather ominous phrase, coming from the Party opposite, that each case will be looked at on its merits. Who is to decide on the merits—the Bank of England or the Treasury? Because the merits might be considered very differently by one or the other.
§ LORD SHEPHERDMy Lords, in the first instance it is the Bank of England, and I think that that body can be expected to look at all cases on their merits (to use the word I used earlier) sympathetically, bearing in mind, of course, the very special need at the present moment in regard to the balance of payments.
§ LORD DERWENTMy Lords, does that mean that when the Bank of England have looked at the case on its merits the Treasury, when it gets to it, will look also at the case on its merits?
§ LORD SHEPHERDMy Lords, I have not suggested that any advice that the Bank of England gave in this voluntary programme would be referred to the Treasury. The phrase I used—and perhaps the noble Lord will read what I said earlier—is this:
I have asked the Bank of England to keep in…touch with the Treasury and to report to me any special difficultiesthat may arise. I thought that would have been perfectly clear to any Member of your Lordships' House.