HL Deb 12 February 1973 vol 338 cc1259-62

3.41 p.m.

EARL JELLICOE

My Lords, I apologise to the noble Lord, Lord Fiske, but it might be convenient to the House if I were now to repeat the Statement which my right honourable friend the Chancellor of the Exchequer is making at this moment in another place in reply to a Private Notice Question there. The following is my right honourable friend's Statement: Following pressure last week on certain currencies, notably the Deutschemark, I have been in contact with colleagues in a number of countries over the past few days. I have twice visited Paris for discussions and have also had discussions in London with the U.S. Under-Secretary for Monetary Affairs. In the circumstances it seemed desirable that the countries concerned should close their foreign exchange markets to-day, and the London exchange market has accordingly been closed. The various consultations are still continuing and are proceeding well, and I know that at this stage the House will not expect me to say more. My Lords, that concludes my right honourable friend's Statement.

LORD BESWICK

My Lords, I am sure that the House would require me to thank the noble Earl for repeating that Statement, although it would be difficult to describe it as exceptionally forthcoming. If I may not ask the noble Earl what policy Her Majesty's Government are advocating on behalf of our nation at the present time, may I ask for two assurances? First, will he make clear that we shall not be hustled into prematurely fixing sterling again at a new exchange rate?—"prematurely" is the word I emphasise there. Secondly, will he make clear that the requirements of the Common Agricultural Policy for a fixed exchange rate as between the various members of the E.E.C. will not be allowed to override other considerations if the present weakness of the dollar suggests that the immediate way out is the floating of one or more of the currencies of other E.E.C. countries?

LORD WADE

My Lords, I should like also to thank the noble Earl for repeating that Statement. May I ask him whether I may assume that among the countries taking part in these consultations will be Japan? I ask that because it seems obvious that this is now an international problem which does not concern only the United States and Western European countries. The other question is of a more general nature: have we not reached a state of affairs in which speculation in international currencies has become so popular and serious that it has a very damaging effect on international trade?

EARL JELLICOE

My Lords, I am grateful to the noble Lords for their forbearance. I must agree that the Statement which I repeated was perhaps not remarkably informative, and perhaps noble Lords were not surprised that that was the case in present circumstances. In reply to the question asked by the noble Lord, Lord Wade, it is my understanding that there has been, as one would expect, consultation with the appropriate Japanese authorities.

As regards the two assurances for which the noble Lord, Lord Beswick, asked, here again I feel that I should be suitably cautious in what I say to the noble Lord. I assure him that considerations which affect particularly the sterling area, I am confident, and my right honourable friend is confident, will be fully taken into account in the consultations which are now taking place. I can give him an absolute assurance also that my right honourable friend has made it quite plain to his colleagues that he will not be able to accept arrangements which will impair or damage our balance-of-payments prospects. Beyond that, at this very delicate stage of negotiations and consultations, I think that it would be unwise for me to be drawn.

LORD BROWN

My Lords, would the noble Earl undertake to note very seriously indeed the comments made by the noble Lord, Lord Wade, vis-à-vis the Japanese situation, in the light of the recognised fact that there are extremely ingenious and far-reaching non-tariff barriers used by the Japanese to exclude exports, to exclude external capital investment, and in general, by devious methods to make a contribution to the unsettlement of monetary stability which, although recognised I believe by the Government and by people in the "know", is not fully understood by the world at large even yet? In the light of that, would the noble Earl assure the House that the monetary dislocation that is at present occurring will be treated not only as a matter of international seriousness but also as one to which the Japanese have contributed particularly to make it worse than it would otherwise have been?

EARL JELLICOE

My Lords, I am sure that my right honourable friend will take due note of the remarks made both by the noble Lord, Lord Brown, and by the noble Lord, Lord Wade, although I think that the noble Lord, Lord Brown, was somewhat embroidering on the point made by the noble Lord, Lord Wade. It would be a mistake certainly for me to point a finger in any particular direction at this particular moment. But what I should like to say is that I believe that it will be very difficult to establish stability, and the price of expansion of world trade depends to a very large degree upon the striking of a stable and sensible relationship between the three great trading blocs—North America, Japan and the European Community. The importance of the right triangular relationship can hardly be over-estimated.

LORD BOOTHBY

My Lords, may I ask the noble Earl, the leader of the House, whether he will convey to the Chancellor of the Exchequer the news that a substantial rise in the monetary price of gold is the only possible solution to the present currency crisis?

EARL JELLICOE

My Lords, I am glad to convey the views of the noble Lord, Lord Boothby, on this matter to my right honourable friend, and I am sure that he will not be altogether surprised to know what they are.

LORD BESWICK

My Lords, will the noble Earl take into account that there are others who take a different view about over-rewarding those who dig up that particular metal? May I ask one further question arising from what has been said by the noble Lord, Lord Wade, and by my noble friend Lord Brown? While it is essential to work towards a stable system of currency exchanges in order to help international trade, is it not becoming increasingly obvious that we require also some mechanism which would rap on the knuckles those who exist simply by dealing in currency rather than exchanging goods and services? And if that means, for the time being at any rate, a dual rate of exchange, let us not rule that out either.

EARL JELLICOE

My Lords, in reply to questions asked by noble Lords opposite, I am certainly not intending to rule out anything, but it would be quite wrong for me at this moment and in this place to indicate the range of decisions which are being considered at the present time. I would ask the House to understand that there are limitations on what one can say from the Despatch Box at this present juncture.