HL Deb 24 January 1974 vol 348 cc1574-6

3.17 p.m.

LORD DAVIES OF LEEK

My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government, in view of the fact that the service industries are a major growth area in the advanced countries of the world, and that the financial services industry is one of the most important of them what they are doing to ensure that the financial services industry will be modern and efficient so that its valuable contribution to the economy of the nation will ensure that entry into the E.E.C. will not result in a bonanza for the city at the expense of industry as is hinted in the Cabinet Office Paper dealing with the Future of London as an International Financial Centre, pages 1–1 and 1–3.

LORD ABERDARE

My Lords, the Report on the Future of London as an International Financial Centre was not a Cabinet Office Paper. It was commissioned by the Central Policy Review Staff, but it reflects only the views of its authors. The Government decided to publish the Report as a contribution to public discussion. Both the Report and the Government are convinced of the importance of the City's contribution to our "invisible" exports, and this is certainly not at the expense of industry.

LORD DAVIES OF LEEK

My Lords, is the noble Lord aware that I have the Report in my hand? I know by whom it was prepared. There are references as to why it was prepared, and it is said that it was prepared for presenting to the Cabinet Office. It has written on it, "The Cabinet Office". Why is the noble Lord trying to slide away from the facts about this matter? May I now, in relation to the Question, ask the Government whether they are aware that the Governor of the Bank of England, in his speech on October 18 at the Lord Mayor's Dinner to the bankers and merchants, spoke about what he considered to be the "over-rapid expansion" of money presentation; namely, what is known as "M3"? Is the noble Lord further aware that in the Cabinet Paper itself the gap between the City and industry was something which the Government wished to eradicate? Will he say—

SEVERAL NOBLE LORDS: Speech!

LORD DAVIES OF LEEK

That was introductory, my Lords. Here is the question. At least it is more coherent than the half reply I have had up to now. Will the noble Lord therefore please say what is being done to ensure that the resources of the City do not frustrate the honest entrepreneur who wants to invest in British industry rather than to speculate?

LORD ABERDARE

My Lords, I am now aware that the noble Lord holds in his hand a copy of this Report. But I can hardly think that he has read the Preface. The Preface says: This Report was commissioned by the Central Policy Review Staff"; and it goes on to say: As is stated in the terms of reference, it reflects the views of its authors only. If the noble Lord will accept that, he will apreciate that it is not an official Cabinet Office Paper. Secondly, the Report makes quite clear that the City does a very valuable job in "invisible" exports, and it brings out at one point only that it may be said by some that there is some conflict between the City and industry. But this does not argue this point. It says that the City and industry and the Government should make sure that this assertion is refuted.

LORD DAVIES OF LEEK

My Lords, is the noble Lord not aware that much of the difference between industry and the City lies in the fact that industry cannot get the investment in the mechanisation and new machinery that it needs because of the tendency of the City to pass large amounts of capital overseas? I will put it as simply as that.

LORD ABERDARE

No, my Lords, I do not accept that.

LORD CONESFORD

My Lords, is it not a happy fact that present conditions have so concentrated the mind of the noble Lord who asked this Question that he pays tribute to the value of the service industries, whereas the Government that he supported introduced S.E.T. to discourage them?

LORD ABERDARE

My Lords, I am grateful to my noble friend.

LORD ROBBINS

My Lords, would the noble Lord agree with me that the expansion of M3, whether it is a good thing or a bad thing, is the responsibility of Her Majesty's Government and not of sundry personalities in the City?

LORD ABERDARE

Yes, my Lords.