HL Deb 09 March 1978 vol 389 cc913-4
Lord BOYD-CARPENTER

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

The Question was as follows:

To ask Her Majesty's Government whether in view of the present balance of payments situation they will instruct the Bank of England to make major relaxations in its present control of capital movements.

The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)

My Lords, the Government keep exchange controls under review, but are not persuaded that major relaxations at this time would be in the best interests of the United Kingdom's economy.

Lord BOYD-CARPENTER

My Lords, is the noble Baroness aware that, under the Treaty of Rome, we are obliged to allow free movements of capital to other EEC countries unless we can establish that we are in balance of payments difficulties? In view of the fact that the Chancellor of the Exchequer assures us that we are not in such difficulties, are not the Government in breach of their obligations?

Baroness BIRK

My Lords, the United Kingdom has been authorised under the EEC Treaty to maintain our present restrictions. It is true that there will be need for further talks with the Commission before the end of 1978 and what then follows will be in the light of the economic situation at the time. I think I should remind the noble Lord—although I am sure that, with his financial experience, he does not need any reminding—that we are still only emerging from a period of chronic balance of payments difficulty, and we really have to proceed gradually.

Lord BOYD-CARPENTER

My Lords, accepting what the noble Baroness said as to the precarious nature of the alleged balance of payments recovery, may I ask her whether the waiver by the EEC is not one granted to us solely on balance of payments grounds? If our balance of payments were really to re-establish itself, would we not be bound then to allow the free movement provided for under the Treaty of Rome?

Baroness BIRK

My Lords, that is taking a look into the future and is a rather "iffy" kind of question. As our position improves obviously we can look at it again, but my right honourable friend the Chancellor of the Exchequer does not feel that now is the time to extend relaxations. I would remind the noble Lord, as I am sure he knows, that recently there have been some relaxations—in fact, two sets of relaxations.

Lord HARMAR-NICHOLLS

My Lords, does the noble Baroness realise that her Answer has confirmed that we have lost freedom of action? If the EEC had not authorised this, we could not have applied the restrictions that we as a nation thought ought to be applied.

Baroness BIRK

Well, my Lords, I have never taken the view that negotiation is losing freedom of action. Negotiation is carried on in a variety of areas with the EEC, not only in this field but in every other field of activity. I am rather surprised that the noble Lord does not see it in that light.

The Earl of ONSLOW

My Lords, is it not slightly odd that Her Majesty's Government, through the Bank of England, have been buying depreciating dollars as opposed to allowing private citizens to buy possibly appreciating assets?

Baroness BIRK

No, my Lords.

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