§ 3 p.m.
§ Viscount Hanworth asked Her Majesty's Government:
§ Whether they intend to put forward proposals for limiting short-term currency speculation for discussion with partners within the European Community and elsewhere.
§ Viscount HanworthMy Lords, I thank the noble Earl for that unsatisfactory reply. I only wish to ask him to continue to consider the problem because he would surely agree that it is important. Does he realise that in the past it was a capital offence if someone tried to gain money personally and not in the national interest when the country was in difficulties?
The Earl of CaithnessMy Lords, the noble Viscount will be aware of the importance of London as probably the world's major trading centre for foreign exchange. If one pursues the noble Viscount's line of thought, one would have to look, first, at the desirability of any action and, secondly, at the practicality.
Lord Bruce of DoningtonMy Lords, will the noble Earl agree that one of the difficulties in this instance is that short-term speculation is not defined in any way in the Treaty of Rome, much less in the wretched Treaty of Maastricht? Does he agree that in any event if it were possible to define it and legislate against it, it would put half the banks and financial institutions in the United Kingdom completely out of business?
The Earl of CaithnessMy Lords, the noble Lord is right to say that the banks were trading on the foreign exchange markets. But, as he will know as well as anyone else, so were a great many other people.
§ Lord MoyneMy Lords, is it not the case that, were any proposals such as the noble Viscount suggested put into effect, the minimum lending rate would now be 2 per cent. higher than it is and the pound would be at an unacceptably high rate in the foreign exchanges? Do we not owe a vote of thanks to the currency speculators?
§ Lord Stoddart of SwindonMy Lords, following the noble Earl's Answer to the noble Viscount, Lord Hanworth, does that mean that we shall make no efforts, early or late, to re-enter the exchange rate mechanism?
The Earl of CaithnessMy Lords, I seem to remember the noble Lord, Lord Stoddart, asking me precisely that question not so long ago. It is not relevant to the Question on the Order Paper.
§ Lord O'Brien of LothburyMy Lords, will the Minister agree that it would be far better for the Government to concentrate their energies on minimising the economic financial uncertainties now existing than on taking the course of action proposed by the noble Viscount, Lord Hanworth? It is these uncertainties that lead to speculation.
The Earl of CaithnessMy Lords, my right honourable friend the Chancellor of the Exchequer will be making the Autumn Statement tomorrow. I hope that the noble Lord will be clearer as to the policy then.
§ Lord DonoughueMy Lords, while recognising that any action to curb speculation must be on a global basis in today's international markets, will the noble Earl agree that the best solution is for the British Government to conduct a sensible monetary policy so that speculation does not arise?
The Earl of CaithnessMy Lords, I thought that the party opposite was in favour of the ERM and welcomed the fact that we went into it. Perhaps I misunderstood the situation.
§ Lord MarlesfordMy Lords, will my noble friend agree that we must deplore the large profits made by certain banks, particularly overseas banks, at the expense of the British taxpayer? Will he agree that the blame for this must be placed with the Bank of England for not having made it clear to Her Majesty's Government that the kind of intervention in which they indulged was quite futile, and predictably so?
The Earl of CaithnessMy Lords, I am sure that my noble friend will agree with me that it would have been quite wrong for the Government not to have tried to defend sterling in the way that they did on that occasion.