§ Mr. Biggs-Davison
asked the Chancellor of the Exchequer whether he will publish in the OFFICIAL REPORT the terms of his guidance regarding the curtailment of investment in the more developed countries of the sterling area; to which individuals and institutions such guidance has been addressed; and what response has been received.
§ Mr. Callaghan
Yes. I reproduce below the text of a Treasury Press Notice about the Programme and of a letter which I have sent to the chairmen of over 200 companies. I have received replies from nearly every one of them, expressing their willingness to co-operate, and I am very grateful for the response.
Following is the Notice
In accordance with the Voluntary Programme announced by the Chancellor of the Exchequer in his Budget Speech, Her Majesty's Treasury issue the following statement concerning overseas investment by residents of the United Kingdom.
2. The aim of the Voluntary Programme is that for the time being direct investments overseas should in general be confined to those for which the funds are provided by appropriate borrowing abroad, or from normal retained profits of an overseas company (i.e. 125W the average level retained over a representative period in the recent past), or where the investment promises an early, substantial and continuing benefit to the United Kingdom balance of payments. The benefit should be in the form of export earnings, or other current income remitted to the United Kingdom, equal or exceeding in value the original capital outlay within 2–3 years and continuing thereafter. Exports of capital goods etc., which are part of the investment itself, being either free of payment or paid for out of capital moneys provided for the investment, do not in general count towards the fulfilment of the criterion.
3. These criteria are intended to apply to direct investments over £25,000 a year (in any one country) outside the Scheduled Territories and in the main developed countries of the Sterling Area (Australia, New Zealand, South Africa, Irish Republic). They do not apply to investment in the less developed countries of the Sterling Area.
4. Firms and individuals planning direct Investments over £25,000 a year in Australia, New Zealand, South Africa, or the Irish Republic, are asked to reconsider their plans in relation to the criteria. In all such cases where it is intended to proceed with plans for investment in these countries, i.e. where a project is considered within the categories indicated, or where special factors may apply, the firm or individual concerned is requested to send details to the Bank of England (Overseas Investment Office), preferably through their bankers. The Bank of England will discuss the matter with the firm concerned in the light of the information provided. These arrangements cover all plans for investment however financed.
5. Direct investments outside the Scheduled Territories are subject to exchange control. Approvals will continue to be given for the use of investment currency for projects which meet the criterion of early, substantial and continuing benefit to the United Kingdom balance of payments. Approval will not normally be given for projects over £25,000 a year which do not meet the criterion, unless they are financed by appropriate borrowing abroad.