§ Mr. Albuasked the Chancellor of the Exchequer if he will state the official criteria at present being applied in consideration of direct investment in the sterling area and the non-sterling area, respectively.
§ Mr. MacDermotFor direct investment in the non-sterling area exchange control consent is normally given provided that it is unlikely to disadvantage the balance of payments of the U.K. and is financed by appropriate borrowing abroad. Consent is also given for the use of investment currency for projects of £25,000 or less a year, and those of a greater amount which promise an early, substantial and continuing benefit to the U.K. balance of payments. This benefit may be in any form, including export earnings or profits or other income, which will equal or exceed the original outlay within two or three years.
U.K. controlled subsidiary companies in the non-sterling area are expected to remit to the U.K. as much as possible of their earnings, but are allowed to retain, for ploughing back, what may reasonably be regarded as necessary to carry on the existing business.
Under the Voluntary Programme companies wishing to make direct invest- 254W merits over £25,000 a year in Australia, New Zealand, South Africa or the Republic of Ireland are requested so far as possible to finance them by appropriate borrowing abroad, or from normal retained earnings of local companies. Remittances from the U.K. should be confined to projects which meet the criterion already stated of early, substantial and continuing benefit to the U.K. balance of payments.
Direct investment in the rest of the sterling area is not subject to the Voluntary Programme or to exchange control. In cases where consent is required under the Control of Borrowing Orders, it is given if the transaction is advantageous to the economy and balance of payments of the territory concerned, provided that there is no demonstrable and avoidable detriment to the U.K. balance of payments.