HC Deb 10 May 1976 vol 911 cc51-2W
Mr. Lee

asked the Chancellor of the Exchequer how many claims were made during the financial year 1975–76 for refunds in respect of the dollar premium market; how much money was involved altogether; and what were the corresponding figures for 1973–74 and 1974–75.

Mr. Robert Sheldon

Refunds do not, as such, arise in the investment currency market. Transactions in the market take place between United Kingdom residents, without official intervention, at freely negotiated rates of exchange which fluctuate daily. Investment currency commands a premium which is paid by the purchaser and received by the seller. I regret that information on the transactions in this market cannot be provided without a disproportionate expenditure of time and resources.

Mr. Lee

asked the Chancellor of the Exchequer if he is satisfied that the dollar premium system is working satisfactorily; and if he will make a statement on its operation over the last five years.

Mr. Robert Sheldon

The system is generally satisfactory, in that it permits transactions in foreign currency securities and holiday homes abroad to be undertaken without placing a net burden on the balance of payments and without detriment to the country's reserves or exchange rate. It is subject to careful regulation in order to prevent abuses.

During the last five years the size of the market has been greatly increased by the inclusion of securities payable in overseas sterling area currencies. Exchange control requires that, for foreign currency securities a proportion of disposals is made through the official foreign exchange market. This leads to benefits for the balance of payments which in the past five years have amounted to over £750 million.

Mr. Lee

asked the Chancellor of the Exchequer if he will make a statement on his policy on the transfer from the United Kingdom of funds across the dollar-sterling exchange.

Mr. Robert Sheldon

Our exchange control operates on all foreign currency, and U.S. dollar transactions are not separately controlled. Genuine current payments may be made abroad without restriction, although they are monitored to ensure that they are genuine. Transfers of capital abroad are tightly controlled. At present, access to the official foreign exchange market for such purposes is very restricted and, in the case of investments abroad, such access is generally denied.