§ Mr. Cockeramasked the Chancellor of the Exchequer if he has completed his review of the future of the Exchange Control Act 1947; and whether he will make a statement.
§ Sir Geoffrey HoweYes. The House was told on 6 November last that, following my decision, announced in October, to abolish exchange controls, I would be reviewing the future of the Exchange Control Act 1947. I have now decided that, at least for the time being, the present Act should be retained.
I regard the 1947 Act as unsatisfactory in a number of ways, notably in the wide extent of its powers and in its bias, natural enough when it was introduced, towards the control of outflows. I see no prospect of time being made available in the legislative programme for the early replacement or substantive amendment of the Act; and simple repeal would not be compatible with our Treaty obligations.
I do however envisage that ultimately, and probably most conveniently in several 672W stages, changes in the law will be sought with the objectives of making the powers available in this area less draconian and more symmetrical as between control of outflows and of inflows.
In the meantime, the Act needs to be kept in being because the United Kingdom Government are required, under the European Community Council Directive 72/156 of 21 March 1972, to have available certain instruments for effective regulation of international capital flows and for neutralising those effects of such flows on domestic liquidity which are considered undesirable. The directive also requires that these instruments may be able, where necessary, to be put into operation without further enabling measures. The Exchange Control Act 1947 is the only current legislative authority in the United Kingdom under which the Government could take such action.