(DISCUSSIONS)The following Question stood upon the Order Paper:
50. Mr. Bruce-Gardyne
To ask Mr. Chancellor of the Exchequer, if he will make a statement on the outcome of the meeting of Finance Ministers at Chequers from 21st January to 22nd January and also on the basis on which invitations were extended, explaining in particular why an invitation was not extended to the official responsible for interest rate [column 1269]policy in the United States of America the Chairman of the United States Federal Reserve Bank.
The Chancellor of the Exchequer (Mr. James Callaghan)
With permission, Mr. Speaker, I would like now to reply to Question No. 50.
My discussions with the Ministers concerned with financial policy in the United States, France, Germany and Italy showed that there is a general desire to see interest rates in some of the leading centres reduced. Circumstances in the five countries vary considerably and there are also differences in the nature of the responsibilities of the Ministers in this particular matter. However, there was agreement that within these limits we should co-operate in such a way as to achieve our objectives. This was a small and informal meeting of Ministers. Meetings of Central Bank governors are held fairly frequently.
Is the right hon. Gentleman aware that I was unaware that he was going to answer this Question at the end of Question Time? Apart from that, is he also aware that the Chairman of the Federal Reserve Bank in New York was first informed of this meeting, apparently, in the newspapers, although he is the official in charge of American interest rate policy? Does the Chancellor really think that this is the best way to get the right sort of climate in reducing interest rates internationally.
I am sorry if the hon. Gentleman was not informed that I was to answer this Question at the end of Question Time. But I must say that when I was a young Member of the House it was regarded as one's duty to be present at Question Time if one had put down a Question. [Hon. Members: “He was here.” ] If he was here, then he has no complaint, has he?
As to the rest of his supplementary question, it is not my obligation to inform the governors of the Central Banks of other countries, and I certainly do not feel that I should do so. Indeed, there would be complaint if I did.
Can my right hon. Friend say whether, in the course of the discussions with his opposite numbers, the question of an increase in the price of gold was raised and its relation to [column 1270]international liquidity? Has he considered the possibility that if some people get their own way in relation to an increase in the price of gold it would have a detrimental effect on those who suffer from very low fixed incomes?
The last sentence of the communiqué said that no other question was dealt with at the meeting. That means no questions other than the question of interest rates, so I do not think the rest of my right hon. Friend's supplementary question arises.
Sir C. Osborne
Is the Chancellor aware that right hon. and hon. Members on both sides of the House will wish him well in attempting to get low interest rates, especially for industry? But will he bear in mind the other aspect, that in industry today liquidity is improving but production is going down, and that a mere reduction in interest rates will not solve our problems?
There are a number of aspects of the problem of getting the growth in the economy which is essential, and this is one step to securing that end. But it is not the only step.
Will my right hon. Friend accept that we on this side welcome any initiative to reduce interest rates, whether informal or official?
I am obliged to my hon. Friend. I think that that is the view taken generally not only by this country but by the other countries concerned.
As there have been many different interpretations of the significance of the talks, would James Callaghanthe right hon. Gentleman agree that it would be unwise to expect any dramatic results from a meeting at which the representatives could commit neither their Governments nor the Central Banks? What influence, if any, have these talks had on his own decision about interest rates here?
I think the hon. Lady would be the most surprised person in this House if I gave an answer to the last part of her question. As to the first part—the Ministers were, of course, in a position to commit their own Governments but, as I made it clear in my Answer and as the communiqué pointed [column 1271]out, the relationships between Central Banks and Governments in various countries differ. It was for that reason that the communiqué was carefully phrased. As to whether anything dramatic can happen—what I would hope to see would be a steady downward progress, undramatic, from the very high level of interest rates reached last autumn.
Mr. Arthur Lewis
Since only six months ago the Chancellor and the Prime Minister were saying that putting up these interest rates to such a high level would solve all our problems, what has happened in the last six months to bring about this change?
I would be deeply interested if my hon. Friend would send me the quotation that he is referring to.
Would not the Chancellor agree that one of the best ways to reduce interest rates to the Government would be to exclude Government stocks from Capital Gains Tax?
No. I think that it would have only a marginal effect, if any.
Is my right hon. Friend really saying that a change in the price of gold would have no effect on interest rates?
I was not aware that that was the question put. The question put was related to Government bonds, as I understood it.
Mr. Ian Lloyd
Is the right hon. Gentleman aware that what he says he hopes to achieve can probably best be achieved through a substantial increase in the formation and supply of capital, by which the whole range of Government policy is substantially affected?
There are two factors making up the level of interest rates. One is the domestic side of the economy and the other is the possibility of international competition for money. It was with the latter aspect of the matter that we were concerned on Saturday and Sunday and on which there was general agreement about the path we should follow.
On a point of order, Mr. Speaker. As I pointed out to [column 1272]the Chancellor, I received no prior notice that this Question would be answered at the end of Question Time, although it so happened that I was present when he answered it. Had I not been present, this Question could not presumably have been asked. How is it that a Minister can answer a Question in these circumstances? What is the position?
The question of whether an hon. Member is informed by the right hon. Gentleman is not a matter of order but a matter of courtesy. On the other point of order—if the right hon. Gentleman had sought to answer the Question at the end of Question Time and the hon. Member had not been here the Question could not have been answered.
Further to that point of order, Mr. Speaker. Because there might be some implied reflection in what you said about lack of courtesy, may I draw your attention to the fact that we made very rapid progress in Questions today? This was an Oral Question and might well have been reached if the Prime Minister's Questions had been finished. In those circumstances would you regard it as the duty of a Minister to leave his seat when the Prime Minister's Questions are on and go and tell another Member whom he sees walking out of the Chamber that he should stay?
I assure the right hon. Gentleman that in what I said I meant no reproof at all. All I was stating was that the Chair can rule on questions of order but that on questions of courtesy it cannot.
Mr. Kenneth Lewis
Should not the Chancellor of the Exchequer know perfectly well, because of the number of Questions down to the Prime Minister today, that his was hardly likely to be reached? Is it not more than likely, since this is the second week running that he has appeared at the Box alongside the First Secretary, that he has taken the opportunity just to make sure that his place of No. 3 in the Government order is maintained?
That is not a point of order.
Sir Knox Cunningham
Could you clarify what you said, Mr. Speaker, because is it not a fact that if there is a [column 1273]Question on the Order Paper, whether for Oral or Written Answer, the Minister can always take that Question and answer it?
I am advised by the Clerk that there is some doubt about the Ruling I gave about the hypothetical circumstance in which a Minister decides to answer a Question at the end of Question Time and the hon. Member is not there to put it. I will give a firm Ruling on that tomorrow.
Mr. Ronald Bell
So that we may have this matter clarified, Mr. Speaker, would you bear in mind, when giving consideration to it, the obvious difficulty that the Minister might have answered the Question before he realised that the hon. Member was not present? Would you further consider what the position is if an hon. Member, thinking that his Question has not been reached for Oral Answer, withdraws it by going to the Clerk at 3.30 and perhaps leaves the Chamber? In those circumstances, whatever your Ruling on the first matter, would it be in order for the Minister to answer the Question?
I shall give consideration to every point, including that which the hon. and learned Member raised.
Would you also bear in mind, Mr. Speaker, that I did not rise until you called me? I therefore assume that if any information was given to the Table about the Question being withdrawn you would not have called me.
If the Chancellor of the Exchequer had wished to be certain of answering the Question today, could he not easily have given you notice earlier today that he wished to answer it, whether it was reached or not? Was it not therefore an unnecessary discourtesy to my hon. Friend that he was not given any warning that the Question would be answered in any case?
The hon. Gentleman has merely stated forcibly the point which is before the House and on which I promised to rule a little more formally tomorrow.