Reminiscing about the £50 overseas spending limit; and new tax break rules for private lettings
When I first started travelling for business in the 1960s and 70s, there was still a spending limit for trips abroad. I remember only too clearly the chore of making my way from my newspaper’s offices close to Fleet Street to a rather smart branch of Coutts bank on The Strand before any business trip. Once there I would present my passport, which would then be marked on a special page stuck in at the back with the date and amount of foreign currency I had been issued with (£50, if memory serves).
In fact, it was not only the small amount of foreign currency that would be recorded but also the value of any travellers’ cheques with which I had been issued, a method of carrying money abroad before credit and charge cards took over the corporate travel world.
The overseas spending limit of £50, the equivalent of about £650 today, had been introduced by Prime Minister Harold Wilson’s Labour government in 1966 in an attempt to narrow what had been a very large balance of payments deficit and at the same time revive the faltering economy.
BENDING THE RULES
It failed eventually, not least because foreign companies and high-net-worth individuals could see little point in investing in the UK if it became virtually impossible to get any profits out of the country again. The currency controls were eventually abolished by Margaret Thatcher’s Conservative government in 1979, but not before plenty of ingenious schemes had been hatched to get around the rules. One such scheme was dreamed up by singer Cilla Black and her husband, Bobby, who were finding it difficult to export the final £1,000 they needed to pay for a villa in Spain. Bobby, a former baker, decided to hide the money in a hollowed-out loaf of bread. It’s said the maid at their Spanish villa witnessed the couple eating toast with a hole in the middle the next day.
For most people, though, you could forget about buying a property abroad, purchasing overseas equities or financing even a modest holiday. The controls were, to all intents and purposes, little but a restriction on freedom of movement and the ability of British subjects to leave the country.
What the scheme did achieve, however, was to encourage the growth of the package-tour business, not only for holidaymakers but to a lesser extend for those travelling on business. You may not have been able to take more than £50 abroad with you but there was nothing to stop you paying for as much as possible in the UK before you travelled.
If you used the services of a business travel agent or tour operator you could not only pay for your air fare, pretty much as you do today, but you could book and pay for your hotel and car rental in sterling before you left home. I seem to remember that in some cases ways could even be found for you to pay for full board, so you didn’t need to shell out for food while you were away. And there were other unofficial ways to get round the rules.
If you or your company had associates overseas, there were sometimes ways to get them to pay your hotel bill and perhaps advance some cash to use during your trip. This could then be repaid in sterling if your associates or customers came to the UK on business. I can certainly remember being entertained fairly lavishly by colleagues living and working in places such as Brussels, Hamburg, Hong Kong and Canada, who were only too happy to fund the odd night out during my visits to their home bases, knowing full well that their hospitality would be repaid next time they found themselves in London.
But no matter how inventive business travellers were, the £50 limit was at best an annoyance, acting as it did as a brake on international business.
So there was much rejoicing when the Thatcher government used the Budget in June 1979 to announce its plans to abolish exchange controls. The then Chancellor of the Exchequer, Lord Howe, summed up the situation well when he made it clear that there would be “full freedom to buy, retain and use foreign currency for travel, gifts and loans to non-residents buying property overseas and investment in all foreign currency securities”. Foreign currency accounts could now be held in the UK or abroad, and passport marking for travel funds was abolished.
It helped pave the way for an explosion in business travel and tourism, not to mention trade. An explosion we still enjoy today.
Abolishing exchange controls paved the way for an explosion in business travel, tourism and trade