HC Deb 01 March 1955 vol 537 cc1871-2
33. Mr. Blenkinsop

asked the Chancellor of the Exchequer what alteration he proposes to make in the Public Works Loans Board rate following the increase in the Bank Rate by 1 per cent.

Mr. R. A. Butler

I would refer the hon. Member to the statement made by my hon. Friend the Financial Secretary to the Treasury when he opened the debate on the Second Reading of the Public Works Loans Bill in the House yesterday.

Mr. Blenkinsop

Is the Chancellor aware of the strong criticism from both sides of the House of the frequent variations in the rate of the Public Works Loan Board bills, and does this latest variation mean that he regards the latest change in the Bank Rate as being of a fairly permanent character?

Mr. Butler

The Bank Rate is, as I have frequently described it, a flexible instrument, but I am sorry that its flexibility should have repercussions in other spheres.

Mr. Jay

Can the Chancellor give the information, which was denied the House yesterday, as to whether the housing subsidy will be raised sufficiently to cover this increase? Is the subsidy a flexible instrument also?

Mr. Butler

I am unable to add anything on that subject today.

Mr. Gaitskell

May we take it that the decision of the Chancellor to raise the interest rate to local authorities is not in any way intended to discourage or diminish the extent of expenditure on capital works by those local authorities?

Mr. Butler

We must leave the initiative to the local authorities, but the intention in raising the Bank Rate was, as the right hon. Gentleman knows, for it to have a beneficial effect on the economy, and I hope it will have that effect.

Mr. Gaitskell

I must press the Chancellor on this matter. What we want to know is, what is the intention of the Government here? Is it part of their plan for putting matters right that local authorities should spend less on development and on capital works? Can we have an answer, please?

Mr. Butler

The answer is that local authorities should spend what they themselves think best.