HC Deb 26 February 1957 vol 565 cc1029-30
28. Mr. Roy Jenkins

asked the Chancellor of the Exchequer what is now his policy for the future level of the Bank Rate.

Mr. P. Thorneycroft

I would refer the hon. Member to the reply given on 7th February to the right hon. Member for Huyton (Mr. H. Wilson).

Mr. Jenkins

Is the right hon. Gentleman aware that that reply would have been equally appropriate if he had put the Bank Rate up or if he had kept it where it was? In particular, could he tell us whether last week's cuts in the social services were, in the Government's view, a corollary of the cut in the Bank Rate? If so, on the basis of the Government's policy, how many further cuts must we have before the Bank Rate goes back to the normal level?

Mr. Thorneycroft

I do not think that the two are relevant to each other, but the point made by the hon. Member that it was possible to refer the reply to a rise or a fall was the great merit of that reply.

Mr. Osborne

Will my right hon. Friend say that it is the Government's objective to cut down the Bank Rate as soon as possible and that they do not like dear money for its own sake? If the bill rate continues to fall, will the Bank Rate follow?

Mr. Thorneycroft

I do not think that it would be at all helpful if I started making prophecies about the movements of the Bank Rate.

Mr. H. Wilson

Since the right hon. Gentleman's answer to me, to which he has referred, conveyed no information, and as, since then, there has been a statement by the Governor of the Bank of England, does he not accept our argument from this side of the House last year, when we suggested to him that it is still possible to run an effective monetary policy without a Bank Rate of 5½ per cent., in view of its effect on Government out-payment and overseas balances and so on? Will the right hon. Gentleman be a little more specific in his answer to his hon. Friend the Member for Louth (Mr. Osborne)? Will he say whether it is the policy of the Bank of England, under Government direction, to adopt the new Canadian system of following the Bank Rate rather than influencing it?

Mr. Thorneycroft

There is no fixed rate of Bank Rate, whether above or below 5½ per cent., which is essential to monetary policy. It depends on the circumstances of the moment.