HC Deb 16 May 1957 vol 570 cc558-9
26. Mr. Cronin

asked the Chancellor of the Exchequer if, in view of the present high rates of interest prevailing in the United Kingdom, he will consider arrangements to provide funds for Commonwealth investment at a lower rate of interest.

Mr. Powell

No, Sir.

Mr. Cronin

Would the hon. Gentleman not agree that it is rather hard for the Commonwealth countries, particularly the newer ones, to be obliged to pay exorbitant rates of interest for essential capital investment?

Mr. Powell

To make loans on the terms suggested would involve either a direct or an indirect subsidy. If a subsidy is to be granted, this is not the right way in which to do it.

Mr. H. Wilson

Yes, but since it has been obvious to everybody except the Government that the Bank Rate as a method of monetary technique has now broken down, does not the hon. Gentleman recognise that the present and rising level of Bank Rate has been driving one Commonwealth country after another to making its borrowing in Amsterdam, New York, Zurich and other financial centres? Will he, therefore, look at it from that point of view? Will he further recognise that one of our main instruments for Commonwealth development, the Colonial Development Corporation, has now reached the limit of its lending powers, and will the Government take quick action to deal with that as well?

Mr. Powell

The Colonial Development Corporation is not a question for me. As for the right hon. Gentleman's general proposition, as I do not accept his premise, I do not accept his contention.

Mr. J. Griffiths

What is the difference between subsidising the Commonwealth and the Government selling Trinidad Oil and subsidising our Budget?

Mr. Powell

I said that this was not an appropriate method of granting a subsidy, if such a policy were decided upon.

Mr. Wilson

When the hon. Member says that he does not accept my premise, does he not accept as a fact that Commonwealth countries have been driven from borrowing in London to the financial centres which I have mentioned? Does he deny that that is taking place as a result of the high level of interest rates?

Mr. Powell

The premise which I do not accept is that the Government's monetary policy has been ineffective.

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