§ 46. Mr. Jayasked the Chancellor of the Exchequer his estimate of the effect of the present high Bank Rate upon industrial development, building activity and employment.
§ Mr. ErrollAlthough it is difficult to isolate the influence of Bank Rate from other forces, my right hon. Friend considers that judicious adjustment of Bank Rate from time to time contributes to the health and stability of our financial system, which is the necessary basis for economic activity and employment generally. In this, as in other fields, "high" and "low" are relative terms, and I would remind the right hon. Member that Bank Rate has been reduced five times in the last twelve months.
§ Mr. JayAs all that does not mean very much, will the Minister tell me this? If it is true, as the Government tell us, that the £ is now strong and convertibility has made it even stronger, why do we need a continued high Bank Rate in present conditions?
§ Mr. ErrollI do not accept the suggestion that it is necessarily at a high rate just now. I am sorry that the Answer I gave did not convey much to the right hon. Member. I took a great deal of trouble to prepare it for him.
§ Mr. JayIs not the real truth that the introduction of convertibility has made the Government afraid to reduce the Bank Rate, although internal conditions require it?
§ Mr. ErrollNo, I cannot accept the implications in that supplementary question.