HC Deb 25 October 1960 vol 627 cc2130-1
13. Mr. Rankin

asked the Chancellor of the Exchequer whether he will introduce some relaxation of credit restrictions in order to overcome the present diminution in business activity; and if he will make a statement.

18. Mr. Jay

asked the Chancellor of the Exchequer whether he will now reduce the Bank Rate.

Mr. Selwyn Lloyd

I have no announcement to make to the House about relaxation of credit restrictions.

Mr. Rankin

Is the right hon. and learned Gentleman aware that we were told yesterday that Lanarkshire County Council had floated a loan on the London market at 6 per cent.? This is a loan of £5 million, redeemable in 1980. Does he realise that the £5 million will cost Lanarkshire £6 million in total, and £300,000 per year? Is he aware that this is bound to affect industrial activity due to the high rating position that will ensue in Lanarkshire—and also throughout Scotland, because it is common. In view of that and in order to help business activity, will he reconsider the question of reducing the Bank Rate or giving local authorities the advantage of the Public Works Loan Board facilities?

Mr. Lloyd

I think it is better that Lanarkshire should pay the market rate. [HON. MEMBERS: "Oh."] I certainly think so. I believe that if one starts to distort the economy by preferential systems one does not help Lanarkshire or anybody else. As to the question of the reduction in the Bank Rate, that is not usually dealt with by Question and Answer across the Floor of the House.

Mr. Jay

Does the right hon. and learned Gentleman think that the present extremely high Bank Rate is doing anything either to encourage exports or restrain imports, or to increase the national product, which he has just said he wants to do? If not, what is it achieving?

Mr. Lloyd

It is playing its part in helping to equate demand with resources. If there is excessive demand, there will be a shortage of goods, labour and material, and as soon as that happens, prices go up, and then one gets inflation.

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