§ 11. Mr. Hooleyasked the Chancellor of the Exchequer what special studies are being made by his Department of the effect of an 8 per cent. Bank Rate on local government finances.
§ Mr. DiamondThe effect of the current level of interest rates on local government finance is kept under review in the normal course of Government business.
§ Mr. HooleyIs my right hon. Friend prepared to extend over the whole of local government finance the excellent principle now introduced into the housing subsidy system of keeping the effective borrowing rate not higher than 4 per cent. for local government services?
§ Mr. DiamondI am glad that my hon. Friend has drawn attention to the position concerning housing subsidies, but to extend that principle is an entirely different question.
§ Mr. HordernWhat is the point of keeping Bank Rate at 8 per cent. in any case? It is not bringing in enough money from abroad, and the clearing banks are limited in their level of advances.
§ Mr. DiamondI agree that a high Bank Rate is not desirable in itself, but the present Bank Rate is a necessary part of the measures the Government are taking to make devaluation work.