§ 26. Mr. Barnett
asked the Chancellor of the Exchequer if he will make a statement on his discussions with the joint stock banks on his request to them to reduce their lending by a further £150 million.
§ 28. Mr. Biffen
asked the Chancellor of the Exchequer if he will make a statement on the present and prospective level of clearing bank advances; and what further measures he proposes to restrict credit.
§ Mr. Harold Lever
The clearing banks were asked last November to reduce their restricted lending to 98 per cent. of its devaluation level by mid-March this year. In January these banks were about 3 per cent. (approaching £150 million) above the target figure.
In the recent exchange of letters with the clearing banks, the Bank of England re-emphasised the importance which the authorities attached to achievement of this target. The target has not been changed and my right hon. Friend attaches the greatest importance to its achievement.
§ Mr. Barnett
I am conscious of the extremely difficult position of local bank managers in trying to reduce the facilities they give, but does not the refusal by the central banks make it very difficult for the Chancellor to pursue his economic policies? Is my hon. Friend satisfied that his right hon. Friend has adequate powers under the 1946 Act to enable him to pursue the economic policies that he wants to?
§ Mr. Biffen
Referring to the second part of my Question No. 28, can the hon. Gentleman confirm that the Government have no intention of extending their statutory powers over credit financing to cover techniques not currently covered by hire-purchase restrictions?
§ Mr. John Smith
Would not it help if the Government were to hasten the payment of their debts to the private sector, debts which, owing to legislation of one sort and another, such as S.E.T., have increased very greatly?
Mr. J. T. Price
Would my hon. Friend be surprised to learn that he has my full support at any rate in all steps 1267 taken by the Treasury to ensure that this country lives within its means for the good of both its national health and its international commitments? Until we -do that, we shall continually be in the red. Will my hon. Friend give me an assurance that he will use every effort of his Department to see that people do not borrow money from the banks to speculate on the stock market?
§ 29. Mr. Biffen
asked the Chancellor of the Exchequer if he will make a statement on the extent to which the Government are currently using interest rates as part of the policy of restricting total demand on available resources.
§ Mr. Harold Lever
Levels of interest rates in this country do not depend solely on decisions of the authorities. In so far as they do, it is the Government's policy that they should be consistent with the requirements of domestic and external policy. This is not simply a matter of direct effect upon demand; the economic consequences of changes in interest rates are highly complex.
§ Mr. Biffen
Is the hon. Gentleman aware that it would be much more preferable, if the Government seek to ration credit, that they should do so through the market mechanism by allowing the Bank Rate to move upwards, rather than attempt to sub-contract this task on to the clearing banks and ask them to carry out a private administrative system?
§ Mr. Frederic Harris
Does the hon. Gentleman realise that the Government have taken the law unto themselves in this matter, as they have done with the deposits on import duty, collaring the lot and paying no interest whatsoever?