§ 12. Mr. Barnett
asked the Chancellor of the Exchequer if he will make a further statement on bank lending.
§ Mr. Roy Jenkins
Yes, Sir. There was a fall, after seasonal adjustment, in lending by the main groups of banks, during the latest month for which information is available.
§ Mr. Barnett
Because of the way that the bank facilities work is it not a fact 1142 that to an extent this is fortuitous? Does my right hon. Friend know to what extent the ceiling would have been exceeded if all the facilities had been used? Is he contemplating changing the system to something like the kind that they have in the United States where, instead of having facilities, there is fixed lending?
§ Mr. Jenkins
The question of a change in the system would not be a matter for me but for bank practice. I could not give a figure of the position if all facilities were taken up. But it is the case that British banks have operated under this system for a long time. It should be possible for them to adjust their various commitments and the extent to which they are taken up so as to move rapidly towards the ceiling, as they have in the past month, though not in preceding months.
§ Mr. Kenneth Baker
As the right hon. Gentleman is penalising those banks which do not restrict their lending to 98 per cent., will he consider modifying the penalty and applying it only to banks which do not reach the 98 per cent.? To take one example, Lloyds has got its lending down to 98 per cent., yet it has to take the cut in interest on special deposits. Surely it should apply only to banks which have not reached the 98 per cent.
§ Mr. Jenkins
No. I dealt with that point in answer to a Question by the hon. Member for Cities of London and Westminster (Mr. John Smith). I would have been perfectly agreeable to have applied the cut in interest rates to special deposits selectively if that had been thought a reasonable procedure by the banks. The banks preferred that the procedure should be adopted across the board with an equal cut for all banks.