HC Deb 08 July 1969 vol 786 cc1136-7
4. Mr. Hunt

asked the Chancellor of the Exchequer when he intends to restore the recent cut in the rate of interest paid to the London clearing banks on their special deposits with the Bank of England.

Mr. Roy Jenkins

When they have collectively brought their restricted lending within the 98 per cent. ceiling.

Mr. Hunt

Is not evidence accumulating that this latest form of squeeze has hit particularly hard small businesses which are unable to finance expansion from their own resources and which at the same time are not large enough to raise capital in the stock market? Will the Chancellor recognise that these small firms represent the lifeblood of our economy and that they are being very hard hit indeed by the recent measures?

Mr. Jenkins

The hon. Gentleman's supplementary question is not directed to his Question, which relates to the rate of interest paid to the banks on special deposits. Whether that rate were or were not restored, it would not affect the influence of the 98 per cent. ceiling on some firms. I do not entirely accept what he says. I recognise that any pressure on credit cannot be imposed without some hardship and cannot be done totally painlessly, but nor can any other measures to improve the balance of payments.

Mr. John Smith

Does the Chancellor not realise that this is as ineffective as caning a whole class because one or two of the boys have done something one does not like?

Mr. Jenkins

It certainly does not look ineffective on the performance of last month's figures. Furthermore, the reason that we chose to proceed in this way is that the banks were asked whether they preferred a collective or an individual approach, and they in fact preferred a collective one.