HC Deb 04 March 1969 vol 779 cc195-6
12. Mr. Tom Boardman

asked the Chancellor of the Exchequer what estimate he has made of the rate of interest required to preserve real capital values and produce a real after-tax return of 3 per cent. per annum, on the basis of the present standard rate of income tax and a continued fall in the internal purchasing power of the £ sterling at the average rate experienced since October, 1964.

Mr. Harold Lever

As an exercise in arithmetic, I estimate that between October, 1964, and January, 1969, the required rate of interest would be about 12½ per cent. Such calculations have, of course, no implications for the future.

Mr. Boardman

Does not this rate show the real measure of the cost of Socialist economic failure? Has it not brought acute hardship to small savers? Is that what the Chancellor of the Exchequer meant when he said that 8 per cent. was not a crisis Bank Rate?

Mr. Lever

Had the hon. Gentleman asked me to engage in a similar arithmetical operation in respect of periods when the Conservative Party was in power, the result would not have been very dissimilar.

Mr. Henig

As the decline in the value of sterling which has gone on ever since the war is bound to be a disincentive to private saving, would my hon. Friend try-to persuade the Chancellor of the Exchequer that when he presents the Budget this year there will be a new scheme of saving offering much higher interest rates in order to restore the position?

Mr. Lever

I am grateful to my hon. Friend for his suggestion, which is not altogether novel. I will ensure that my right hon. Friend is encouraged in the direction that my hon. Friend wishes.

Mr. Powell

In view of his reply, is the hon. Gentleman surprised that the Government have been so unsuccessful in borrowing from the public?

Mr. Lever

The Government have not been unsuccessful in borrowing from the public. In fact, if one aggregates the Government borrowing and that of other fixed-interest borrowers whose borrowing is subject to the same difficulty as that implied by the Question—building societies—the rate of lending is higher than ever in our history.