HC Deb 04 March 1969 vol 779 cc196-7
14. Mr. St. John-Stevas

asked the Chancellor of the Exchequer if he will allow an adjustment of the present ceiling on bank lending to the private sector to take account of the decline in the internal purchasing power of the £ sterling since November, 1967.

Mr. Roy Jenkins

No, Sir. Price movements were taken into account, along with many other factors, in determining the level of the bank lending target set last November.

Mr. St. John-Stevas

Is it not unfair and discriminatory to reduce bank advances in the private sector by 2 per cent. when public expenditure in money terms is liable to rise by 5½ per cent.? Has not the Chancellor got his priorities wrong? He should be reducing public expenditure, not private expenditure.

Mr. Jenkins

No, Sir, with respect, the hon. Member has got his comparisons wrong. It is not accurate to compare bank lending with public expenditure. What is accurate and reasonable is to compare public expenditure with private expenditure on the one hand and, on the other, to compare lending to the private sector with borrowing by the public sector. As I pointed out, the reduction which is being carried out this year in public sector borrowing and the central Government borrowing requirement from £1,300 million to nil is a far more dramatic reduction than anything for which I am asking the banks.

Mr. Barnett

What estimate can the Chancellor give of additional profits accruing to banks from the increase in interest rates? In these circumstances, does he not think it proper and right that the banks should now be made to publish their accounts?

Mr. Jenkins

I am afraid that I could not give an arithmetical figure to my hon. Friend without notice, but I will bear in mind what he says.

Mr. Higgins

Is it not a fact that the Chancellor himself never makes comparisons between relevant variables on a consistent basis. Does not the limit on bank lending in percentage terms mean that it is being calculated on a money basis, whereas he says to the House that he has restricted Government borrowing in real terms. May we in future have figures which compare like with like, either both in money terms or both in real terms?

Mr. Jenkins

In so far as I give answers which the hon. Gentleman does not regard as valid comparisons, it is because I am asked questions which are to a large extent on a false basis. It is quite impossible to express the money flow, which is what bank lending inevitably is, in real terms.