HC Deb 20 May 1969 vol 784 cc226-7
27. Mr. Barnett

asked the Chancellor of the Exchequer what is his latest estimate of the increase in real net savings from the new scheme outlined in his Budget.

Mr. Roy Jenkins

I am confident that Save As You Earn will produce worthwhile new savings, but as I said in my Budget statement it is not possible to calculate the response in advance.

Mr. Barnett

The Chancellor said in his Budget Statement that he would measure the response and seize it. Does it mean that, if in 1969–70 there is a substantial response, he will adjust some other part of his strategy, that is to say, to allow money supply to grow at a greater rate, or perhaps to have an autumn Budget to reduce taxation?

Mr. Jenkins

My hon. Friend persists in talking about money supply. I prefer to talk about the effectiveness of credit policy as a whole. But to the extent that savings gave a substantial response in 1969–70, or indeed in any other year, this would have an automatic effect on the level of credit created.

Mr. Grant

The Chancellor has said that there should be a substantial increase in savings. Has he considered the dis-savings created by his overdraft proposals in the Finance Bill? If the scheme is a success, will he extend it to equities if necessary, some time in the future?

Mr. Jenkins

I recognise the part played last year by the hon. Member for Harrow, Central (Mr. Grant) in encouraging savings schemes, but I find his logic a little difficult to follow. I find it difficult to see that a tax disincentive to borrowing will encourage dis-saving. On the second part of his question, dealing with investment in equities, I would not close my mind to it, though I believe that at the moment it is overwhelmingly desirable to invest at fixed interest.