HC Deb 17 February 1970 vol 796 cc195-6
22. Mr. Kenneth Baker

asked the Chancellor of the Exchequer whether he now intends to issue a new directive to the banks on their lending policy.

Mr. Roy Jenkins

No, Sir. I see no need for fresh requests or guidance at the present time.

Mr. Baker

Why cannot the credit squeeze be eased now? Is there not ample evidence that the economy needs reflating? Why has the Chancellor handed over the job of reflating the economy to Mr. Vic Feather?

Mr. Jenkins

I have handed over nothing to Mr. Vic Feather. I take notice of what he says on this and on other matters. But the responsibility for managing the economy is mine, and I do not think that a policy of indiscriminate reflation would be right at this time.

Mr. Dickens

As 125,000 building workers are currently unemployed, is there not a very strong case for giving the con- struction industry a higher priority for lending from the banks?

Mr. Jenkins

It would be very difficult to do this without giving it to a great number of other industries—for instance, agriculture. Exports are already given priority. Once one has made a great number of holes in any piece of cloth there is not much of the cloth left.

Sir A. V. Harvey

Will the Chancellor look again at what he has just said, bearing in mind how agriculture could help our balance of payments in the immediate years ahead, and give it the priority that it needs; also the building industry which his hon. Friend has just mentioned?

Mr. Jenkins

I am sure that if one went round and took a list of individual items, one could make a very good case, considered on their own, for each of them being relaxed. I am also clear that if one put them all together one would destroy the policies which have achieved success in our balance of payments.

Mr. Sheldon

Since the banks have been lending money in excess of my right hon. Friend's directive, may I ask whether he will formalise the present situation, and will he be doing anything about any other financial institutions over which he has little control?

Mr. Jenkins

I do not think that "directive" is the correct word, because no directive has been issued or, indeed, would be appropriate in the circumstances. The banks are above their 3½ per cent. ceiling. But in considering whether this is appropriate at present, regard must be had to all the circumstances, including, for instance, the continuance of the import deposits scheme.