HC Deb 03 November 1970 vol 805 cc839-40
20. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer what estimate he has made of the increase in the money supply and the expansion of domestic credit, respectively, since Budget day.

Mr. Barber

In the June quarter, the recorded increases in both the money supply, on the widest official definition, and domestic credit were about £700 million after seasonal adjustment. These figures are published in Financial Statistics.

Mr. Bruce-Gardyne

Does it not appear that the growth in the money supply this summer has been such that in order to bring us back on the course laid down by the previous Chancellor of the Exchequer in his Budget Statement we would have to have a net contraction in money supply of something like £700 million between now and next April? Are instructions being given to the Governor of the Bank of England to achieve this?

Mr. Barber

I do not think this is the sort of matter I ought to enter into in public. As has already been explained, and as has appeared from published statistics, the large rise in domestic credit and money supply in the June quarter, about which the Question was asked, followed a period of more than a year in which domestic credit had contracted sharply and money supply had grown very little. But it is also relevant to note that the rise in the quarter to which my hon. Friend is referring was due mainly to the sharp increases in private bank lending in the banking months ending mid-May and mid-July.

Mr. Barnett

Would the right hon. Gentleman say whether his target for increase of money supply of 5 per cent. is the same 5 per cent. as was taken by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins)? Secondly, does he agree with the reply given to me on Thursday last by the Prime Minister, that further tightening of the money squeeze would not affect companies? If this is so, will he suggest who will be affected?

Mr. Barber

I do not at Question Time propose to give a revised estimate of money supply for the whole year. The hon. Gentleman will have read of the decision concerning special deposits and will have seen the banking figures. He must draw his own conclusions.