HC Deb 24 November 1970 vol 807 cc211-3
8. Mr. Hordern

asked the Chancellor of the Exchequer if he will publish monthly figures showing the money supply under the definition m1, m2 and m3, both unadjusted and seasonally adjusted, as set out on page 322 of the Bank of England Quarterly Review for September, 1970.

29. Mr. Sheldon

asked the Chancellor of the Exchequer what monthly figures of the money supply he proposes to publish.

Mr. Barber

I am considering the possibility of publishing monthly money supply figures.

Mr. Hordern

Is my right hon. Friend aware that that statement will be widely welcomed? Is he aware also that it is intolerable that the House should not have had any figures about the money supply since last June and that when those figures were produced they covered the quarter before the General Election, which showed the largest increase in the money supply ever, a fact for which the Labour Government were entirely responsible?

Mr. Barber

My hon. Friend has made a very relevant point. [HON. MEMBERS: "Oh."] There are later Questions dealing with the substance of this matter, and I should be happy to go into further details then if right hon. and hon. Members wish me to. It is true that the previous Administration declined to publish monthly money supply figures. I am now considering doing so, because I can see the advantages of it. The only reason for my hesitation is that the figures in this series have been available for only a relatively short time and I should not like them to be published before it is absolutely certain that they would not be misleading. I hope that it will be possible to do so.

Mr. Sheldon

I am sure that the whole House will welcome the publication of more figures on this matter, as it always welcomes the publication of figures. What is the Treasury's present position concerning the money supply? We know that the Treasury was sceptical at one time, we know that it swung into certainty in the opposite direction, and we know that there is now further scepticism. What is the Chancellor's view as to the importance of the money supply and how he intends to use it to control the economy?

Mr. Barber

That question obviously goes far wider than the Question on the Order Paper, which is concerned with the publishing of monthly figures. There is a later Question dealing with the substance of the matter. Obviously, questions of money supply and of domestic credit expansion are of great importance. The previous Government took that view, and I take the same view.

Mr. Roy Jenkins

Does the Chancellor agree with the September issue of the Bank of England Quarterly Review, which is referred to by the hon. Member for Horsham (Mr. Hordern) in the Question? That publication makes it clear that the increase in bank lending—probably the most vital factor in the increase in money supply—was running in accordance with the ceiling laid down until mid-June and that the increase which brought it out of line took place after mid-June.

Mr. Barber

If the right hon. Gentleman would like to table a Question related to a specific aspect of bank lending, I should be very happy to answer him. This Question is concerned with the publication of statistics concerning the money supply generally. In his Budget the right hon. Gentleman proposed a limit for the 12 months of the financial year 1970–71 of £900 million domestic credit expansion. When we took office, although only three months of that year had elapsed, there had already been an expansion of £700 million.

Mr. Roy Jenkins

The Chancellor has, unfortunately, failed to understand the question, which he understandably declined to answer. Will he not agree that it might have been legitimate to refuse to be drawn wider had he not been drawn by the hon. Member for Horsham into making some very tendentious suggestions?

I now put three question to the Chancellor. First, has he read the Bank of England Quarterly Review for September? Second, does he recollect that it makes it clear that a very large part of the increase to which he referred took place after mid-June? Third, does he agree with that?

Mr. Barber

Whatever the right hon. Gentleman may say, the simple fact is that he set a target of £900 million for the full year, and before we came to office, when only three months of the year had elapsed, domestic credit expansion had risen by £700 million. Nothing the right hon. Gentleman can say can rub out that record.

Mr. Tapsell

In view of these exchanges, is it not now clear that the Chancellor's Budget judgment last April was at fault, and a considerable tightening of the money supply is now necessary?

Mr. Barber

No doubt, the right hon. Gentleman the Member for Birmingham, Stechford (Mr. Roy Jenkins) will give his own verdict on his Budget judgment in due course. I have already made clear the Government's attitude towards the control of the money supply and domestic credit expansion. I would only add now, in fairness to my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) whose Question it is, that Question No. 34 raises this matter more directly, and I shall he very happy to deal with it then.