HC Deb 18 May 1971 vol 817 cc1067-8
20. Mr. Hordern

asked the Chancellor of the Exchequer what proposals he intends to make to the banking sector to change existing arrangements on lending ceilings, liquidity ratios, and competition for deposits.

Mr. Barber

These proposals are set out in the consultative document "Competition and Credit Control", published by the Bank of England last week. Copies have been placed in the Library.

Mr. Hordern

The Bank of England paper "Competition and Credit Con- trol" will be widely welcomed, particularly by those who have long wished to see a greater degree of competition in the financial sector and a tighter grip on the money supply. It also accords very well with the Conservative policy of greater simplicity and competition within the economy. Will my right hon. Friend expand on the precise role of the Government Broker compared with that which he assumed 10 years ago, and the precise composition of the assets to be counted as assets by the finance houses in the future?

Mr. Barber

The last three points made by my hon. Friend should await the consultations which are now going on between the Bank of England and others concerned. I am grateful to my hon. Friend for what he said about the general proposals. I knew that they would have his support, and the support of some of his colleagues, because they have been pressing for action on this front for some time. All I can say at this stage about the Government Broker is that rates will tend to fluctuate rather more than previously, but it is important not to exaggerate the change. There is no reason why fluctuation in rates here should be greater than in other countries which order their affairs in this way.

Dr. Gilbert

Will the right hon. Gentleman bear in mind that many of us on this side of the House welcome the first crack against the bank cartel? Will he now tell his right hon. Friend the Secretary of State for Trade and Industry that he has no objection to action against the banks to end their collusive practices in charges, hours and the provision of services?

Mr. Barber

That is a matter not for me but for my right hon. Friend. I am grateful to the hon. Gentleman for what he said at the outset of his supplementary question. The Government want to see a competitive banking system, while still retaining an effective influence on the operations of the banks in so far as this is required for the purpose of economic and monetary management.