HC Deb 18 May 1971 vol 817 cc1064-5
16. Mr. Le Marchant

asked the Chancellor of the Exchequer what is his latest estimate of the increase in the money supply in the second quarter of 1971.

Mr. Maurice Macmillan

I cannot usefully add anything to what my right hon. Friend said in his Budget Speech about the growth of the money supply in the earlier part of the financial year.

Mr. Le Marchant

Does Friday's Bank of England Consultative Paper show a change of policy? Does it mean that monetary policy will be used to manage the economy or, on the other hand, is it just part of the general policy?

Mr. Macmillan

Perhaps the most accurate way of looking at the changes in the Friday paper is that they are changes in method without changes in basic policy.

Mr. Cant

Does the hon. Gentleman not agree that there is considerable confusion in the country about the Government's attitude to this problem? The Chancellor of the Exchequer in his Budget speech said that he was prepared to continue to finance inflation. In a subsequent speech he jumped on the fence and added to the confusion. According to the new Consultative Paper it is obvious that, with the withdrawal from the gilt-edged market, the Bank of England will control the money supply rigorously. The country is entitled to know where it stands.

Mr. Macmillan

The hon. Gentleman has come to a number of conclusions. I certainly do not agree that my right hon. Friend's monetary policy is in any way designed to finance inflation. As he said in his Budget speech, it is to achieve the necessary degree of expansion without adding to the pressure of inflation.