HC Deb 23 January 1973 vol 849 cc195-7
3. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer what was the increase in the money supply (M3), expressed as an annual rate, during the latest period of three months for which figures are available; and if he will now revert to the former practice of publishing targets for the expansion of domestic credit over the period of the financial year in course.

Mr. Patrick Jenkin

In the three months to mid-December M3 increased at an annual rate of about 24 per cent. The latest figures emphasise how right we were to take the measures we have taken recently to moderate the growth of money and credit to rates consistent with our objectives for the economy. In present circumstances I do not think it would be desirable to give hard and fast numerical targets for the expansion of monetary aggregates.

Mr. Bruce-Gardyne

Is my hon. Friend alarmed by this latest reversal of the slight reduction which we previously experienced in the rate of acceleration in the money supply? To what extent does he think it is related to the Government's public spending programmes coming home to roost, and what relationship is there between this and the phase 2 legislation which we are to discuss later in the week?

Mr. Jenkin

I can only emphasise what I have already told my hon. Friend: that I think that the December figures, which were to the middle of December, indicated that it was right to have taken the earlier action which was taken and the action which was announced before the figures were made public. I would have thought it would be wrong to place too much emphasis on a single month's figures. Although the trend is higher than it was earlier in the autumn it is substantially below what it was in the summer, and it remains the Government's intention to bring the growth of money supply more nearly into line with the money growth of the economy.

Mr. Joel Barnett

When the Chief Secretary is talking about not placing too much reliance on one month's figures, he might remind the Chancellor of some of the things his right hon. Friend said on the basis of one month's figures. On the whole question of money supply and public expenditure, as the Government have forecast that public expenditure is to grow next year at the rate of 5.3 per cent., will the Chief Secretary tell us what growth rate he is planning for private consumption?

Mr. Jenkin

The hon. Gentleman will know that it has been the custom of successive Chancellors to give forecasts of that nature only at the time of the Budget and I will not anticipate my right hon. Friend's Budget Statement. As for the question of the growth of money supply, the hon. Member's point never arose under the previous Administration because they never published monthly figures.

Mr. Ridley

If the Government are hoping for a rate of growth of 5 per cent. per annum, what is the point of having a rate of growth of money supply which is in excess of that?

Mr. Jenkin

We have always made it clear that it is Government policy that our stance on money supply should be consistent with the rate of growth my right hon. Friend announced in his Budget Statement. As he told the House last year the rate of growth of money supply was higher than was necessary to achieve that, and we have been running it down. Measures taken recently will reinforce that intention.