HC Deb 10 June 1976 vol 912 cc1666-8
Q3. Mr. Watkinson

asked the Prime Minister if he will meet the Governor of the Bank of England.

The Prime Minister

I have no plans to meet the Governor in the immediate future. But my right hon. Friend the Chancellor of the Exchequer maintains close contact with him.

Mr. Watkinson

When my right hon. Friend next meets the Governor of the Bank of England will he discuss with him the pivotal rôle of the Bank, the Government and industry in the oncoming upturn? Will he take care not to repeat the blunders of the Barber Administration and ensure complete control over the money supply during the coming period? Will he also issue the strongest directive to the banking system that investment funds should find their way into productive industry?

The Prime Minister

I take my hon. Friend's last point completely. I hope that with the upturn that is coming that will be so.

As regards control of the money supply, I hope that we can learn from the mistakes and excesses of the previous Administration.

The House should absorb the figures of the increase in the money supply last time because they hold a great lesson for us. In 1973 the increase in the money supply—[An HON. MEMBER: "Reading."] yes, I am reading—was 28.5 per cent.; in March 1974 it was 25.2 per cent.; in March 1975 it had been reduced to 10.7 per cent. and in March 1976 to 9.6 per cent. That is the reason why we had the terrible burst of inflation in 1974 and 1975 and why it is coming down so fast now—

Mr. Powell

The right hon. Gentleman has got it right.

The Prime Minister

—aided by the pay policy. I do not want to make relations between the right hon. Member for Down, South (Mr. Powell) and the Opposition Front Bench any worse.

Mr. Lawson

In view of the Prime Minister's great interest in and long experience of these matters and in view of his continued assertions that sterling is at present under-valued, will he tell the House precisely what he considers the right value of sterling to be?

The Prime Minister

There was a time when I used to read the hon. Gentleman with some interest. I never then heard him make such a suggestion, and he should not do so now. The hon. Gentleman knows very well that it would be foolish for me to make such an assumption.