§ Q1. Mr. Michael Latham
asked the Prime Minister whether he will appoint a person with practical experience of property development to the Committee on the Functioning of Financial Institutions under the chairmanship of the right hon. Member for Huyton (Sir H. Wilson).
§ The Prime Minister (Mr. James Callaghan)
No. The Committee is not intended to be representative of particular interests. The property development industry is, however, free to submit evidence and I am sure that this would be welcomed by the Committee.
§ Mr. Latham
In the interests of increasing invisible earnings, could the Committee investigate the dismal trading 1651 performance of that unique branch of social enterprise, Labour Party Properties Limited?
§ The Prime Minister
I am sure that if the Committee would find it interesting, it would be open to it to do so. The hon. Gentleman may not understand that Labour Party Properties Limited is a non-profit-making venture—[Interruption]—but, unlike the rest of the property companies in Britain, it is deliberately non-profit-making. In other words, it was set up so that no one who was associated with it should draw any funds or fees from it but that it should assist local parties with their activities and their property. It has been very successful in doing so.
§ Mr. Heffer
Will my right hon. Friend ask our right hon. Friend the Member for Huyton (Sir H. Wilson), when the Committee is established, to look into the City's response to the National Enter-price Board, the finance for equity organisation, which, after having been in existence for eight months, has made no investment at all in manufacturing industry? We are told that the chairman is being cautious. Is this not being a bit too cautious, especially as plenty of money is sitting around in the City instead of being used for manufacturing industry?
§ The Prime Minister
Yes, Sir, the National Enterprise Board has in my judgment made a very good start in the work that it is required to do and is rapidly gaining in prestige and authority over the whole field. As regards the funds available, it is the purpose of the Committee on Financial Institutions—its exact purpose—to examine the reasons why finance from the City has not flowed more easily into industry and, if there are any obstacles, to see that they are removed.
§ Mr. Baker
Is the Prime Minister satisfied with the present policy of the Bank of England, which seems to be to intervene to keep interest rates high? How can that be in the interest of the economy, since it attracts hot money which we do not want and deters capital investment which we do want? The net result of a high interest rate policy is to ensure that in nine months unemployment will be higher than it would otherwise have been.
§ The Prime Minister
The level of sterling must clearly depend to some extent on the rate of inflation in this country, although that, of course, can be offset for a period of months or indeed, on occasions, a year or more. Therefore, our first task is to ensure that the rate of inflation does not increase and, indeed, that it substantially diminishes. For that purpose, I hope that we shall manage to get through the economic policies that are needed, especially in relation to investment and regeneration, and more especially to another round this year of wage agreements, which will enable us to ensure that inflation will come down.
I should like to emphasise one further point. I believe that if the people of this country, despite the forecasts which were made, want to throw away the gains of the last couple of years—[HON. MEMBERS: "What gains?"]—for example, the gains by reducing the absurd rate of money increase bequeathed to us by the previous Government, which has now been brought under control, and various other gains including the halving of the rate of inflation. I would say to the House, and through it to the country, that if we can accept another year of continued restraint there is little doubt that the rate of inflation will be substantially lower. If that is now thrown away as a result of impatience, I believe that we shall be heading for a vastly increased rate of inflation.