HC Deb 23 February 1978 vol 944 cc1674-5
2. Mr. Watkison

asked the Chancellor of the Exchequer if he remains satisfied with the level of interest rates.

The Chancellor of the Exchequer (Mr. Denis Healey)

Yes, Sir, though I keep the position constantly under review.

Mr. Watkinson

Will the Chancellor resist the pressure which seemed to appear at the beginning of this week to increase interest rates? On the contrary, will he do everything possible to push them down, because this is vital for industrial expansion and particularly significant to the small business community, which we want to promote?

Mr. Healey

Interest rates should be as low as is consistent with the general welfare of the economy. I know that my hon. Friend shares my pleasure in the fact that the minimum lending rate is now 6 points below the level that I inherited from the previous Government. Mortgage rates are 2½ per cent. below the level that I inherited. That means that a person with a new £10,000 mortgage is £250 a year better off than he was a year ago.

Mr. Jay

Will the Chancellor note that while this reduction is extremely welcome, interest rates are still too high? Will he not agree that there is every conceivable reason for bringing them down further in present circumstances? With our much lower rate of inflation and the fact that there are no exchange rate problems this should be possible.

Mr. Healey

I hope that it will be possible. However, one must consider interest rates as one of a number of variable contributions to the welfare of the economy.

Mr. Higgins

Is it the case that the rate of increase in M3 is about the same—working on a three-months' basis—as that which the Chancellor inherited? Does this have an implication for interest rates?

Mr. Healey

I would love to answer that question, but parliamentary protocol prevents my doing so because there is a later Question about that very point.