§ 2. Mr. Chapmanasked the Chancellor of the Exchequer if he will take steps to discourage the procurement of goods and services through hire purchase credit terms and the use of credit cards by providing incentives through the value added tax system for cash payments.
§ Mr. LawsonI have noted my hon. Friend's suggestion, but I would see some difficulty in using the VAT system for the purpose that he has in mind.
§ Mr. ChapmanWhile recognising the importance of reducing private sector borrowing, may I ask my hon. Friend whether he sees any way in which the Government can come forward with initiatives to encourage the procurement of goods through cash payments rather than discouragement of credit terms through interest rates?
§ Mr. LawsonInterest rates are a considerable discouragement. The interest rate on many forms of consumer credit 721 is very high, especially on credit cards. The statistics show that there has been a falling-off in the rate of growth of consumer credit as a result.
§ Dr. GlynDoes my hon. Friend agree that the whole system of credit cards is an inducement to inflation? People purchase goods by producing a card rather than producing cash at the time. Will he consider some form of restriction of this credit system, which is causing an inflationary spiral?
§ Mr. LawsonMy hon. Friend is correct. That is the nature of credit cards and all forms of credit. Discriminatory regulations against credit cards would lead to other forms of credit. We take the view that the best way to control credit is through its cost.