§ 6. Mr. Cryerasked the Chancellor of the Exchequer what representations he has received from the Confederation or British Industry and other employers' organisations regarding a reduction in the rate of interest.
§ The Chief Secretary to the Treasury (Mr. John Biffen)We have received a number of representations from employers' organisations, individual business men and industrialists regarding a reduction in the rate of interest.
§ Mr. CryerWill the right hon. Gen-man confirm that the CBI is making strenuous efforts to get the Government to change their lunatic economic policy of high interest rates, which are ruining, in particular, small firms? Does the right hon. Gentleman accept that many organisations want the Government to take measures with regard to the massive profits that the banks are creaming off? If the Government cannot help to increase the number of jobs and extend industry instead of wreck it, will the right hon. Gentleman and his cronies resign from office?
§ Mr. BiffenWe do not intend to resign from office. We are not quitters. We are determined to pursue a monetary policy which, of necessity, includes the current level of interest rates until we see tangible signs of success that a reduction in the lending rate can be embarked on with wisdom and prudence. Premature action would be foolish.
§ Mr. Bruce-GardyneDoes my right hon. Friend agree that, as an advocate of the CBI, the hon. Member for Keighley (Mr. Cryer) is like a gourmet at a health farm? Will my right hon. Friend point out to the CBI and other bodies that make representations on the level of interest rates that the rate is still negative against the rate of inflation? Will he further point out that a recrudescence of inflationary pressures, resulting from a premature cut in interest rates, would be far more damaging to industry in the long term than a reduction in interest rates?
§ Mr. BiffenThe answer to all three parts of that constructive question is "Yes, Sir".
§ Mr. Denzil DaviesIs not the real reason why the Government cannot reduce interest rates not the reason given by the Chancellor, that bank lending was too high, but that inflation is so high? As we are to have an inflation rate of probably 20 per cent. at the end of the year, does the right hon. Gentleman accept that there is no way in which interest rates can fall before then?
§ Mr. BiffenThe right hon. Gentleman has made that point on a number of occasions.
§ Mr. BiffenIn the past, and during the lifetime of the Government of whom the right hon. Gentleman was a member, minimum lending rate tended to be a lead indicator and a move ahead of the rate of inflation.
§ Mr. DykesAs we have had peak interest rates for a longer continuous period than before, and as inflation is still increasing, will my right hon. Friend spell out precisely why there would be such dire consequences from even a moderate reduction in MLR of one or two points now?
§ Mr. BiffenWe believe that a fall in interest rates at this moment, unless it were clearly indicated by market conditions, would have a serious impact upon the Government's monetary target.