§ Mr. Ray Powell
asked the Chancellor of the Exchequer if he will estimate the impact of the current levels of interest rates on inflation.
§ Mr. Ian Stewart
The current level of interest rates is maintaining downward pressure on the rate of inflation.
§ Mr. Powell
Is it not time that the Minister tried to examine yet again the economic policies that the Government are pursuing? Is he aware that hon. Members on both sides of the House are expressing the alarm and 1298 concern that was expressed earlier this week in the Division on the top salary increases? What effect wall the top salary increases have on demands by the trade union movement for an increase in wages and salaries? When will the Minister try to get his calculations right and get his predictions out of a twist? Is it not time that the Minister seriously considered the effect of the Budget, which his right hon. Friend called a Budget for employment, but which, especially in my constituency, turned out to be a Budget for unemployment?
§ Mr. Stewart
I am sorry that the hon. Gentleman underestimates the importance of the changes in the tax threshold and in national insurance contributions which my right hon. Friend announced in the Budget. They have important implications for jobs and, as I remarked earlier this afternoon, the numbers of people in employment are rising rapidly.
If I may be permitted to come back to the subject of the question, I point out to the hon. Gentleman that it is the Government's policy to maintain interest rates at whatever level—but not above that level—is needed to exert downward pressure on inflation. [Interruption.] In loosening monetary conditions today we do not want to encourage further inflation tomorrow.
§ Mr. Dickens
Following his royal highness' remarks on the ITN news at lunchtime, does my hon. Friend accept that we are moving towards a home-ownership democracy in this country and that, as such——
§ Mr. Dickens
It is. Does my hon. Friend agree that the tax relief on mortgage interest payments is an important part of the encouragement given to people to stand on their own feet and to own the house in which they live? That being so, will my hon. Friend take this opportunity to tell people today— —
§ Mr. Blair
What price does the Economic Secretary say that we shall have to pay for this high interest rate policy in terms of mortgage costs, company liquidations and the cost to industry? As Treasury forces, not market forces, are keeping interest rates at their present artificially high levels, can the hon. Gentleman tell us when they will be reduced to the levels enjoyed by our main competitors?
§ Mr. Stewart
I remind the hon. Gentleman that interest rates have already been reduced by 2 per cent. from their level at the time of the Budget. There are always difficulties that raising interest rates cause in the short run, but the difficulties caused in the long run by a failure to take appropriate action on monetary conditions are far greater.