Interest Rates (Hansard, 26 January 1989)

§ 10. Mr. Cox
To ask the Chancellor of the Exchequer when he expects to reduce interest rates.

§ Mr. Lilley
It is not my practice to comment on future movements in interest rates.

§ Mr. Cox
Does the Minister agree that that is a deplorable reply? Is he so unaware of the problems that his Government are causing to industry and to people seeking to buy their own homes? Can he tell the House what advice he would give to people who budgeted for expenditure that they thought they could undertake and are now suffering from the ongoing increases in interest rates, leading to higher mortgage repayments? What advice can he give them so that they may have confidence in the future under the Government's policies?

§ Mr. Lilley
Far from suffering from the present circumstances, industry is undergoing an investment boom which I hope the hon. Member welcomes. We have been very successful in our policy of encouraging home ownership; 3 million more people own their homes. Mortgage rates show no correlation with difficulties over arrears or repossessions, the biggest factors in those problems being martial discord and unemployment. Happily, the latter is coming down.

§ Mr. Ian Taylor
Does my hon. Friend agree that the tight fiscal policy of the Government, shown by the size of the public sector surplus, has enabled them to use the interest rate weapon flexibly? Now that it is having its effect, will Opposition Members stop ranting and raving about other measures and give the Government credit for their success in curbing consumer spending?

§ Mr. Lilley
My hon. Friend is right to point to the importance of having a background of sound fiscal policy. The fact that the Government are repaying £10 billion of debt means that that money is available for industry to borrow.

§ Mr. Chris Smith
The Minister's statement just now will go down in the House as representing the uncaring face of the Government. As millions of home owners around this country are finding it extremely difficult to meet massive increases in mortgage repayments, when will the Government give them some hope and some relief in that task?

§ Mr. Lilley
When the hon. Gentleman was last at the Dispatch Box he said that lots of people had budgeted prudently by borrowing up to the hilt. Happily, most hon. Members would not give that advice to their constituents. Both the lender and the borrower have an obligation to make sure that borrowing is not excessive. On occasions when the borrower has difficulties, almost invariably the building society will reach arrangements that will accommodate those difficulties.