§ 18. Mr. TurnerTo ask the Chancellor of the Exchequer what assessment he has made of the effect of the Government's policy on interest rates.
§ Mr. TurnerWill the Chancellor confirm that his team is at the top of the OECD inflation table entirely because the right hon. Gentleman keeps scoring own goals through his high interest rate policy?
§ Mr. RyderTo be fair to him, I do not think that the hon. Gentleman has been well briefed for this question. Britain is not top of the OECD inflation league by a long chalk. Many other countries in Europe have higher inflation rates than Britain, as do others in the OECD.
§ Mr. Maxwell-HyslopDoes my hon. Friend agree that one factor in this complex consideration is that if we were to join the exchange rate mechanism, interest rates would become a much more important element in combating inflation than they are ever at the moment?
§ Mr. RyderMy hon. Friend is trying to entice me crown an incredibly attractive path, but I shall resist the temptation. As he knows, the question is not when—[Interruption.]—not whether, but when we shall join the ERM. He also knows that we shall pursue the conditions set out at the Madrid summit last summer. As soon as those conditions have been met, we shall enter the ERM.
§ Mr. Ieuan Wyn JonesThe Minister will be aware that, as a result of high interest rates, many home owners are considering remortgaging packages, which may appear to them to be attractive. Is he aware of a difficulty here? At present home owners get tax relief on that part of the mortgage with which they acquired their property and on home improvements, provided that they were carried out before 1988. Is he aware that if they remortgage they lose out on tax relief on that part which involves the home 660 improvements scheme? That is a very important consideration. Will the Minister make a statement or, if he wishes to reflect on it, will he write to me?
§ Mr. RyderI shall certainly pass on the hon. Member's Budget recommendation to my right hon. Friend the Chancellor. The hon. Gentleman is right to this extent: high mortgage rates cause a great deal of anxiety to people with mortgages, particularly young married couples. As soon as we can get inflation on a sustained downward path, interest rates and mortgages will follow.
§ Mr. KnapmanDoes my hon. Friend agree that the short-term pain of high interest rates is preferable to the long-term pain of inflation—£1,000 in 1960 had a purchasing power of only £160 in 1980? Does he agree that we must never allow that to happen again?
§ Mr. RyderWe must never allow it to happen again, but it will if the Labour party ever gets a chance or a sniff of office. Their record in the 1960s and the 1970s showed that they do not care at all about high inflation and how it affects people with mortgages and savings. The rates of interest and of inflation in the 1970s were a particular problem to elderly people with savings. It is to them that the Labour party would mete out its policies if it ever won office again.