§ 2. Mr. Nicholas WintertonTo ask the Chancellor of the Exchequer if he will make a statement on current levels of interest rates. [24305]
§ The Chancellor of the Exchequer (Mr. Kenneth Clarke)I cut base rates by a per cent. to 6 per cent. on 8 March. That cut in rates was the third in four months, and was based on the improved outlook for inflation.
§ Mr. WintertonWhen my right hon. and learned Friend visits Macclesfield tomorrow, a borough whose Conservative-controlled council manages its affairs as prudently as he seeks to run the national affairs, will he listen to the views of local business men and women, whose views I share, who believe that low interest rates 827 and low inflation are essential to the future success of our country? Will my right hon. and learned Friend accept from me that, although there has been a modest improvement in the housing market, a further improvement, which would also enhance the opportunity of the Conservative party being re-elected at the next election, would be gratefully assisted if he were able to reduce interest rates by a further; a per cent. as soon as possible?
§ Mr. ClarkeI am looking forward to hearing the views of the business people of Macclesfield tomorrow, as they are usually so forcefully put by my hon. Friend. As he will know, Britain has the lowest interest rates—the best run on interest rates—that we have seen for 50 years or so. Business expects to see a combination of low interest rates based on sound management of the public finances and low inflation. The combination of circumstances that we have now produced is the best of that kind that we have seen for a long time.
The housing market is beginning to show the first encouraging signs of some improvement. It is—I agree with my hon. Friend—small at the moment, but it is encouraging that house prices are beginning to go up and that turnover appears to be improving. I trust that, if we keep the present conditions in place, housing and construction will recover and begin to enjoy the increased prosperity that other sectors of the economy are obviously now feeling quite strongly.
§ Mr. SheldonIs the Chancellor aware that one of the few encouraging aspects of his chancellorship has been that he has been winning the battle with the Governor of the Bank of England? Given the extremely high level of the public sector borrowing requirement, will he adopt an even more robust attitude in his meetings with the Governor to ensure that interest rates do not rise?
§ Mr. ClarkeThe Governor and I are joined in battle, side by side, to achieve the Government's inflation target—which we plainly will achieve—of 2; per cent. It is that which is giving Britain the best inflation record that it has had for a generation and more, and it is that which is making the present recovery so strong and likely to be sustained.
The Labour party cannot even say what inflation target it would set if ever it got into government, and that is because the whole history of Labour Governments, including the one in which the right hon. Gentleman served, has been one of taking inflation through the roof—which has been destructive of all industrial recoveries in recent times.
§ Lady Olga MaitlandIs my right hon. and learned Friend aware that, with the lowest mortgage rates in 31 years, the property market in my constituency in Sutton is undoubtedly shifting and, with that, the morale of property owners is going up? Is that not good news for his policies?
§ Mr. ClarkeIt is very good for the people in my hon. Friend's constituency and in mine, and throughout the rest of the country. I am extremely glad that the number of people suffering from negative equity is now plainly on a downward path, but I am sure that my hon. Friend and I are both agreed that that must continue. Those are the 828 encouraging signs for the housing industry, but it needs years of this, and years of this means sticking with the policies of this Government and avoiding the danger of a party that does not even have a target for such things ever coming to power.