Orders of the Day — Interest Rates

Part of the debate – in the House of Commons at 12:00 am on 26 March 1968.

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Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham 12:00, 26 March 1968

I hate to retreat behind the shield of the statement that I made earlier. I would be involved in areas of comment which would not be regarded as generally desirable if I were specifically to defend the given rate at the given time. I would be involved in predicting the future movements of Bank Rate up or down, and it would not be desirable, especially if it proved wrong. In fact, I do not know which would be worse: if people speculated on what I said and lost because it was wrong, or gained because I was incautiously proved right.

We start from the inevitability of a high Bank Rate after a devaluation crisis. I am glad to see that the Chancellor felt able to bring it down to 7½ per cent. I still regard it as a very high rate and not one that it is in our interests to sustain for longer than necessary.

If one drops to party polemic and debating point scoring, everyone knows that, if we want low interest rates, and I do, and if we think that low interest rates lead to a reduction in industrial costs, an easement on house borrowers, a cheapening of building costs, a lessening of the expense of borrowing money abroad on the reserve balances, and the rest of it, we can only reliably hope to have them if we put our balance of payments in order.

Taking the longer term view, the best guarantee of permanently lower interest rates coming within the possibility of a British Government is to be seen in the Government's effort in the Budget and the Finance Bill which will follow to get our balance of payments right. A balance of payments in order gives a Government far greater room to manoeuvre on these questions of interest rates. Those who want low interest rates should support the measures, however Draconian, which are necessary to put our balance of payments in order. I am confident that the Government will succeed as a result of the Budget and the other measures taken to put the balance of payments into order. We can then look forward to a vastly lower rate of interest than those prevailing at present.