As the hon. Member is aware, minimum lending rate was reduced last Thursday to 13 per cent. It is not possible to insulate small firms from rises in market rates of interest. I am, however, aware that these rates may sometimes raise special problems for small firms and I shall continue to seek other ways to help them, as we have done in the past year or so.
Although one is pleased at the fall in minimum lending rate, may I ask whether the Chancellor, in his charming way, has yet understood the essential point that high Government spending, particularly on wasteful job creation and job protection schemes, causes the Government to force up interest rates so as to borrow, thereby losing more real jobs in the private sector than they create bogus jobs in the public sector?
I think that the rather naive assumptions which the hon. Gentleman invites me to make owe more to party polemics than to a desire to grasp the whole of this complex subject. Our borrowing requirement is firmly held in check. The rates of interest at present, for one reason or another, are higher than they were with the same borrowing requirement. The hon. Gentleman chooses wilfully to ignore a whole complex of factors at home and abroad which bear upon interest rates.
Can my right hon. Friend tell the House how much in interest charges the recent issues of Government securities will cost the taxpayer between now and the end of the century? Does he agree that that borrowing could have been had more cheaply?
Without notice I cannot give my hon. Friend the cost in interest charges to the end of the century, or to any particular time. The present high rates of interest are undoubtedly exceedingly costly. No one will welcome more than I shall any reduction in interest rates on all borrowings which the Chancellor of the Exchequer is able to make.
I do not know that I find it reassuring that Opposition Members and some of my hon. Friends are achieving identical hallucinations on this delicate area of finance. No one could possibly suggest that that rate of interest was induced by a state of panic. It was a judgment reached after due consideration. The rate was dropped as soon as market conditions made it possible.
Is it not a fact that it has been widely reported that, as a result of minimum lending rate going up to 14 per cent., some of the City friends of the Chancellor of the Duchy have made a killing during that three-week period when the Government were selling gilts in that way? As my right hon. Friend has just raised the question of the PSBR again, may I ask whether he takes into account the fact that it is costing about £4,000 million to finance the dole queue? Is he not aware that that is one of the factors which is creating inflation and leading to this figure of 14 per cent.? It is at that end that he ought to start doing some work.
My hon. Friend raises two interesting points. The first relates to the profits made by some people in dealing in gilts. All I can say is that of course some people make profits from time to time dealing in gilts. Otherwise, they would not deal in them. If my hon. Friend were to offer me a gift of either the profits made recently dealing in gilts or the losses that have been made in gilts in recent years, I am afraid that I should have to tell him that the latter would quite dwarf the former.
The second point raised by my hon. Friend is important. The key problem for the Government in a difficult inflationary situation such as we have now is how to prevent the measures taken to curb inflation from further adding to the public sector borrowing requirement by increasing the unemployed, non-wealth-creating sector of our economy. I share my hon. Friend's anxiety on this score and am anxious that we tackle this problem so as to reduce the PSBR, as well as the human unhappiness and wealth loss which results from this high level of unemployment.
Will the Chancellor of the Duchy of Lancaster tell the House and those who live in the Duchy what is his assessment of the influence on the minimum lending rate of the Government's present borrowing requirement? Will he do that in the context of what he said a moment ago, namely, that it is desirable to reduce the public sector borrowing requirement below the figure of £8,500 million?
I hope that the hon. Member has not quoted me accurately. I made no such assertion about the extent of the borrowing requirement. The Government have made clear that they do not want the borrowing requirement to be inflated and that they intend to keep it firmly under control. The rate of interest that we have reached, in my opinion—since the hon. Gentleman asks for my opinion—does not derive from the size of the Government's borrowing requirement. It derives from a number of other factors too numerous to retail now.
In view of the high level of interest rates and the likelihood that they will remain at this level for a time, is the right hon. Gentleman satisfied that adequate funds are available for industry and in particular small companies which are starting up for the first time? Would it be helpful to have a low-interest fund available to these companies?
Availability of funds and the rate of interest are not necessarily the same thing. As the hon. Gentleman knows, the Welsh Development Agency has done a splendid job in providing funds. COSIRA and other agencies have done well in the United Kingdom generally. There are special difficulties for the smaller firm in finding finance. I shall keep under constant review what might be done to extend the facilities for providing finance for these smaller firms.