Autumn Statement

Part of the debate – in the House of Commons at 3:30 pm on 1 November 1988.

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Photo of Mr Nigel Lawson Mr Nigel Lawson The Chancellor of the Exchequer 3:30, 1 November 1988

The hon. Gentleman is under a misapprehension about what he calls the political and economic time bomb. The way the RPI is constructed, the increase in mortgage rates is fed into the RPI immediately the building societies announce it. It does not wait until they implement it. Therefore, there is nothing further to come in April. It does mean, of course, that because one or two building societies, notably the Halifax, do not in fact require the people it is lending to to pay more until April —some of them do it much earlier and, of course, for new mortgages it is earlier—the tightening in monetary conditions that occurs as a result of putting up interest rates, and mortgage rates going up, is not something that happens instantaneously. It happens progressively, and there will be a progressive tightening for the very reason that the hon. Gentleman said, but the effect on the RPI is immediate.