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Money Supply (Definition)

Volume 14: debated on Monday 30 November 1981

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asked the Chancellor of the Exchequer how he defines money supply; how long the Treasury has adhered to that definition for purposes of monetary management; and whether he expects to change the definition.

[pursuant to his reply, 26 November 1981, c. 429]: There is a number of different measures of the money supply. Series for five aggregates are published each month by the Bank of England and can be found in "Financial Statistics", section 7. Full definitions are set out in "Financial Statistics Explanatory Handbook".Targets for one of these, £M3, were first set in December 1976 for the period April 1976 to April 1977. Targets for £M3 have been set each year since that date. For the last two years the Financial Statement and Budget Report has set out ranges for £M3 over the medium term.The Government monitor all the monetary aggregates and, as my right hon. and learned Friend the Chancellor of the Exchequer explained in his Budget Speech, takes account of them, together with other financial indicators, in assessing the stance of policy.On 18 November the banking sector, as defined for the purposes of calculating the monetary aggregates, was enlarged to include more institutions. This change in statistical procedures has no policy significance, and is expected to have only a modest effect on the monetary aggregates, since the business of many of the new reporting institutions is small. When the monetary figures prepared on the new basis are announced adjustments will be made so that growth during the target period will be comparable with growth in the aggregates calculated on the old basis. The first announcement to include figures calculated on the new basis will be made on 5 January, in respect of banking December.These changes are fully described in 'Monetary Control—Provisions', a Bank of England paper of 5

£ million
1976–771977–781978–791979–801980–811981–82 (forecast)
North Sea oil and gas revenues
Royalties712282896289901,200
Petroleum revenue tax1831,4352,4202,210
Supplementary petroleum duty1,850
Corporation tax*101090266480620
Other oil and gas revenues
Excise duty on hydrocarbon oil
Petrol1,5171,6661,6541,978†2,6403,565
Derv447542559690†700890
Rebatable oil104253256264†240250
Value added tax on hydrocarbon oil†325290280425600700
Total2,4742,9893,3115,6868,07011,285
*Corporation tax before any ACT set-off. Comparable figures for corporation tax on activities related to oil outside the North Sea ar not available.
†Estimated amounts.