To ask the Chancellor of the Exchequer if he will make a statement on the current level of interest rates.

Base rates are 10½ per cent.

Does my hon. Friend believe that interest rates should be reduced by 0·5 per cent. now and that immediate action would save thousands of jobs? Do the Government have the ability to make that adjustment, or are they tied hand and foot by the exchange rate mechanism? If so, will my hon. Friend say so?

My hon. Friend knows that our policy on interest rates is to set them in a way that is compatible with our commitment to the pound's band within the exchange rate mechanism and to bear down on inflation. That policy has been manifestly successful over the past 12 months in reducing the rate of inflation to 3·7 per cent.

Is the Minister aware that a respectable reason for high interest rates is the control of inflation? However, given the claim of the Chancellor of the Exchequer, in response to the hon. Member for Ealing, North (Mr. Greenway), about lower inflation, should not the Chancellor have a little more regard for board rooms where, in the balance between optimism and pessimism, the state of opinion remains distinctly negative, than for the exigencies of the exchange rate mechanism?

The mood in board rooms as disclosed by the CBI business confidence survey shows something rather different—a substantial and continuing increase in business confidence. Business men who are borrowers naturally want lower interest rates, but I am afraid that the Government have to take a rather broader view of what is in the interests of the economy. They cannot simply allow one sectional interest in the community to override others.

Does my hon. Friend accept that high interest rates are a disincentive to investment? Instead of indulging in sterile exchanges of statistics across the Chamber, should not the House decide whether the level of investment in this country is adequate to ensure that our manufacturing base can compete against other countries? [HON. MEMBERS: "Hear, hear."] How does the level of investment in this country compare with that of our major competitors?

I am surprised that Opposition Members cheered that question. They obviously have short memories. My right hon. and learned Friend the Chief Secretary has given them the figures on investment in this country and they are rather good. Interest rates are set, as I said, in a way that is compatible with our commitment to the exchange rate mechanism and to bear down on inflation. That policy has been successful. There is nothing in the long run that is more damaging to investment than inflation.