§ 55. Mr. BRIGGSasked the Chancellor of the Exchequer if, in view of the greater facilities that exist to-day for obtaining credit, he will consider the limiting of guarantees under the Trade Facilities Acts to capital, and discontinue entirely the giving of these guarantees to interest?
§ Mr. CHURCHILLMy hon. Friend was good enough to communicate this suggestion to me privately, and I have had it carefully examined. I am advised that it is impracticable. A security guaranteed as to principal only would be of very unusual form, and it would not be available for investment by trustees. These facts, together with the absence of a guarantee of interest, would make it impossible to issue such a security at a reasonable price, and would therefore defeat the object of the Trade Facilities Acts.
§ 53. Mr. BRIGGSasked the Chancellor of the Exchequer what losses have been incurred under the Trade Facilities Acts of the capital sums guaranteed; what is the total sum for which the State is responsible of the capitalised value of the interest upon such capital losses; and if a company having a guarantee defaults on its interest, what action do the Treasury take?
§ Mr. CHURCHILLPayments by the Treasury in respect of default on capital payments amount to £5,384 14s. 6d. These payments of course extinguished any subsequent claim by the lender on the Treasury guarantee in respect of interest on the capital extinguished. Of the amount stated, £4,134 14s. 6d. may be regarded as a final loss, whereas the rest may ultimately be recovered. If a company defaults on the payment of interest or repayment of capital in respect of a loan guaranteed by the Treasury, the Treasury takes whatever action seems called for to enforce their security and protect the Exchequer. Normally this action would be by way of appointing a receiver.
§ Mr. MAXTONCan the right hon. Gentleman tell us what percentage that is of the total guarantee given? I mean the amount lost.
§ Mr. CHURCHILLI have not a calculating machine with me, and I 1718 would not trust myself to make a percentage calculation on the spur of the moment.
§ Mr. WALLHEADI take it that the percentage is very small?
§ Mr. CHURCHILLI hesitate to commit myself to a bird's-eye view of the figures, but on a bird's-eye view it does not appear very large.
§ 57. Mr. BRIGGSasked the Chancellor of the Exchequer what is the total capital sum guaranteed up to date under the Trade Facilities Acts; what is the capitalised liability for interest on such capital sum; have any of the guarantees expired and, if so, to what amount; and dc the Treasury obtain any lien upon a company's assets in return for giving a guarantee?
§ Mr. CHURCHILLAs the answer is a long one, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
§ Following is the answer:
§ The guarantees which the Treasury have stated their willingness to give up to the 31st December last amounted to £63,169,741. In view of the varying terms of the loans guaranteed, it would be an extremely laborious task to work out the present capitalised liability for the interest; and in any case the amount would only represent the difference between the above nominal figure of £63 millions and its present value.
§ Four guaranteed loans amounting to £529,700 have been entirely paid off. The Treasury liability has been further reduced by about £900,000 as a result of the repayment of loans by instalment. In the normal course, the Treasury guarantee is only given on condition that the loan to be guaranteed is to be secured by a charge on the company's assets, and in some cases further guarantees are obtained from other businesses interested in the company's undertaking. In a few exceptional cases in which a lien has not been taken, the Treasury have been satisfied on the advice of the Advisory Committee that the security is satisfactory.