HC Deb 24 April 1928 vol 216 cc830-2

The Committee will naturally wish to know how this very large charge meets the obligations of the present year, and of the years which immediately follow. But before I unfold this, I have a further important announcement to make which has an unexpected bearing upon the provision for this year's Sinking Fund. In the first Budget which it was my task to present, I announced the return of this country, and indeed of the British Empire, to the Gold Standard. The time has now come to take a subsidiary step for the management of our currency system which was announced when the Gold Standard was reinstituted. The amalgamation of the Currency Notes with the Bank of England Note issue will take place in the present financial year. A Bill for this purpose will be introduced by the Financial Secretary at the earliest convenient opportunity. I will not, therefore, attempt to discuss the question of the details, or indeed the general principle of the proposal now. It will probably be sufficient if I confine myself to saying that when the Bill is published it will be found that a greater elasticity is provided for the Bank and the Treasury acting in unison than was permitted by the pre-War system.

As to the machinery, the Bank of England will take charge of the present Note issue and of the assets held against it. The profits on the issues, less expenses, will remain secured to the State. The assets will be taken by the Bank at their present value, and we shall not, of course, hand over the reserves accumulated by the Treasury against the possibility of future depreciation. These reserves, which are the property of the taxpayer, are considerable. They amount to £13,200,000. What is the position of these reserves? They are real assets; they are the fruits of past saving. Obviously, they cannot be used to meet current expenditure. I propose to use them as a special means of strengthening the Sinking Fund for this year, and of inaugurating the new Debt Redemption scheme. To this sum of £13,200,000 I shall add £800,000 from the general resources of the Budget in order that, added to the £51,000,000 which I have already mentioned, it may carry the Sinking Fund again this year to the record figure of £65,000,000 at which it was placed last year. This, I am sure, will be the course most conducive to the national credit and our interests at home and abroad.

I will now give the Committee a six-year forecast of the operation of the fixed Debt charge of £355,000,000, showing what provision will be available in each year for the new Sinking Fund and for the interest on the Savings Certificates. I take six years for a particular reason. I take it, as that six-year period includes the year 1933, when our War Debt payment to the United States of America increases by £4,000,000. I will, first of all, state the amounts available in the accumulator for 1928 and the five years following for Sinking Fund and Savings Certificates combined. In 1928, for these two objects, the Sinking Fund and the Savings Certificates, the provision will be £78,500,000; in 1929, £60,500,000; in 1930, £69,000,000; in 1931, £72,000,000; in 1932, £73,500,000 and in 1933, £71,000,000. I will pause over the figure of £78,500,000 for 1928. It is a great figure because the accumulator is fortified by the extra £14,000,000 from the Currency Note account to which I have alluded. The figure which the right hon. Gentleman opposite provided in 1924, even if I include the unrevealed or invisible Sinking Funds which accrued in that year, amounted only to £57,000,000. We are now surpassing the 1924 figure, not indeed by the £28,000,000 of last year, but by no less than £21,500,000.

I return to the figures of the six-year period which I have just stated to the Committee. The Committee will see on the card which they have before them a line which is marked "average," and lines for three more figures which I will now give. On average the figures produce £71,750,000 for the Sinking Fund and Savings Certificates combined. The specific sinking funds earmarked to particular loans alone require an average of £50,250.000. This leaves an average provision for the whole six years' period of £21,500,000 available for Savings Certificate interest or for further Sinking Fund. That is the figure for the line marked "balance" on the card. The Government Actuary who, at my request, made a detailed examination of the whole of this problem, has certified to me that the full annual provision on the average of the next six years required to meet the interest accruing on the Savings Certificates is £20,250,000. Thus a fixed debt charge provision of £355,000,000, fortified this year by an addition of £14,000,000, will, during the next six years, not only meet the statutory and fiduciary requirements of the new Sinking Fund, but will cover the whole provision actuarially required for the Savings Certificates, with a free margin of £1,250,000 a. year. I trust that upon examination the Committee will feel that that is a prudent and reasonable arrangement, and one which will give our National Debt service a solid and regular framework, without any undue burden on the taxpayer in any particular year.