§ 25. Mr. GILLETTasked the Chancellor of the Exchequer whether the reduction in Ways and Means advances and the increase in Treasury Bills issued, as reported on 31st March, 1929, are due to the transfer of the note issue into the hands of the Bank of England; and, if so, has the change resulted in increased 1700 interest charges to the Treasury, due to the discount rate on the Treasury Bills being more than the interest rate paid on Ways and Means advances?
§ Mr. CHURCHILLThe answer to the first part of the question is in the affirmative. The substitution of Treasury Bills for Ways and Means was made possible by the change from the Currency Note issue which fluctuated day by day to the present fixed fiduciary issue. In reply to the second part of the question there is a fixed rate of interest on these securities which does not follow market fluctuations. Whatever the rate of interest, 0 or 5 or 20 per cent., it would both be paid by the Exchequer and received back by the Exchequer as profits of the issue. It is simply a matter of book-keeping convenience. Neither the amount of the floating debt nor the interest was in fact-affected by the technical change in the form of the securities held.
§ Mr. GILLETTWill the right hon. Gentleman say whether the amount of the Sinking Fund would not be affected if the rate on Treasury Bills was higher than the amount of interest which was being paid on Ways and Means advances?
§ Mr. CHURCHILLI do not think that has anything to do with the question on the Paper.
§ Mr. GILLETTSeeing that the total figure for the Sinking Fund and Interest charges is fixed, would not this increased interest charge automatically reduce the amount of money available for the Sinking Fund?
§ Mr. CHURCHILLWhen the interest upon Treasury Bills increases that of course adds to the expenditure on debt and consequently affects the fruitfulness of the £355,000,000 fixed debt charge. In so far as any portion of this interest on the Treasury Bills increased or not increased, is actually received by the Exchequer, there is absolutely no change in the account on either side.