§ 54. Mr. CRAVEN-ELLISasked the Chancellor of the Exchequer the actual rate of interest, free from Income Tax or Super-tax where liable, which is payable by the Government on savings certificates now convertible into long-date national securities?
Mr. CHAMBERLAINAs the reply contains a number of figures, I will, with the permission of the House, circulate it in the OFFICIAL REPORT.
§ Following is the reply:
§ The interest payable on the savings certificates, if the holder does not accept any of the conversion offers is one penny per month per certificate after the tenth year. What rate of interest this represents depends on the time the individual certificates have been held and the value they have reached.
§ The yield of the conversion certificates now on offer is £4 2s. 9d. per cent. free of Income Tax, if held for the full term of 10 years. The yield on the 4 per cent. National Savings Bonds, repayable at 103, is £4 4s. 11d. if held for 10 years. The yield on 4½ per cent. Conversion Loan, which is repayable after not less than eight and not more than 12 years, depends on the market price on the day on which the conversion takes place. The gross yield on this stock, after allowing for the small turn contained in the offer, was about £5 2s. 6d. per cent. when the offer opened and with the subsequent rise in the market price of the stock is now about £4 18s. per cent.
§ The figures given above are not properly comparable with each other. Some of the securities are liable to Income Tax and Surtax, others not: some are repayable on demand, and others only at a fixed period; in some cases the interest is payable periodically and in other cases it is added to capital. The purpose of the conversion offer was to give present holders a very wide range of choice so that as far as possible the convenience of each individual holder might be met.