§ Before I leave the past year, I will, as usual, give the Committee a brief notice of the position as regards the National Debt. Apart from the payment to America, the £17,250,000 allocated to the Sinking Fund, together with certain minor items applicable to debt redemption, amounting altogether to £730,000, was used to cancel debt of a, nominal value of £18,562,000. Against this we must set three items, namely, a Budget deficit of £32,279,000, the £2,656,000 which we borrowed for interest on Savings Certificates, and the sum of £23,175,000 borrowed, under Section 17 of the Finance (No. 2) Act, 1931, to meet the expenses of the Conversion Loan, and, in particular, the cash bonus.
§ The great increase in the Floating Debt during the year has been partly owing to these items which I have just mentioned, but mainly to the creation of the Exchange Equalisation Fund. As soon as we formed that fund, it was credited with the full amount of £150,000,000, and, of course, the State has acquired assets corresponding to that sum. The Floating Debt of £810,000,000 is nearly £200,000,000 above what it was last year, and, in spite of the abnormally low rate of discount at which Treasury Bills can now be sold, I thought it advisable to take advantage of 38 the present cheapness of money gradually to convert a portion of this balance into a longer-term security in the shape of the new 2½ per cent. Conversion Loan which is now being offered for tender weekly. The consolidation of our position which that will give us will repay us for any extra interest charge that may be involved.
§ Students of finance often note that changes in the nominal amount of the Dead-weight Debt do not really represent changes in its true burden. That is very clearly illustrated by what has happened during the past year. We have had a very considerable, but very misleading, increase in the amount of the nominal Dead-weight Debt, but, at the same time, we have laid the foundations for a very substantial decrease in the annual charge for the service of the debt, a decrease which will enter into the accounts of the present year. The total interest saving this year will amount to upwards of £52,000,000, or virtually a decrease of 20 per cent., and, although part of that is, no doubt, due to the present abnormal cheapness of short money, which in the nature of things cannot be expected to go on for ever, I think one may say safely that a very large part of it represents a permanent gain which has been due to the conversion of the War Loan and to the further operations which followed upon that great conversion. If you consider the price of Government securities at present, it points in the same direction. I will give some rather interesting figures to show the yield on a purchase of British Government securities 12 months ago as compared with to-day. On a funded stock 12 months ago the yield was £4 3s. per cent. To-day it is £3 9s. 7d. per cent. On a medium-term redeemable loan it was £4 6s. 9d. a year ago. To-day it is £3 8s. On a two-years bond to-day it is £2 3s. compared with £3 6s. 10d. a year ago. On Treasury Bills, the rate on which a year ago was £2 2s., to-day the rate is 9s. 6d. I venture to ask Members of the Committee to consider carefully whether we could have secured these immense financial benefits if we had not insisted upon a balanced Budget.
§ Taking leave of the year that has passed, I think we may say it is one of substantial achievement. Holders of fixed interest securities have made their 39 contribution to the economy of the nation. Thereby they have helped to provide one of the essentials preliminary to a revival of business activities. The sacrifices which have already been suffered have been borne with a patience which has excited general admiration and, in spite of the continued shrinkage of international trade and the continued high level of unemployment, the purchasing and saving power of the people has been maintained to a very remarkable degree. The Post Office deposits, for instance, last year rose by upwards of £16,000,000 and those in the Trustee Savings Banks by £11,750,000, which seems to me to be a very striking demonstration of the persistence of the habit of saving among our working people in these hard times. If I take, for example, three of the most important dutiable articles of working-class consumption, namely, tea, sugar and tobacco, I find that, in spite of the new duties, consumption of tea per head last year at 10.55 lbs. was higher than it has ever been before. The consumption of sugar at 91.67 lbs., though less than in 1931 when it reached the abnormal figure of 96.14 lbs., but again with that one exception, was higher than in any previous year. Even in the case of tobacco, which must be regarded as a luxury rather than a necessity, the consumption at 3.23 lbs., although rather lower than in 1931 or 1930, is still higher than in any year prior to 1929. I doubt very much whether figures similar to that could be produced in any other industrial country in the world.