HC Deb 15 April 1935 vol 300 cc1626-7

Before we decide what to do with that surplus, I have one or two other matters to speak about. I will deal with one which, although it forms part of the financial proposals of the year, does not affect either revenue or expenditure. We are at present financing the Local Loans Fund by 3 per cent. Local Loans Stock. That stock dates from 1887, the year of the Goschen conversion scheme, and it is in the form which was common to longterm Government stocks at that period. It is a perpetual annuity. The holders have no right to claim redemption, but Parliament reserved the right to order redemption at par at any time after the year 1912 by giving one month's notice. There has been no occasion up to now to alter the method of borrowing, but hon. Members will see what a curious anomaly it is that we should be financing our Local Loans Fund by what purports to be and was intended to be a long-term stock, but one which, ever since 1912, has been redeemable at one month's notice. There was no practical importance in the anomaly so long as the yield on Government securities at the market price was well over 3 per cent., and so long as Government Departments were easily able to absorb any stock, so that it was unnecessary to make a public issue. But I am sure the Committee will agree that the time has come when we ought to have additional powers for any future borrowing, to enable us to issue stock in such form as may be best suited to modern conditions. Accordingly, I shall propose a Clause to that effect in the Finance Bill. I shall also ask for further powers to be exercised if and when the conversion of existing stock should be feasible. These powers, of course, will not make any difference to the rights of stockholders. They will be merely concerned with machinery. I want the Committee to understand that I am not now taking upon myself the role of prophet. It is quite clear that conversion is not practicable at the present moment, and, indeed, I cannot give any indication of when it may be possible to convert, but it is desirable that powers should be ready in the hands of the Treasury, so that they may be used at the appropriate moment in whatever form is thought best at the time. The Committee may remember that my predecessor, Lord Snowden, in the second Budget of 1931, obtained powers for the conversion of the War Loan at a time when that operation certainly did not seem to be within the range of possibility, but that later on those powers proved to be extremely convenient.