HC Deb 20 April 1937 vol 322 cc1604-5

The Committee will desire that I should say a few words about the National Debt before I conclude my review of the past year. The low rate of interest on Treasury bills prevailed during the whole of the period. The average rate was 11s. 8d., which was only 2d. more than the low record of the previous year. In November last I was able to raise £100,000,000 of 2¾ per cent. Funding Loan, with a period of 15 to 20 years, at 98½, and that enabled me to meet a maturity of Treasury Bonds in February of this year, and to effect a further diminution of the Floating Debt, which during the year has been reduced by £84,000,000. There is but little change in the nominal total of the debt. £13,000,000 has been applied out of revenue for Sinking Fund, but that was off-set to the extent of £5,500,000 by the Budget deficit and to the extent of another £3,500,000 by borrowing under the Tithe and Shipping Acts, for which we hold security. The net cash issue from the Exchequer, therefore, for debt redemption, was £4,000,000. But the issue of Funding Loan at a discount and the application of Sinking Fund at a premium caused an increase in the nominal total of over £5,000,000, and on balance the nominal total of the debt was increased by £1,296,000.

I need not remind the Committee that the nominal total of the debt does not really give a correct indication of the situation. The true criterion is to be found in the cost of interest and management, and if we are to get a proper picture of the change in that respect which has taken place since 1931, for instance, we must make allowance on the one side for the American Debt and on the other side for the difference between the interest accrued and the interest actually paid on National Saving Certificates. When these adjustments have been made it will be found that there is a relief of £60,000,000 a year, of which the permanent saving due to the War Loan conversion and later operations of a similar character, amounts to about £40,000,000, while the rest is due to the low rate of interest on Treasury bills.

The only other observation I have to make on this head concerns the Exchange Equalisation Account. I believe that the Committee are now resigned to the fact that the Exchange Equalisation Account must continue to be wrapped in mystery, but all the same they may like to have from me once more an assurance that the account still shows a profit.