HC Deb 26 April 1937 vol 323 cc33-5
Mr. Attlee

(by Private Notice) asked Chancellor of the Exchequer whether he is in a position to make any announcement on the subject of borrowing under the Defence Loans Act, 1937?

The Chancellor of the Exchequer (Mr. Chamberlain)

Yes, Sir, I have decided that in the general interests of local authorities and other borrowers it is desirable that the market should be asquainted with my intentions. It is proposed to advertise on Wednesday morning details of an issue to be made on Thursday of 2½ per cent. National Defence Bonds to be the amount of £100,000,000 at 99½This will be a short to medium term security redeemable before the end of 1948 by annual drawings at par of not less than 20 per cent. of the amount of the loan, the first drawing being in the autumn of 1944. Subscriptions will be payable by instalments over three months, and the first dividend will be 13s. per cent, on 15th September, 1937. In order that small investors may have an opportunity of participating. I have arranged for a separate issue of registered Bonds in amounts of £5 and multiples of£5 up to a maximum of £1,000 to be made through Post Office Savings Banks and Trustee Savings Banks. The full issue price in these cases will be payable on application, and the first dividend, also payable on 15th September, 1937, will be 19s. per cent. The proceeds of the issue until required for financing the Defence Programme will be available for reducing the floating debt, and will in any case cover the estimated expenditure of £80,000,000 to be met this year from borrowed moneys.

Mr. Attlee

May I ask why the issue is for £100,000,000, seeing that the right hon. Gentleman estimated for an expenditure of £80,000,000 from loan; secondly, are the small bonds part of the larger issue; and, thirdly, will they also be issued at 99½?

Mr. Chamberlain

The answer to the first question is that there is no necessary relation between the amount of the borrowing and the amount which it is proposed to provide by way of Appropriation-in-Aid this year. I think I made that clear before. The Government will issue bonds or loans just as the market may appear to be favourable. In reply to the second question, the issue of the small amounts will he part of the whole issue. The answer to the third question, whether the price will be 99½, is Yes.

Mr. Bellenger

Has the right hon. Gentleman taken power in this issue to redeem any outstanding sum, when the time comes for redemption, below par if the market price is below par at that date?

Mr. Chamberlain

No. I think I clearly stated the terms.