§ 3. Mr. H. G. Williamsasked the Minister of Labour what rate of interest is now being paid on the interest of the funded debt of the Unemployment Fund; what rate of interest is being obtained on the current balance of the fund; and what annual saving would result if this balance were used to pay off an equal amount of the funded debt?
§ Mr. E. BrownThe current rate of interest on the outstanding debt of the Unemployment Fund averages about 3⅙ per cent. As from October, 1938, the rate will be 3⅛ per cent. At 24th April, 1937, the balance on the General Account of the Unemployment Fund was about £44,000,000, and in order that it may be readily available, if required, it is invested in short term securities on which the rate of interest averages about 1⅔ per cent. If this balance were applied to the reduction of the outstanding debt there would be no consequent reduction in the present charges on the Unemployment Fund, since the annual payments of £5,000,000 now made in respect of principal and interest would in accordance with the Unemployment Insurance Act, 1935, have to be continued without reduction, although of course for a smaller number of years. The balance cannot be applied to the reduction of debt without a recommendation from the Unemployment Insurance Statutory Committee to that effect and I would remind my hon. Friend of the remarks made by the committee on this subject in their last report.
§ Mr. WilliamsIs it very good business to borrow money at twice the rates at which you lend money?
§ Mr. BrownThe hon. Member will realise that his supplementary question does not give an accurate account of the proceedings. This money was borrowed at different periods and in very different circumstances.