HC Deb 20 June 1939 vol 348 cc2015-6
58. Mr. Bellenger

asked the Chancellor of the Exchequer whether he is aware that the statutory provisions under which the Metropolitan Water Board are authorised to borrow money by way of bills are being impeded by the policy of the Bank of England in refusing to discount such bills for more than six months with a period of 90 days clearance between the maturity of such bills; and whether this policy has been approved by him as part of the restriction of the circulation of municipal bills?

Sir J. Simon

I assume that the hon. Member refers to the decision of the Bank of England that they will not consider eligible for rediscount bills of local authorities and public bodies issued with a currency of more than six months, and that during each financial year there must be at least 60 days, to be reckoned consecutively or in two periods of not less than 30 consecutive days, during which the authority or public body concerned has no bills outstanding. The circulation of bills issued by the Metropolitan Water Board is subject to these conditions, which are part of the measures of market regulation which, as I informed my hon. Friend the Member for East Aberdeen (Mr. Boothby) on 13th June, have my sympathy and approval.

Mr. Bellenger

Does the right hon. Gentleman realise that these restrictions placed on local authorities and public undertakings by the Bank of England are resulting in higher borrowing costs to these authorities when they go into the market; and is that the Chancellor's intention?

Sir J. Simon

No, Sir. I want each of these authorities to get reasonable facilities, but it is necessary to put certain limits. By that means we secure liquidity of the market and that, of course, is the direct concern of both the clearing banks and the Bank of England.