§ The Chancellor of the Exchequer (Mr. Dalton)With the permission of the House, I wish to announce an important 904 development in the Government's borrowing programme.
As the House is aware, £429 million of local loans stock have been outstanding for many years. The rate of interest on this stock is 3 per cent., which is more than can be justified by this Government's credit as it stands today. I have, therefore, decided to exercise the powers granted by Parliament 11 years ago to meet this contingency, and I give notice that local loans stock will be redeemed at par on the next interest date on 5th January, 1947.
At the same time, I propose to make a new Government issue of 2½ per cent. Treasury stock. This stock will not carry a final redemption date, but will be redeemable at the option of the Government on or at any time after 1st April, 1975. This new issue will be made at par: it will open on 28th October and will be available for a limited period to investors generally and to holders of local loans stock, who will be invited to reinvest their redemption money in this new security.
This is an event for which Parliament provided by legislation enacted in 1935. At that time, there was no practical possibility of action; but Parliament made due provision, in the belief that the time might come when these powers could be used. That belief has now been fulfilled through the steady advance of the national credit. A landmark has been reached. For the first time in the history of the National Debt, His Majesty's Government are able to issue, for cash, an irredeemable security yielding ½ per cent. at par.