§ I would now like to say a word or two about the programme of Government borrowing for 1947–48 and to emphasise in the first place, that this year's Budget surplus, together with the supporting weight of the National Savings that have been promised, will much more than cover—and this is important—that part of what is called by some of the experts "expenditure below the line," which does not directly create new capital assets. Therefore, thoughtful and instructed persons should be reassured to know that all further internal Government borrowing this year will be either for replacement of maturing debt, which is always occurring, of course, or for definitely new capital development. None of it will be merely to bridge a gap between current income and expenditure. That phase is finished.
§ Under the heading of new capital development we expect to borrow some £50 million for the capital requirements of the National Coal Board. All our future depends upon coal, and nothing must be allowed to stand in front of the re-equipment of the now publicly owned mining industry. The other public boards, the Air Transport Corporations, the Electricity Authority and the Transport Commission, when set up, will finance their development by the issue of stock bearing their own name, not part of the National Debt but under Treasury 59 guarantee. On the other hand, the Treasury will advance to the local authorities this year from the Local Loans Fund at least £200 million for housing and for other capital schemes. We shall also borrow a further £90 million for temporary houses, and other charges of a capital character, for which the Ministry of Works are primarily responsible, which are not financed through the Local Loans Fund.
§ There will also be large financial operations, which consist, when stripped down to their essentials, only of the exchange of one piece of paper for another, in connection with compensation to private shareholders in the industries and services which are now being taken into public ownership—coal, electricity, transport and cable and wireless. These are very large financial transactions in the total, but they do not involve either new borrowing in the market or any addition to the net capital liabilities of the nation which is becoming possessed, as the result of our Socialist measures, of an impressive range of properties which were previously under private ownership. These are assets which, whatever may be thought about the policy—I am not now speaking of policy—can properly be set off against the debt created.
§ Further, we must deal with such existing debt as may mature this year. As regards small savings, maturing Certificates should be more than covered by new purchases. The first issue of the 3 per cent. Defence Bonds began to mature in November, 1946, and, by the end of this month, £32 million of these will have been paid off and £27 million converted into the 2½ per cent. series, with a saving of interest. A further £160 million will mature this year. But—and this is important to me as Chancellor of the Exchequer—apart from the maturity of these Defence Bonds and the recurrent maturities of the Floating Debt from week to week, we have a good clear run, with no large maturity to be met until 1st March, 1948, when £300 million of 3 per cent. Conversion Loan 1948–53 become redeemable. Now, therefore, is a favourable opportunity for consolidating the great advance which we have made in the last 18 months in reducing the rates of interest on Government borrowing. I have undertaken to speak of this in a little detail, and I would like to pursue the topic for a few moments.