§ 69. Mr. Dryden Brookasked the Chancellor of the Exchequer whether he has any statement to make about National Savings.
§ Mr. GaitskellYes, Sir. The Eighth Issue of National Savings Certificates and the current issue of 2½ per cent. Defence 726 Bonds will be withdrawn from sale at the close of business tomorrow. On the following day, Thursday, 1st February, new issues of Certificates and Defence Bonds will be on sale.
The new Ninth Issue of Savings Certificates will cost 15s. per unit and will increase in value to 20s. 3d. in 10 years. This is equivalent to a rate of £3 0s. 11d. per cent. per annum compound over the 10-year period compared with a rate of £2 13s. 2d. on the current Certificate. The growth in value will be free of Income Tax. The maximum permitted holding of the new issue will be 500 units, costing £375, in addition to any permitted holdings of earlier issues.
The new Defence Bond will bear interest at 3 per cent. per annum as against 2½ per cent, on the current issue. The-Bonds will he repayable at par on the interest date next following 10 years after the date of purchase. There will be no alteration in the existing limit on holdings of Bonds which is £2,500 of any issue, or combination of issues.
Full details of these new securities are being issued to the Press this afternoon. The rearmament programme announced yesterday by my right hon. Friend the Prime Minister makes it all the more necessary that there should be the greatest possible volume of savings. I hope that small savings will be stimulated by the more attractive terms of these new Certificates and Bonds, and that they will be purchased by the public in large quantities.
§ Mr. OsborneIf the Chancellor is not prepared to give the higher rate of interest of £3 0s. 11d. per cent., against £2 13s. 2d. per cent., on the old issue, does he not see that people can sell the old issue and re-invest in the new? Why not give the new rate on the old and stop all this nonsense?
§ Mr. GaitskellWe cannot alter the rate of already existing Certificates.
Mr. Norman SmithWill my right hon. Friend give abundant notice to potential subscribers for these securities that, although the securities may appreciate in financial terms, they will certainly, whichever party is in power, depreciate in real value, because of the inflation which is inseparable from rearmament; and is it not really time that interest and repayment were tied to the cost-of-living index, so that we can have honest finance, and 727 not the sort of finance which we on these benches—[Interruption.] Is it not time that we had a savings campaign that hon. Members on this side would not be ashamed to advocate?
§ Mr. GaitskellIt is, of course, an essential part of the policy of combating inflation and preventing increases in prices that we should have the maximum amount of savings, and I would rely upon all hon. Members to give their fullest possible support to our policy. There is no party issue at all in this matter.
§ Mr. MaudlingIs not the Chancellor aware that, in present conditions of rising prices and heavy taxation, it is better to increase the premium on redemption rather than the current rate of interest?
§ Mr. GaitskellThese are matters which, naturally, are very carefully considered by our financial advisers. I think that the terms I have read out this afternoon are really very attractive when compared with the previous terms.
§ Lieut.-Commander Gurney BraithwaiteDoes not the Chancellor's announcement nevertheless mean a retreat from the cheap money policy so flaunted to the House and the country by his penultimate predecessor?
§ Mr. GaitskellI should not agree that it is a retreat from anything. It is well know to all hon. Members that the rate of interest on all long-term securities is rather higher than it was four years ago.