HC Deb 15 April 1958 vol 586 cc43-5

Within this total the floating debt increased by £376 million. My predecessor, in last year's Budget speech, hoped that an overall Budget deficit of £125 million would "be amply covered by small savings and other non-inflationary methods of finance." In the event, the requirements of the Exchequer were somewhat higher than he had expected. On the Budget, the overall deficit was £212 million; and outside the Budget, the welcome increase in the gold and dollar reserves involved a corresponding increase in the capital of the Exchange Equalisation Fund. I do not mind that happening.

The National Savings Movement working under difficult conditions, has contributed what it could, and the authorities have made good use of every opportunity for funding—that is to say, for official sales of longer-term securities in the market. In spite of these efforts, however, some increase in short-term Government borrowing and, therefore, in bankers' liquid assets could not be prevented. Nevertheless, the level of bank advances has fallen over the year by £72 million. I am most grateful to the banks for the co-operation which they have shown in keeping down the level of advances fully in accordance with the undertakings which they gave to my predecessor.

So much for Exchequer management and credit policy in the past year. During the year ahead I am determined to maintain the effort to meet Exchequer requirements without increasing the floating debt. This means a continuing very tight hold on public expenditure, vigorous funding, and, I hope, an increase in Exchequer receipts from small savings.

With this in mind, I have reviewed the terms of the securities offered by the National Savings Movement. My right hon. Friend the Prime Minister's Premium Savings Bond is running well—if I may put it like that. I see no reason for change here or in the arrangements for the Post Office and Trustee Savings Banks. But it is time to raise the limit on holdings of the current issue of the National Savings Certificate. This limit has remained at 600 units since the present series began in August, 1956. It will now be raised to 1,000 units with effect from 1st May. Otherwise, the terms of the Certificate remain the same.

There remains the Defence Bond. The present 4½ per cent. Bond has suffered recently by comparison with the higher yields that small savers can get elsewhere. I intend to issue a new Defence Bond on 1st May, carrying interest at 5 per cent. and repayable in seven years at the rate of £103 for each £100 invested. If held to maturity, the yield will be £5 8s. 6d. per cent. without any allowance for the fact that the bonus paid on maturity is tax free. The Defence Bond holder will continue to be protected from market fluctutaions; but now he will also get a yield fully competitive with that of comparable gilt-edged securities in the market. These are very favourable terms, but, I think, rightly so.

I know that the past year has been a disappointing one for the National Savings Movement. But I know, too, that there has been no decline in the loyalty and enthusiasm of its voluntary workers. From my own personal experience I know that they are a grand band of people who go steadily on with their good work and are ready to take the downs with the ups. I hope that with the help of the two changes I have mentioned they will be encouraged in the year to conic by the better results which their steadfast efforts deserve.