HC Deb 14 May 1959 vol 605 cc1408-10
23. Mr. Emrys Hughes

the Chancellor of the Exchequer if he will consider assisting local authorities in Scotland to proceed with schemes which will reduce unemployment by providing such local authorities with loans at a reduced rate of interest.

Mr. Erroll

The rates of interest on loans to local authorities from the Public Works Loan Board are fixed to reflect the rates payable by local authorities in the open market. My right hon. Friend could not agree to preferential interest rates for those authorities which borrow from the Board.

Mr. Hughes

Is the hon. Gentleman aware that many local authorities would go forward with schemes which would give work to the unemployed if the rate of interest were reduced? Is he again putting the interest of the moneylenders before the interest of the unemployed?

Mr. Erroll

No. We are far more interested in the maintenance of a sound and stable currency.

Mr. Ross

Is not the Minister aware that the Secretary of State for Scotland is appealing to local authorities to get started with works and that one of the things which is preventing them is the fact that rates of interest are prohibitive? What does he intend to do about it?

Mr. Erroll

I do not accept that the rates are prohibitive, but it is certainly right. that local authorities should borrow in the market, just like everybody else, and that for those who are not able to do so there should be the facilities of the Public Works Loan Board.

Mr. Jay

Why should local authorities have to pay a higher rate on interest for public money than the rates at which the Government are lending to building societies?

Mr. Erroll

Because the two circumstances are different. Rates for Government lending to building societies are fixed in accordance with the arrangements made between the Government and the building societies, and the rates at which the societies are able to borrow. The rates for loans to local authorities through the Public Works Loan Board are fixed so as to be in alignment with the rates paid by local authorities which are able to borrow in the market.