HC Deb 25 February 1960 vol 618 cc566-8
35. Mr. Frank Allaun

asked the Chancellor of the Exchequer at what rate of interest loans are being made by the Government to Colvilles, Cunard and the British Motor Corporation; and what rate of interest the Public Works Loan Board charges to local authorities for housing and other loans of a similar period.

Mr. Barber

The Government have entered into an agreement to lend only in the case of Colvilles. The rate of interest on each instalment of the loan will be determined by the Treasury, having regard to the cost at that time of borrowing by the Government for a similar period.

The Answer to the second part of the Question is 6 per cent.

Mr. Allaun

Are we not entitled to be told at what rate public money is being used? Is it not a fact that it is being loaned at a lower rate of interest to private firms than to local authorities? Will the Minister admit that since 1954 this increase in interest rates has halved the building of desperately needed council houses?

Mr. Barber

I thought I had made it clear in my Answer that as no instalment has yet been drawn by Colvilles, the rate of interest has not yet been determined by the Treasury.

Mr. H. Wilson

This is not good enough. Is the hon. Gentleman aware that when this money is lent, it is lent under the authority of this House and that every one of these cases is highly unusual in character, as the noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) and other hon. Members opposite have pointed out? In these circumstances, is it not right that the House of Commons should know what rate of interest the Treasury proposes to apply in these cases? It is not good enough to say that it is the market rate. Will the hon. Gentleman say whether it is tied to the Bank Rate and, if so, what differential from the Bank Rate is to be applied?

Mr. Barber

The right hon. Gentleman will remember that on 21st January last year, my right hon. Friend the Minister of Power, in reply to a Parliamentary Question, announced the heads of agreement with Colvilles. One of the heads of agreement was that in regard to each instalment of the loan, the rate of interest will be determined by the Treasury. So far, no instalment of loan has yet been made to Colvilles and, consequently, the time to determine the rate of interest has not yet come.

Mr. Wilson

I remember the Answer perfectly. It was in column 38 of the Written Answers of HANSARD for the day the hon. Gentleman has quoted. We all know it perfectly well by heart, although it was given, I think, by the Parliamentary Secretary and not by the Minister of Power. Will the hon. Gentleman at least undertake that when money is lent, and when the Treasury advances it under this arrangement and under all the other arrangements mentioned in the Question, he will inform the House of the actual rate of interest that has been charged on those occasions?

Mr. Barber

No, Sir. I cannot give that assurance. The assurance which I can give is that I will give full consideration to any Question that the right hon. Gentleman may care to put down to me.

Mr. Mitchison

Will the Economic Secretary answer the Question about the other two cases, Cunard and B.M.C.?

Mr. Barber

I was asked in the Question at what rate of interest loans were being made by the Government to Colvilles, Cunard and the British Motor Corporation. I replied that the Government had entered into an agreement to lend only in the case of Colvilles.

Mr. Allaun

In view of the unsatisfactory nature of the reply, I wish to give notice that I will raise the matter at the earliest opportunity.