War Loan (Hansard, 28 February 1961)

§ 6. Mr. C. Osborne
asked the Chancellor of the Exchequer if he is aware that since the £2,000 million War Loan interest was reduced from 5 per cent. to 3½per cent. in 1931 holders have lost 70 per cent. of the real value of their income and with the price now under 60 per cent. the loss in real capital value is over 80 per cent.; if he will now reconsider his refusal to give this stock a definite redemption date, in order to restore investors' confidence in Government securities; and if he will make a statement.

§ Mr. Selwyn Lloyd
I am afraid that I remain of my predecessor's view, as expressed on 8th March, 1960, in reply to a Question by my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir), that it would not be right to announce a redemption date for War Loan in present circumstances.

§ Mr. Osborne
Would not my right hon. and learned Friend agree that this stock was issued largely in the dark days of 1917, at 5 per cent. interest, when people thought they were making a sacrifice on behalf of their country? Is he aware that this was regarded by the ordinary small investors as absolutely safe, but that they have lost 80 per cent. of their capital? Is he also aware that they feel swindled and that if he only gave the date 2001 it would give them hope again? Cannot he do something for them?

§ Mr. Lloyd
My hon. Friend has mentioned the hardship cases. Everybody has very considerable sympathy with such people, but he must realise that to do what he suggests would be a major operation of far-reaching implications. Moreover, fixing the date at 2001 would have practically no effect for the people immediately concerned.

Mr. H. Wilson
In view of the deep concern and hardship, and the fact that the price of this stock is at an all-time low, thanks to Government policy, would he at any rate give consideration to a proposal, which has been put forward authoritatively in the Investors' Chronicle, that the Government should at least use their controlling power to peg the price of stock in order to see that it does not go lower? If the right hon. and learned Gentleman does not do that, there is reason to think that people will stop lending money in gilt-edged because of loss of confidence?

§ Mr. Lloyd
That is a different suggestion. My hon. Friend the Member for Louth (Mr. C. Osborne) asked me retrospectively to change the terms on which the money was lent, which would have very wide implications.