HC Deb 02 August 1962 vol 664 cc768-9
9. Mr. Callaghan

asked the Chancellor of the Exchequer, to what extent United Kingdom short-term liabilities have been increased by borrowing of foreign funds by local authorities since July, 1961.

Mr. Boyd-Carpenter

I regret that no estimate of the increase in our short-term liabilities attributable to this borrowing can be made.

Mr. Callaghan

Is that really so? Is it not possible to inquire of the local authorities to what extent they are borrowing from Germany and other continental countries? Ought not the Treasury to do so? Is it not contrary to our national interest that local authorities should be borrowing for long-term projects at high rates of interest very short-term money which could substantially and adversely influence our reserve position?

Mr. Boyd-Carpenter

On the first point, as the hon. Member may perhaps appreciate, a certain amount of this money will be borrowed through British or overseas banks, and the local authority which borrows from the bank will not necessarily know where the funds originally derived from. On the second part of his question, the hon. Gentleman will, no doubt, recall that the previous Chancellor of the Exchequer indicated that an appraisal of this was being undertaken.

Mr. Callaghan

May I press the Chief Secretary on this? Is this not a most important matter to us in view of the amount of borrowing that is known to be going on? Does he say that it is impossible for the Government to make inquiries of the various financial institutions to find out how significant this factor is? Will he not, in order to avoid this—it is well known that it is going on—reopen access to the Public Works Loan Board so that local authorities can borrow money in this country at low rates of interest for social purposes?

Mr. Boyd-Carpenter

The last part of the question plainly does not arise from the Question on the Paper. On the earlier part, I do not think any useful purpose would be served by this very complicated investigation. On the general and, I accept, much more important question of short-term borrowing by local authorities for long-term needs, as I have already indicated, my right hon. and learned Friend indicated that an appraisal was taking place, and it is in fact doing so.

Sir H. d'Avigdor-Goldsmid

Lest it should be thought that interest in this matter is entirely on the other side of the House, may I ask my right hon. Friend to give very great weight to this important piece of statistical information which is obtainable without too great difficulty simply by making inquiry from the various banks in London as to the extent of their transactions in this matter? I put it to my right hon. Friend that this is a piece of statistical information which is of the utmost value to him and his colleagues?

Mr. Boyd-Carpenter

If it can reasonably be obtained without putting everybody concerned to excessive trouble, I am all for obtaining it, but certainly my present information is that the difficulty of tracing foreign money that has been re-lent by a bank or other financial institution in this country to a particular class of borrowers is a highly complex and unrewarding activity.

Mr. Callaghan

But surely it is not right to say that—

Mr. Speaker

Order. We must get on.