HC Deb 22 March 1962 vol 656 cc551-4
25. Mr. Spriggs

asked the Chancellor of the Exchequer if he will provide separate details of interest and capital repayments made by local authorities for money borrowed from the Public Works Loan Board for each year since 1950 to the latest convenient date; and how much these repayments have been affected over the same period by Bank rate changes.

Mr. Barber

As the Answer contains a number of figures, I will, with permission, circulate details in the OFFICIAL REPORT. The P.W.L.B. rates are not directly linked to Bank Rate, and it is not therefore possible to say how changes in Bank Rate since 1950 have affected repayments to the P.W.L.B. by local authorities.

Mr. Spriggs

Is not the Government's financial policy anti-social as regards local government finance, and will not the Government have another look at this matter?

Mr. Barber

I am not quite sure whether I correctly heard what the hon. Gentleman said, but, in answer to what I thought he said, I can assure him that we certainly bear in mind the level of interest rates when we are deciding what the level of the Public Works Loan Board rates should be.

Following are the details:

REPAYMENTS OF P.W.L.B. LOANS TO LOCAL AUTHORITIES
Financial Year Principal Interest Total
£m. £m. £m.
1950–51 … 25 39 64
1951–52 … 31 48 79
1952–53 … 38 62 100
1953–54 … 48 81 129
1954–55 … 54 89 143
1955–56 … 66 103 169
1956–57 … 69 109 178
1957–58 … 85 124 209
1958–59 … 83 122 205
1959–60 … 87 124 211
1960–61 … 84 119 203
TOTALS

…

 670 1,020 1,690

26. Mr. Frank Allaun

asked the Chancellor of the Exchequer if he will now reduce the interest rate on public works loans for housing.

Mr. Barber

The rates charged by the Public Works Loan Board reflect those which local authorities pay when they borrow in the market. These rates are kept under constant review, and will be adjusted as soon as market rates indicate a need for a change.

Mr. Allaun

As the Bank Rate went down by ½ per cent. this morning, and as Bank Rate has now gone down by 2 per cent. since last July, why has the P.W.L.B. rate been reduced by only a ¼ per cent. in that period? Does the Minister realise the catastrophic effect on rents when, as a result, a council flat costing £2,600 to build now costs £10,761 by the time the interest has been paid at the current rate of 6¾ per cent. for 60 years?

Mr. Barber

I am grateful to the hon. Gentleman for making it clear to the House the great progress which has been made since last July. As for the other point made by the hon. Gentleman, he will know, from answers given to him on previous occasions, that there is no direct connection between Bank Rate and the rate for longer-term borrowing.

Mrs. Slater

Will not the hon. Gentleman take credit for the Government having increased the interest rates, which they did previously—they doubled them? Is it not true that every local authority is faced with a colossal burden because the Government policy forces it to borrow money on the open market? Would he not now do something about it in view of the high cost to local authorities of this burden?

Mr. Barber

I can only say to the hon. Lady that time and again from this Box my right hon. and learned Friend and I have made clear what the Government's policy on this matter is, and the hon. Lady knows that under our present policy it would be quite impossible to insulate the local authorities from prevailing market rates. What is clear from the news which the hon. Lady will have seen this morning is that it is no part of the Government's policy to maintain interest rates at a high level for longer than is necessary

Mr. M. Stewart

The hon. Gentleman says that there is no direct connection between Bank Rate and the Board's rate. If over a period Bank Rate rises considerably, would he not agree that in practice the rate for the Public Works Loan Board has also risen, and why is the connection only one way? Why is it that over this period when Bank Rate has gone down 2 per cent. there was only a tiny reduction in the Board's rate?

Mr. Barber

If the hon. Gentleman looks at the figures, I am certain he will see that it works both ways. As far as present rates are concerned, if the rates which the local authorities are having to pay in the market come down, the P.W.L.B. rate will also come down.