Public Works Loan Board (Interest Rates)

HC Deb 10 May 1962 vol 659 cc630-1

34. Mr. Jay

asked the Chancellor of the Exchequer whether he now proposes to reduce the rate of interest charged by the Public Works Loan Board.

Mr. Barber

No immediate reduction in the rates of interest charged by the Public Works Loan Board is proposed, but these rates will be reduced if there is a fall in the market rates for local authority borrowing.

Mr. Jay

Why is it that when the Bank Rate rises the Public Works Loan Board rate always rises but when the Bank Rate comes down the Public Works Loan Board rate apparently does not come down? How can the Treasury justify when the Bank Rate is only 4½ per cent. the Public Works Loan Board rate remaining at over 6 per cent.?

Mr. Barber

I can only point out to the right hon. Gentleman what I am sure he must already know. There has in fact been no appreciable reduction in long-term rates following the four recent reductions in the Bank Rate. As I said in my Answer, the P.W.L.B. rates will certainly be reduced if there is a fall in the market rates for local authority borrowing.

Mr. Jay

Is the Economic Secretary aware that his answer will not satisfy local authorities, whose housing operations are being seriously hampered by these very high rates?

Mr. Warbey

Is the position now that the rates of interest which local authorities have to pay for work of public importance, including housing, are no longer determined by the Government but by whatever the private moneylenders can get on the open market?

Mr. Barber

It has been the case, as the hon. Gentleman will recall, since October, 1955, that the rates of borrowing from the P.W.L.B. have been kept in line with the rates ruling on the market. There is nothing new about this. As I said—I repeat it—if the market rates fall there will be a reduction in the P.W.L.B. rates.