HC Deb 20 November 1962 vol 667 cc983-4
6. Sir C. Osborne

asked the Chancellor of the Exchequer why the £25 million Steel Company of Wales 5¾ per cent. second debenture stock was offered at 88½ per cent. in view of the fact that it is redeemable at 102 per cent.; how much loss this sale will show on the Iron and Steel Holding and Realisation Agency's books; and if he will make a statement.

Mr. Maudling

The offer for sale of this stock was made by the Iron and Steel Holding and Realisation Agency in accordance with its statutory duty to secure the return of the steel industry to private ownership. Prior to the sale the Agency's book value of their investment in the company amounted to £27.025 million. The gross proceeds of the present offer will amount to £22.125 million.

Sir C. Osborne

Why should the Agency accept this big loss—that is the Question which I put—if there is any chance of Bank Rate coming down in the near future and of this stock being offered at a much higher price than at the big discount of 11½ points, at which it was put on the market? Why should the taxpayer pay all this money?

Mr. Maudling

I cannot comment on future movements of Bank Rate, but this stock was offered at market value, and I think that market experience since has proved that it was about the right figure.

Mr. Callaghan

Will not the Chancellor answer the question why this stock was put on the market at this time, considering that the Act has been on the Statute Book for nine years? Why choose this moment to involve the taxpayer in a substantial loss?

Mr. Maudling

The loss did not arise on the sale. The loss had already arisen because the market value had fallen. The Agency has a statutory duty progressively to dispose of the nationalised holdings, and this it is doing.

Sir C. Osborne

If there is any chance at all within a reasonable time of Bank Rate being reduced, this stock could have been offered, if not at par, at least at a smaller rate of interest? If the Chancellor is saying that conditions are such that Bank Rate will not be reduced, we must accept it as a somewhat unnecessary sacrifice by the taxpayers.

Mr. Maudling

I do not think the Agency should speculate on future movements of Bank Rate.