TRUSTEE SAVINGS BANKS [MONEY] (Hansard, 23 November 1967)

§ Mr. Terence L. Higgins (Worthing)

I am sorry to delay the House, but I wonder whether the Financial Secretary can elucidate one point in the Explanatory Memorandum. Page ii says: Clause 9 provides for the payment out of the Consolidated Fund of any increase in charge on that Fund attributable to the Bill. Such an increase might arise (under section 36 of the Act of 1954) as a result of the increase in the maximum rate of interest payable to banks on deposits in the Ordinary Departments. It is not possible to estimate the effect of this provision on the Consolidated Fund, but it is not thought likely that it will in practice result in an increased charge. I am not entirely clear what is the relationship between this statement and the increase in the rate of increase provided for under Clause 1, which would appear to involve an extra charge and have a financial effect for the Government, because this is a payment from the Government to cover the expenses of the Trustee Savings Banks. It might be to the advantage of the House if we could be told why the financial effect Clause of the Bill gives the impression that there is no extra charge, whereas the body of the Bill apparently implies that there will be.

§ The Financial Secretary to the Treasury (Mr. Harold Lever)

I will try to help the hon. Member. No extra charge is likely to be incurred. This is a rather abstruse point, but the Exchequer is not likely to be impoverished. I do not know whether the hon. Member wants the matter dealt with in detail at this point, but if he does, I shall be happy to do so. It follows that provision of the Bill may affect the interest accrued from securities in the Fund for the banks for savings or any of the items affecting the interest paid and credited to the trustee savings banks and the like, which we have discussed in the Bill. This may affect either the amount of any surplus to the Exchequer or any deficiency which has to be met by the Exchequer. It is not expected that there will be any deficiency chargeable on the Consolidated Fund in the foreseeable future.

A charge could arise if this rate of interest were such that the National Debt 1604 Commissioners, in the Fund for the Banks for Savings, had to invest at a lower rate than the £3 13s. 6d. which they were paying to the banks. If the rate were to drop so that, when the ordinary department deposited the money with the National Debt Commissioners in the Fund for the Banks for Savings, that would automatically create a liability of up to £3 13. 6d. per cent.—assuming that the Debt Commissioners were paying that rate and were unhappily unable to achieve a better rate—there would be a charge to the Exchequer because the Debt Commissioners would lose on the transaction. Happily or unhappily, according to one's viewpoint, the prospect is not immediate of their incurring any such loss, so the hon. Gentleman's point is dealt with at any rate for the foreseeable future.