§ 28. Mr. Alisonasked the Chancellor of the Exchequer if he will take steps to include local authority borrowing 230 within the categories of those towards whom banks are to exercise credit restraint.
§ Mr. DiamondAs my right hon. Friend said in his Budget speech, he attaches the greatest importance to restraint in the provision of bank credit both to the public and private sectors. The London Clearing and Scottish Banks were asked in May, 1968, to ensure that their lending to local authorities returned to more normal levels—that is broadly the levels outstanding at November, 1967. These banks are aware that they should endeavour to see that their lending to local authorities does not rise appreciably above this level.
§ Mr. AlisonCould the Chief Secretary tell us whether the large sums the local authorities have borrowed or may borrow from the banks are included in his residual negative public sector borrowing requirement of £300 million, that is to say, are they already taken into account for the D.C.E. calculation? Would it not be more satisfactory if the Government used some of their very large central Government negative borrowing requirements to help local authorities instead of putting them into the banks?
§ Mr. DiamondTo the extent that local authorities borrow from banks the answer would be "Yes". To the extent that they borrow from the non-banking sector this would not arise and would not be part of the domestic credit expansion.