§ 34. Mr. Silvesterasked the Chancellor of the Exchequer how many local authorities have borrowed foreign currency at long-and medium-term since April, 1969; and what steps his Department is taking to encourage this development.
§ Mr. DiamondOne, Sir. Section 14 of the Finance Act, 1969, enabled local authorities to pay interest without deduction of tax on foreign currency borrowing, and we are prepared in suitable cases to provide relief for the exchange uncertainties involved but the terms and timing of such borrowings must have regard to conditions in the markets concerned and other demands on those markets.
§ Mr. SilvesterIs it not the case that during the debate on the Budget Resolutions the then Financial Secretary said that he would encourage local authorities to do this? Is the Chief Secretary aware that the Treasury has been particularly unhelpful to some local authorities, particularly my own?
§ Mr. DiamondI am aware of the circumstances affecting the hon. Member's local authority, but the answer is as I have already given it to him, namely, that those demands, and other demands, have to be regulated, and note has to be taken of the condition of the market.
§ Mr. MaxwellWill my right hon. Friend tell the House whether the restric- 942 tions imposed by the Treasury on local authority borrowing overseas has anything to do with the advice tendered to the Bank of England and the Treasury by merchant banks which are attempting to regulate themselves so as to prevent so many local authorities from getting into the queue for borrowing?
§ Mr. DiamondWe have our information, and we take such advice as is necessary to ascertain the state of the market and the likely demands upon it.