HC Deb 04 March 1976 vol 906 cc1517-9
11. Mr. Rost

asked the Chancellor of the Exchequer what is the current total of overseas debt; and what was it in February 1974.

The Chancellor of the Exchequer (Mr. Denis Healey)

I assume that the hon. Member has in mind foreign currency borrowing by Her Majesty's Government and by the public sector. Total amounts of foreign currency borrowing by Her Majesty's Government oustanding on 28th February 1974 and 29th February 1976 were $4.5 billion and $7.8 billion respectively. The latter figure includes the drawing on the IMF oil facility and the $2.5 billion Euromarket loan. The amounts of public sector foreign currency borrowing outstanding on these same days were equivalent to $3.6 billion and $7.9 billion respectively.

Mr. Rost

What is the right hon. Gentleman doing about the staggering and shameful load of debt with which he has lumbered the British people? Does he intend, as before, to wait for the next Conservative Government to repay it?

Mr. Healey

If the hon. Gentleman had listened to my Answer, he would have noted that slightly over half the total debt was inherited from the Conservative Government.

Mr. Fernyhough

Will my right hon. Friend say how much of the foreign debt was incurred to cover the deficit of between £5,000 million and £6,000 million in our trade with the EEC since we joined?

Mr. Healey

It is not possible to distinguish between the various elements of debt and the various elements of related borrowing. A large part of the additional borrowing in the past few years has been due to the additional cost of oil since the Government came into power—namely, about $6 billion a year. We inherited a balance-of-payments problem before the oil price increase hit us. As the Governor of the Bank of England said in January 1974, it was running at 4 per cent. of the gross domestic product in the last quarter of 1973.

Mr. Lawson

Will the right hon. Gentleman tell the House the annual amount of interest on this debt at those two dates?

Mr. Healey

I cannot say without notice what the interest due was in 1974, but I can say that the cost of servicing the present debt at current rates of interest is about $900 million a year.

Mr. Skinner

If, on a conservative estimate, the deficit on our trading balance with the EEC is about £5,000 million, it must be paid for in some form. Does my right hon. Friend agree that it is part of the debt to which the Question refers?

Mr. Healey

All debts have to be financed in some form as interest has to be paid on the borrowing. At some stage the debts have to be repaid. My hon. Friend's hypothesis about the precise amount of the deficit with the Common Market countries is widely exaggerated.

Mr. Nott

I note that the amount of debt required to service the public sector requirements has doubled in the past two years. Perhaps the right hon. Gentleman will say what proportion of the £7½ billion interest on the National Debt—I am referring to the amount in the Public Expenditure White Paper—he expects to relate to overseas borrowing and overseas debts. If he cannot tell us now, perhaps he will be able to do so when we have our debates next week. I have in mind the forecasts.

Mr. Healey

I suspect that the hon. Gentleman is slightly better at arithmetic than I am. The hon. Gentleman protested greatly, after he left office on the last occasion, about the size of the public sector borrowing requirement that he found when he entered the Treasury. I am sorry to say that he did not carry his conviction to the point of resignation from the Conservative Administration when he was still being paid to accept responsibility. As I said, the cost of servicing the existing external debt is about $900 million. I am sure that the hon. Gentleman will be able to work out the percentage which that forms of the total borrowing.