War Loan (Hansard, 26 April 1990)

§ 5. Mr. Andrew F. Bennett
To ask the Chancellor of the Exchequer if he will announce a date for the redemption of war loan.

§ Mr. Norman Lamont
There are no plans to redeem 3½ per cent. war loan.

§ Mr. Bennett
That answer will disappoint at least one of my constituents. Are not there substantial numbers of people who either bought war loans or whose parents bought war loans that they have inherited and who believe that they have had a poor deal? Will the Government consider a scheme by which such people could redeem war loans rather than having to sell them at discounted prices?

§ Mr. Lamont
I am afraid that I cannot hold out hope for the hon. Gentleman. I stated what has been the policy of successive Governments. To redeem stocks now at par would cost a substantial amount of money and would lead to demands for redemption of other undated stocks. In most cases it would simply lead to windfall gains for those who purchased the stocks not at the original point of issue but after the price had fallen. I know that the hon. Gentlemen has been working hard on behalf of his constituents and has put forward ideas for distinguishing between some holders and others, but I am afraid that that would not be possible administratively.

§ Mr Tim Smith
Will my right hon. Friend confirm that the previous Labour Government issued the highest 470 coupon gilt ever, popularly known as "Healeys", and that it would be more sensible to repay those stocks which have a date and a high coupon rather than undated stock with a low coupon such as war loans? When did a Government last repay the national debt for three years in a row?

§ Mr. Lamont
My hon. Friend is right. I am not sure about his remarks about "Healeys", but he is certainly right in his general point about undated stocks, and I have given the hon. Member for Denton and Reddish (Mr. Bennett) the reasons why it is impossible to repay them.

§ Mr. Beith
As the Government make a virtue of repaying the public debt, why do not they give some attention to those who lend money in the particular circumstances of war and have held the stocks continually ever since? As those names must have been recorded, why is it impossible to repay those people?

§ Mr. Lamont
As I explained, large numbers of holders of war loans are not people who bought at the original price. As the hon. Gentleman knows, the stock lies at well below par. We would be giving a substantial capital gain, in particular to higher rate taxpayers and not to those who originally bought the stock. It is impossible to distinguish between those who bought the stock originally and those who hold it now.