§ 3.20 p.m.
§ LORD BARNBYMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government the total amount of outstanding dollar indebtedness including not only Government debt, but also that of public authorities and nationalised industries; also the amount of maturities prior to the end of the 1975–76 fiscal year.
§ LORD JACQUESMy Lords, at the end of October the outstanding dollar indebtedness of local authorities was 1,249 million dollars. That of nationalised industries was 3,734 million dollars. I turn now to central Government. There was no short-term dollar indebtedness. Medium-term dollar indebtedness amounted to 722 million dollars, but this included 500 million dollars drawn from the clearing banks, not because the funds were immediately required but because the terms of the agreement made it necessary to commence drawing if the whole of the loan was to be taken up. Long-term dollar indebtedness arising wholly from the Second World War amounts to 3,339 million dollars. I expect that the noble Lord would like me to total up those figures. The total is 9,044 million dollars. Of these amounts, some 287 million dollars will be repaid by the end of the financial year 1975–76.
§ LORD BARNBYMy Lords, those are massive figures which are not easy quickly to assimilate. I thank the noble Lord for totalling the figures. Arising out of his reply, may I ask the noble Lord two questions. First, with regard to the amount which is borrowed abroad by public bodies and local authorities, is it to be understood that the majority is borrowed under our sterling obligations or that an appreciable amount is borrowed under our dollar commitment? Secondly, does not it seem that it is questionable to give encouragement to the borrowing abroad of such large sums, involving a large debt service, for posterity to handle as against the present responsibility for such indebtedness; and will the noble Lord indicate whether the service of that borrowing, 1495 although lessening the immediate flow of money supply, actually masks, or tends so to do, the exact position of the balance of payments?
§ LORD JACQUESMy Lords, in answer to the first question, may I say that the loans in foreign currency which are negotiated by the nationalised industries and local authorities are arranged under the exchange cover scheme. That is to say, the foreign currency which the nationalised industries or local authorities receive is paid into the exchange equalisation fund and they receive sterling in exchange. They keep part of the advantage of the lower international rate. Usually at the present time they get a benefit of about 1 per cent. The remaining part of the advantage is retained by the exchange stabilisation account so as to meet fluctuations in the value of sterling.
So far as the second question is concerned, I agree that the amounts are very large but they do not pose an unmanageable burden. The maturity dates of the loans taken under the public sector programme are well spread, with the last repayment due in the late 1980s. The Treasury and the Bank of England take fully into account the existing pattern of repayments, including that of the 2½ billion dollars which central Government has negotiated with the clearing banks, before approval is given to any of the loans.
§ LORD DAVIES OF LEEKMy Lords, may I ask my noble friend, who is always cogent, succinct and clear, whether the operative word used in his original Answer was "since" World War 2? Was the word "since" used? If the word "since "was used, what do we owe previous to World War 2? I understand that we are still paying sixpence in the pound for the Battle of Waterloo. This is part of the perpetuity of interest. Is it not time, after about three generations, that mankind abandoned perpetuity of interest?
§ LORD JACQUESMy Lords, the difference between my noble friend and myself can be very easily explained. He is dealing with the public sector indebtedness as a whole. I am dealing only with dollar indebtedness. What I said was perfectly correct, and what the noble Lord said was also perfectly correct 1496 because he was talking about something else!
§ LORD DAVIES OF LEEKMy Lords, I thank my noble friend for giving me now complete information that at least gives the nation true information rather than half information.
THE EARL OF HALSBURYMy Lords, will the noble Lord tell us what it costs the country's exchange in sterling to service this indebtedness?
§ LORD JACQUESMy Lords, that, I think, is another Question of which I should need notice.