HC Deb 21 June 1921 vol 143 cc1125-6W

asked the Chancellor of the Exchequer whether the method of conversion adopted in the recent 3½ per cent, war loan conversion has caused an addition of approximately £100,000,000 to the National Debt; whether this increased debt will entail an additional charge upon the taxpayers in the ensuing year of £2,000,000 to meet Sinking Fund charges; and will he consider the necessity of submitting any future conversion schemes for the approval of Parliament before definite issues are made?


The effect of the issue of the Conversion Loan as explained in the Budget Speech is to increase the nominal total of the National Debt while reducing the average rate of interest on such total. The answer to the second part of the question is in the negative. The increase in the nominal total of the debt has no particular connection with the sinking fund provisions attached to the Conversion Loan, nor is there any necessary connection between the total amount which Parliament may see proper to provide next year for reduction of debt and the particular portion thereof which will be required for the Conversion Loan. My hon. Friend should, moreover, not overlook the fact that a sum of £1,000,000 cash devoted to purchase in the market of, say, a 5 per cent, stock standing at, say, 90 and a similar sum devoted to purchase of a 3½ per cent, stock standing at, say, 63, although it redeems a different nominal total of debt in each case, reduces the charge for interest by exactly the same amount. The suggestion in the third part of the question is not a practicable one.