HC Deb 14 February 1969 vol 777 cc404-6W
Mr. Macdonald

asked the Chancellor of the Exchequer if he will take steps to encourage borrowing in overseas capital markets by the nationalised industries in order to benefit the balance of payments.

Mr. Harold Lever

There would be advantage to the balance of payments if those nationalised industries which have power to do so were to borrow at medium and long-term in these markets. The Treasury is therefore prepared to give consent to such borrowings and, in addition, in appropriate cases, to make special arrangements to relieve the industries of the associated exchange uncertainties. Details are given in a separate Notice issued by the Treasury today and obtainable on inquiry at the Treasury or the Bank of England. The text of the Notice is as follows:


As the [Financial Secretary to the Treasury] announced in answer to a Question in the House of Commons today, the Government has decided that, when it is practicable and appropriate, nationalised industries should be encouraged to cover a proportion of their borrowing needs in the international and foreign capital markets. While it is not envisaged that anything but a small proportion of their capital needs can be met by borrowing in this way, it is considered that such borrowing would provide a significant and useful benefit to the United Kingdom balance of payments, provided that the borrowing were done at medium or long term. In appropriate cases, the Treasury will be prepared to make special arrangements to relieve the nationalised industries of the exchange uncertainties associated with borrowing foreign currencies.

Specific Treasury consent will be needed for each borrowing operation of this kind. Before giving consent, the Treasury will need to be satisfied that the terms and conditions, including the currency, size and timing, of the borrowing are appropriate, both in relation to the United Kingdom balance of payments and to the prevailing conditions in international and foreign capital markets. In order to ensure that loans comply with the Treasury's requirements, nationalised industries who are considering proposals to borrow abroad are being asked to make early contact through their sponsoring departments with the Treasury.

It is emphasised that borrowing in this way will not provide an additional source of finance which would allow the nationalised industries to exceed their approved investment programmes. Borrowing in foreign currency is an alternative source of finance, not a way of increasing investment.

These arrangements will not apply to borrowing in sterling area currencies, or borrowing through a sterling area country; they apply only to borrowing in the currency of a country outside the sterling area.

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