HC Deb 02 December 1975 vol 901 cc560-1W
Dr. Reginald Bennett

asked the Chancellor of the Exchequer what are the latest available figures for: (1) Treasury bills outstanding, (2) the amount of Treasury bills held by United Kingdom banks and (3) the total lending by United Kingdom banks to all public sector entities excluding holdings of Treasury bills; what were the comparable figures on 5th April 1975 and 5th April 1974; and to what extent an increase in public sector borrowing from United Kingdom banks leads to an increase in the domestic money supply on the M1 and M3 definitions.

Mr. Dell

The table below gives the information requested as at 30th June 1975, 31st March 1975 and 31st March 1974. The end of the second quarter 1975 is the latest date for which all the information requested is available; figures are not available for 5th April 1975 or 5th April 1974. Information on the total lending by United Kingdom banks to the public sector is not available: the figures provided relate to the United Kingdom banking sector.

An increase in the public sector borrowing from United Kingdom banks will lead to an increase in the domestic money supply, on the M3 definition, unless this is offset by a reduction in banks lending to the private sector or a change in the banks external position. The relationship to M1 is less direct, as M1 refers solely to sight deposits and not all bank deposits. An increase in bank lending to central Government will also tend to increase the banks' reserve assets, which could lead to a further expansion of M3—unless offsetting action was taken—

nearest £ million
30th June 1975 31st March 1975 31st March 1974
1. Treasury Bills outstanding … 8,826 7,522 5,509
Of which market holdings of Treasury Bills … 3 573 2,663 1,066
2. Treasury Bills held by Banking Sector* … 1,749 841 404
3. Total lending by banking sector* to public sector (excluding Treasury Bills) … 10,394 9,492 8,696

Source: November Financial Statistics.

* Comprises all banks in United Kingdom together with the National Giro the discount market and the Bank of England, Banking Department.