§ Mr. FoulkesTo ask the Chancellor of the Exchequer how much has been granted in tax relief to United Kingdom banks against possible default on third world debts in each of the last 10 years; and what is the rationale for such tax relief. [25373]
§ Sir George YoungProvisions by banks operating in the United Kingdom for doubtful sovereign debt—mostly of third world countries, but which may include relatively small amounts for other countries—are estimated to have reduced corporation tax receipts in the last nine years by the following amounts:
£ million 1986–87 70 1987–88 190 1988–89 550 1989–90 490 1990–91 880 1991–92 120 1992–93 120 1993–94 120 1994–95 (provisional) 120 Estimates for earlier years are zero or small.
Third world debt is a feature of banking and losses on sovereign debt represent real losses arising in the normal course of such business. Losses or potential losses on sovereign debt therefore attract relief in broadly the same way as losses or potential losses on trading debts of other businesses.