§ Mr. Warrenasked the Chancellor of the Exchequer what losses have been sustained by nationalised industries on foreign currency loans to them because of the fall of the value of the £ sterling over the last 12 months; and if it is the intention of the Government to compensate the nationalised industries affected.
§ Mr. Robert SheldonMost foreign currency borrowing by nationalised industries is under the exchange cover scheme, which protects the industries from the effects of exchange rate changes. The exchange risk is borne by the Exchange Equalisation Account, with the industries concerned paying for this insurance by surrendering to the Exchange Equalisation Account part of the interest benefit from borrowing in foreign currencies rather than sterling.
A small proportion of nationalised industry borrowing is, however, on an uncovered basis; the total outstanding was equivalent to £310 million at end-September 1975 exchange rates, compared with £390 million at end-September 1976 exchange rates. No losses are, however, incurred by the nationalised industries until the loans are actually repaid, which in many cases will not be for several 184W years, and their size will depend on the exchange rates ruling at the time of repayment, and so cannot be predicted. The Government have no intention to pay compensation for any losses on these loans.