Public Sector Borrowing (Hansard, 24 January 1977)

§ Mr. Molloy
asked the Chancellor of the Exchequer if Her Majesty's Government now plan to continue with the programme of foreign currency borrowing by public sector bodies.

§ Mr. Healey
Although our external financial position and prospect is now greatly improved, we still face a period of external deficit. Moreover, our official reserves have for long been very low in relation both to the scale of our external transacations and by international standards. As I indicated to the House on 11th January, we do not intend to meet our financing needs on the basis406W of any build-up of potentially volatile external holdings of sterling and this makes it important to strengthen the reserves on a secure medium-term basis, as and when we are able to do so on acceptable terms.
In this situation, the Bank of England has negotiated on behalf of Her Majesty's Government a syndicated credit of $1.5 billion. The lenders are led by a group of major British, American and German banks; the loan will have an average life of nearly six years and final repayment will be made in seven years. Interest will be payable at the appropriate interbank rate in the Euro-dollar market in London plus a margin of 7/8ths per cent. for the first two years and 1 per cent. thereafter. These and other aspects of the terms are very satisfactory in present market conditions; they are the best terms that have been achieved in the market for a comparable operation since the loan to Her Majesty's Government of 1974.
In my statement on 15th December, I referred to my intention to strengthen the reserves with $500 million offered in the form of short-term swaps by the United States Treasury and Federal Reserve. In the light of the improved reserves position on the basis of the first drawing made from the IMF and with the prospect of further strengthening of the reserves over the next few months as this new market loan is drawn down, I have now decided that no drawings should at present be made on these swaps. With the agreement of the American authorities they will, however, remain available for the time being on a standby basis, alongside the parallel $350 million facility with the Bundesbank.

§ Mr. Hordern
asked the Chancellor of the Exchequer if he will publish a table showing all borrowings in foreign currencies by Her Majesty's Government, and by all local authorities, nationalised industries and other public bodies since February 1974 to the latest convenient date, and their current sterling values.

§ Mr. Robert Sheldon
Tables have already been placed in the House of Commons Library giving for each month up to the end of November 1976 the 407W names of all borrowers, the amounts borrowed, and the sterling equivalent at the rates prevailing when the loans were drawn down. I am arranging for this list to be updated.
The current sterling values of each of these loans could only be given at the cost of disproportionate time and effort, and the information would go out of date quickly as the value of the pound moved against all the other currencies involved.
The current sterling value of the total of all foreign currency borrowing by Her Majesty's Government and the public sector between 1st March 1974 and 31st December 1976 is about £6.8 billion.

MARRIED MAN WITH TWO CHILDREN (AGED UNDER 11): TAX ON INCOME FROM EMPLOYMENT

Income Tax Threshold £ Initial Rate Per cent. Maximum Rate Per cent. Income at which Maximum Rate chargeable £

Belgium … 2,200 11.2 (11.9) 72 (75.6) 65,950

Denmark … 2,700 14.4 (38.6) 39.6 (63.8) 12,250

France … 3,550 3.6 54 46800

Germany … 2,200 22 56 65,700

Ireland … 1,550 26 77 11,900

Italy … 1,400 10 72 394,250

Luxembourg … 4,550 18.2 57.7 26,100

Netherlands … 2,750 19.2 72 38,000

United Kingdom … 1,685 35 83 21,685

Sweden … 1,500 4 (29.2) 57 (82.2) 21,000

United States of America … 4,000 25 50 (55.5) 29,600

Canada … 3,900 6 (7.8) 47 (61.3) 48,750

Japan … 3,550 7 (9.8) 67.5 (83.7) 180,550

Notes:

1. Foreign currency amounts are converted into sterling at the exchange rates for 12th January 1977 and rounded to the nearest £50.

2. Figures for United Kingdom and Ireland are for the tax year 1976–77; for Denmark, 1977; for all other countries, 1976.

3. The rates of tax in brackets include local income taxes, as follows:

(a) for Belgium, a general surcharge;

(b) for Denmark, the local income tax payable in Copenhagen;

(c) for Sweden, the average rate of local income tax;

(d) for United States of America, the local income tax payable in California;

(e) for Canada, the provincial income tax payable in Ontario;

(f) for Japan, provincial and municipal income tax.

4. The figures allow for deductible social security contributions, deductible local income taxes (United States of America only), and any earned income relief, personal relief or other minimum or flat-rate reliefs available. Marginal tax rates have been abated as appropriate where reliefs are given which are expressed as a percentage of income.

5. Belgium: The initial rate is 40 per cent.—50 per cent. less abatement for expenses deduction—but the rate settles down to 11.2 per cent.—14 per cent. less abatement.

6. United Kingdom: The United Kingdom figures take no account of family allowances or the family allowances deduction ("clawback").

7. United States of America: The initial rate for United States of America—25 per cent.—is an effective rate which combines the effects of 15 per cent. tax and the withdrawal of tax credit on earned income at the rate of $1 for every $10 additional income.

MARRIED MAN WITH TWO CHILDREN (AGED UNDER 11): TAX ON INCOME FROM EMPLOYMENT
		Income Tax Threshold £	Initial Rate Per cent.	Maximum Rate Per cent.	Income at which Maximum Rate chargeable £
Belgium	…	2,200	11.2 (11.9)	72 (75.6)	65,950
Denmark	…	2,700	14.4 (38.6)	39.6 (63.8)	12,250
France	…	3,550	3.6	54	46800
Germany	…	2,200	22	56	65,700
Ireland	…	1,550	26	77	11,900
Italy	…	1,400	10	72	394,250
Luxembourg	…	4,550	18.2	57.7	26,100
Netherlands	…	2,750	19.2	72	38,000
United Kingdom	…	1,685	35	83	21,685
Sweden	…	1,500	4 (29.2)	57 (82.2)	21,000
United States of America	…	4,000	25	50 (55.5)	29,600
Canada	…	3,900	6 (7.8)	47 (61.3)	48,750
Japan	…	3,550	7 (9.8)	67.5 (83.7)	180,550
Notes:
1. Foreign currency amounts are converted into sterling at the exchange rates for 12th January 1977 and rounded to the nearest £50.
2. Figures for United Kingdom and Ireland are for the tax year 1976–77; for Denmark, 1977; for all other countries, 1976.
3. The rates of tax in brackets include local income taxes, as follows:
(a) for Belgium, a general surcharge;
(b) for Denmark, the local income tax payable in Copenhagen;
(c) for Sweden, the average rate of local income tax;
(d) for United States of America, the local income tax payable in California;
(e) for Canada, the provincial income tax payable in Ontario;
(f) for Japan, provincial and municipal income tax.
4. The figures allow for deductible social security contributions, deductible local income taxes (United States of America only), and any earned income relief, personal relief or other minimum or flat-rate reliefs available. Marginal tax rates have been abated as appropriate where reliefs are given which are expressed as a percentage of income.
5. Belgium: The initial rate is 40 per cent.—50 per cent. less abatement for expenses deduction—but the rate settles down to 11.2 per cent.—14 per cent. less abatement.
6. United Kingdom: The United Kingdom figures take no account of family allowances or the family allowances deduction ("clawback").
7. United States of America: The initial rate for United States of America—25 per cent.—is an effective rate which combines the effects of 15 per cent. tax and the withdrawal of tax credit on earned income at the rate of $1 for every $10 additional income.