§ Mr. Wickendenasked the Chancellor of the Exchequer whether, when making future tap stock issues, consideration will be given to the possibility of redemption dates being shorter than those on recent issues, the coupon being lower and the interest payable thereon being treated as franked income in the hands of recipients.
§ Mr. LawsonThe Government look for ways to minimise the long term costs of public sector borrowing, consistent with that debt being funded in ways which secure the Government's monetary objectives. The issue of short dated stock can have a cost advantage in certain conditions. But, given the portfolio preferences of financial institutions and other private sector lenders and borrowers,612W it is not practicable to rely solely on short term issues, nor would it necessarily be cheaper, given the effect on relative yields, if the Government concentrated their funding on shorter maturities. To treat interest on gilt-edged stocks as franked investment income would be inappropriate in relation to the general structure of corporation tax and would not necessarily reduce the overall cost to the Exchequer of such borrowing.