§ Mr. Bob Dunnasked the Secretary of State for Industry if he is now in a position to make the announcement referred to by the then Financial Secretary in Standing Committee E on the Finance Bill on 25 June on the detailed arrangements for the injection of additional capital into the National Girobank which will be required following the enactment of the tax on banks' non-interest bearing deposits.
§ Mr. Kenneth BakerYes. As my right hon. Friend the then Financial Secretary explained in Standing Committee E, additional capital will be provided to National Girobank to enable its investment programme to proceed. This will be partly public dividend capital on which dividends will be payable and partly national loan fund loans on which interest will be payable to the Government. He also said that dividends would be waived on Girobank's public dividend capital in 1980–81 and 1981–82 but referred to the Government's expectation of greater dividends in later years as Girobank's profitability increased.
I have now agreed, after discussion with the National Girobank, that the capital should be provided in the form of £5 million of public dividend capital subject to parliamentary approval of the winter supplementary estimate, and £2.3 million of national loan fund loans which can be drawn down by National Girobank subject to giving two weeks notice of intent. I have also agreed that the post Office's external financing limit for 1981–82, which applies to the postal business and National Girobank, should be increased by £7 million from £16 million to £23 million to allow for the injection of additional capital referred to earlier.