§ Mr. Tim SmithTo ask the Chancellor of the Exchequer what were the reasons for the rise in the national debt from £186 billion at 31 March 1987 to £197 billion at 31 March 1988, in the light of the repayment of public sector debt in the same period of £3.6 billion.
§ Mr. Lilley[holding answer 13 March 1989]:The national debt is conventionally defined as the nominal 249W liabilities of the national loans fund. Unlike the public sector net debt, it does not include borrowing by local authorities, nor does it net off assets such as the foreign exchange reserves.
The main reason why the liabilities of the national loans fund increased in 1987–88, despite the public sector debt repayment, was because sterling was drawn from the national loans fund to finance a substantial rise in the gold and foreign exchange reserves. There are, however, a great many differences between the two concepts, and a full explanation is given on pages 530–537 of the November 1988 Bank of England Quarterly Bulletin.