Oral Answers to Questions — British Army. – in the House of Commons on 7th May 1940.
asked the Chancellor of the Exchequer whether, in view of the fact that some municipal borrowers are now unable to repay earlier debt or to convert it at lower rates of interest owing to their having used their sinking funds for meeting further capital expenditure, instead of for gradual repayment of earlier debt, he will make it a condition of future borrowing by local authorities that sinking funds shall be set up and applied to the repayment of related debt, and to no other purpose?
I am not aware that any local authority has, for the reason stated, been unable to repay debt due for repayment, and I could not agree with the condition which my hon. Friend suggests should be attached to all future borrowings by local authorities. I would remind him that a Select Committee of this House reported in 1909 that the principle of utilising sinking funds for purposes for which local authorities have borrowing powers was, if properly safeguarded, financially unobjectionable. The principle is also authorised by Statutory Regulations which have been approved by both Houses of Parliament.