Clause 2. — (Power for the Treasury to borrow.)

Part of the debate – in the House of Commons on 5th August 1942.

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Photo of Mr Frederick Bellenger Mr Frederick Bellenger , Bassetlaw

I am referring to gross incomes. If you refer to a miner's gross income of£4 3s. a week or whatever it may be, you must also refer to the millionaire's gross income if you are to deal with them on the same plane. We have heard and read a lot about the "poor rich," but they are better able to maintain their standard of life than some of the "poor poor."

I wish to direct the attention of the Committee to a matter which I think merits serious consideration. As the Committee knows, most of this money on which we are asked to pay three per cent. is in short-term borrowings other than Treasury bills, for which the Government pay only something in the nature of£1 per cent. With the war expenditure increasing and therefore a large amount of money inflation there is a bigger volume of money on which we are compelled to pay up to 3 per cent. To show the casual way in which the Treasury deal with this question of interest on borrowings, it is only necessary to recall what happened on a previous occasion when my hon. Friend the Member for Leigh (Mr. Tinker) pointed out that the 5 per cent. which was then the figure, was too much, and the Treasury immediately reduced it to 3 per cent., thereby, I suggest, proving conclusively that there was room for cutting the rate of interest. When we consider the 2½per cent. paid on Post Office Savings Bank deposits, we must remember that they are almost entirely small deposits. If we are to continue the interest system—and my hon. Friends, be it noted, have not advocated cutting out interest altogether—then I think we have to make some discrimination between the small saver and the large saver.

The Committee must be aware that today the money industry is probably the only industry which has not been seriously affected by Excess Profit Tax. To-day this industry is making huge pro- fits owing to the inflation of Government expenditure. I suggest that my hon. Friends are quite right in suggesting to the Treasury that to-day, when they are paying only about 1 per cent. on Treasury bills, they ought to reduce the interest on the next class of short-dated securities with which this Amendment deals to 2 per cent. at most.