I hope that my hon. Friend will forgive my intervening at this late stage in a Bill that I have not followed through in detail before, particularly at this moderately late hour, but when, earlier this evening, I looked at Clause 4 I could not help feeling a certain sense of misgiving. Subsection (1)(a), speaking of extended borrowing powers, provides that the Act will extend
to the borrowing of money in a currency other than sterling from any person and in any manner
Those words are hardly an encouragement to thrift. Whatever Treasury controls and consents may be required, one cannot help feeling that the words imply a possibility of encouragement that the statutory bodies concerned should borrow short overseas at high rates of interest to meet their losses at home, on the one hand, or their long-term capital spending on the other.
I ask my hon. Friend how much borrowing abroad has already been done by public bodies—by the nationalised industries and local authorities? What has been the increase in each of the past three years? How has this borrowing been divided between short-term and long-term commitments for repayment? Surely Clause 4 should at the very least state that Treasury approval will not include short-term borrowing for long-term spending.
Then there are the Treasury guarantees. How are they to be implemented? At what prices of sterling are they to become effective? Are we to continue the situation in which it is possible to find that for one part of the economy we have the floating pound and for another a floating pound guaranteed at fixed and higher levels? Which levels of sterling will apply to these debts if the guarantees are ever called upon to be effected? Could they be applied to exchange levels above the ordinary exchange rates for Sterling at the settlement dates?
Is it reasonable so to extend the powers of statutory corporations to borrow at a time when we have seen vast increases in world liquidity—much greater than any comparable increase in world trade—when liquidity, as the United Nations Statistical Year Book tells us, has grown by over 62 per cent. in the last two years alone, and when we know that at home we have been increasing our money supply at a rapid rate? At the same time, we find our own pound forced down against a stronger dollar and there is a large impending deficit on our balance of payments to be expected this year, following the bad past year.
All these threats are coming about—in spite of the low value of the pound, which should encourage our exports and, we hope, will increasingly do so ; in spite of the very high interest rates in the United Kingdom ; and in spite of the salutary and substantial cuts announced to reduce or postpone public spending in the year ahead.
I cannot help but feel that the use of the words in question in the Bill is unfortunate in the light of all these factors, and even more particularly at a time when we have experienced secondary bank failures. I repeat the question which seems to me to be cardinal. Will the Treasury always ensure that the terms of borrowing are long enough?
If, however, the Treasury control is adequate, and if the Treasury ensures that the terms are long enough and the interest rates reasonable, why on earth does not the Treasury do all the borrowing? Why put the borrowing on to the statutory corporations, on to the nationalised industries? Either they are to be free agents to borrow under certain rules or, if the rules are to be drawn so very tight, the Treasury should do it itself. In that case, what is the point of Clause 4?
I have no wish tonight to divide against the proposals of my hon. Friend the Minister of State, but I felt that, having sensed the misgiving of which I spoke earlier, I should make these points about the need for thrifty legislation which encourages sound borrowing. There is no objection to borrowing as long as it is absolutely safe. It has always been the height of folly, however, for any business undertaking to borrow short and lend long. I shall be obliged by my hon. Friend's reassurance that no Treasury permission will be given for such action.