A Major Review

As we saw in Chapter 11, the 1980 Quinquennial Review had been dominated by the issue of CDC’s permissible level of activity and how it was to be funded. It paved the way for the breakthrough for CDC to be allowed to borrow from the market in foreign currency, guaranteed by the Treasury. After the initial stumble, the National Loans Fund (NLF) provided a source of funds for several years at the government’s own borrowing rate from the market. However, the intention remained to enable CDC to raise external loans without impinging on the Public Sector Borrowing Requirement, by borrowing foreign currency funds through an overseas subsidiary. In 1985 government was ready with a technical bill to make this possible: introduced in November it was eventually passed in the following June. Ever ungrateful, CDC did not welcome the complications entailed by this funding route (it would have much preferred to retain access to the NLF). It was notably curmudgeonly over the finalisation of the arrangements, which dragged on over many months. Eccles was adamant that CDC should not be perceived as a grant aided body, since this would compromise, in his view, the desired commercial orientation of the corporation. In an exchange of letters between Kindersley and the Minister, Raison went to great lengths to allay CDC’s anxieties, including accepting a last minute amendment placing a statutory obligation on the Minister to consult with CDC before introducing grants.1 The power to make grants to CDC was included in the bill.