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Wilson Committee

Updated: Aug 20, 2021

The Committee to review the functioning of financial institutions set up under the chairmanship of Sir Harold Wilson in January 1977. The Committee issued an interim report, The Financing of Small Firms, in March 1979 and its final report in June 1980. The Committee’s terms of reference required it to ‘review in particular the provision of funds for industry and trade; to consider what changes are required in the existing arrangements for the supervision of these institutions, including the possible extension of the public sector .. .’ The report and its appendices contain a detailed description of the structure of the U.K. financial system and a review of recent trends. Attention was drawn to the growing importance of the financial institutions, particularly pension funds and insurance companies in the capita! market; the growth of building societies; the infiuence of taxation upon the operation of financial institutions and competi­tion between them, especially in favouring savings in home purchase; pensions and life assurance; and the broadening role of the Bank of England following the greater emphasis given to monetary policy in economic management and other changes such as the extension of the Bank’s responsibility to include the supervision of fringe banks.

The report concluded that real investment in the U.K. had not been unnecessarily constrained by shortages in the supply of external finance and that the price of finance in relation to expected profitability was the main financial constraint on investment. However, inflation had led to the drying up of the market for lang-term industrial bonds and there were difficulties in the provision of finance for small finns. The Committee recommended against any extension of the public sector by the nationalization of banks or insurance companies. The two principal earlier inquiries into the financial system were the Macmillian Committee and the Radcliffe Committee.

Reference: The Penguin Dictionary of Economics, 3rd edt.

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