HL Deb 05 March 1925 vol 60 cc421-36

LORD DANESFORT had the following Notice on the Paper:—

To ask His Majesty's Government whether their attention has been called to the fact that by Command Paper 2160 of 1924 it appears that on 1st April, 1924, there was due to the British Government by the Irish Free State the sum of £1,204,830, and from the British Government to the Irish Free State the sum of £123,446, leaving a balance due from the Irish Free State of £1,081,390; whether the Free State have paid over this sum to the British Government; what steps have been taken by the British Government to ascertain what is due by the Free State to the British Government under Article 5 of the Treaty in respect of the sums due by the Free States since 6th December, 1921, for the service of the Public Debt of the United Kingdom and towards the payment of War Pensions; and whether they will issue a White Paper in continuation of Command Paper 2160 of 1924, showing the Financial Position between the British Government and the Government of the Irish Free State; and to move for Papers.

The noble Lord said: My Lords, the main object of the Question which I have placed on the Paper is to ascertain the amounts which are still due and payable to the British Government by the Irish Free State, and to obtain some information as to the probable date and the mode of repayment of these sums. This, to my mind—and I hope your Lordships will agree with me—is a question of very considerable importance to the British taxpayer. It may be tight, and I dare say it is, to be generous to the Irish Free State, but generosity to the Irish Free State should not supersede justice to the British taxpayer. The British Government has, indeed, been extraordinarily generous to the Irish Free State since the date of the Treaty—generous to an extent far beyond any obligation which the British Government undertook under than Treaty. I doubt whether the public of this country have the least idea of the extent to which that generosity has gone. They would, I believe, be surprised—possibly I might use a stronger word—if they knew how generous we had been.

Will the House permit me to give one illustration of that generosity? point because it is of some importance Within a few months of the completion of the Treaty, the British Government transferred to the Free State Government, entirely free of charge, millions of pounds worth of property situated in Southern Ireland and belonging to the British Government. That property included the buildings, furniture, equipment and assets of Departmental offices in Southern Ireland, the Chief Secretary's lodge and other official residences, military and police barracks and their establishments, and vast quantities of military and police stores. It is somewhat interesting to remember that on July 19, 1923, I asked the Government in another place what was the authority for the transfer of this very large amount of property free of charge, and I was informed that it was to be found in Section I of the Irish Free State (Agreement) Act, 1922—that is the Act ratifying the Treaty—and an Order in Council made under that Act. I was informed also that the British Government—and this, so far as I know, is the sole authority for this transfer or gift of property—were authorised to transfer to the Provisional Government the powers and machinery necessary for the starting of that Government. I think the House of Commons would have been surprised had they been told when they passed the Act of 1922 that when they authorised the transfer of the powers and machinery of government they were authorising the free gift by the British Government of many million pounds worth of property belonging to the British Government to the Free State Government. However, that is past and gone, and I suppose we cannot help it. I think it is important in dealing with the question of the present indebtedness of the Free State, that we should know how far our generosity has already gone.

As to the financial relations, or rather the financial position as between the two Governments, we have had up to now two statements, and only two. One was published in 1923. If your Lordships desire to refer to it, it is Command Paper No. 1930 of 1923. The second financial statement was published in April, or shortly after April, 1924, and is Command Paper No. 2160 of that year. Dealing for a moment with the second of those statements, it appears that on April 1, 1924, something over £1,000,000 was advanced to the Irish Free State by the British Government. I would ask the noble Earl who, I understand, is to reply for the Government, if he will kindly tell us whether that money has been repaid by the Free State to the British Government, and whether the Government will issue a further financial statement bringing the position up to date.

Two somewhat important questions arise upon these financial statements. The first is a good deal the more important. It appears from the first statement that a very large amount of property, of the estimated value, according to the statement itself, of about £4,750,000, formerly belonging to the Admiralty, the War Department, the Air Force and other Departments had, in fact, been transferred by the British Government to the Irish Free State. Part of this property—again my authority is the financial statement of 1923—the value of which was to be subsequently ascertained, was to be transferred and was, in fact, transferred to the Free State entirely free of charge. The rest of that property was to be, paid for by the Free State. It is a somewhat remarkable fact, and I think it requires a little explanation which no doubt the noble Earl will give, that in the second financial statement no mention whatever is made of that £4,750,000 worth of property, and we are not told how much of it was to be transferred free of charge and how much the Free State would pay for.

I venture to ask the noble Earl whether the amount to be paid by the Free State Government for this property has been ascertained, and whether the amount has been paid. If it has not been paid, I hope he will be able to satisfy your Lordships that there are valid reasons why it has not been paid. Further, I would ask the noble Earl whether any valuation of this property has been made. It is a somewhat serious matter to transfer free of charge, or to be paid for here, an enormous amount of property belonging to the Government of this country to another Government without a valuation. I cannot conceive of it having been done, and therefore I trust that the noble Earl will be able to tell your Lordships that a proper valuation was made and that the property in question has been paid for. That is the first point which arises out of the statements.

The second point is one of less importance, because the amount of money involved is much smaller. In both financial statements there appears an item of £'40,000, which the Free State were to pay and which they undertook to pay for military stores supplied to them on terms of repayment. On looking at the statement I find that only £5,000 has been repaid so far, and the question I ask the noble Earl upon that is whether the Government will give your Lordships some details—at present we have none at all—as to what these military stores so handed over were. Were they aeroplanes, or motor lorries, or rifles, or guns, or what were they I There is a further point about which I think your Lordships would like to know something: By virtue of what authority were these military stores handed over to the Irish Free State? Constitutionally speaking, I imagine that no British Government has the right to hand over military stores, or any other property, without some authority either from the House of Commons or from Parliament; but so far as I know, no authority for handing over those stores has yet been produced.

So much for the financial statements. I pass now to what is, perhaps, an even more important matter—that raised by the latter part of the Question which stands in my name on the Paper. It is as to what steps have been taken by the Government of this country to ascertain the amount due from the Irish Free State under Article 5 of the Treaty in respect of the contribution which they promised to make towards the service of the National Debt and the payment of Pensions. Your Lordships will allow me to read the Article which bears upon this point because it is of some importance.

It is Article 5, which provides that— The Irish Free State shall assume liability for the service of the Public Debt of the United Kingdom as existing at the date hereof"— that is to say, December 6, 1921, more than three years ago— and towards the payment of War Pensions as existing at that date in such proportion as may be fair and equitable, having regard to any just claims on the part of Ireland by way of set off or counterclaim, the amount of such sums being determined in default of agreement by … arbitration … It is quite obvious that the amount paid under that Article of the Treaty must be a very large sum indeed. As a matter of fact, the amount of the contribution which was payable by the free State under the Act of 1920, which only, as we all know, came, before us as regards Southern Ireland, was something like £10,000,000 a year to begin with, and certain sums to be ascertained hereafter. If we make, as I think we must make, some allowances for the financial changes which arose under the Treaty as compared with the Government of Ireland Act, 1920, it is estimated—and I have taken some little trouble to obtain this estimate—that the annual payments under Article 5 by the Irish Free State would be somewhere about £8,000,000 a year.

I do not know whether all the taxpayers of this country realise that up to the present, date not one shilling has been paid in respect of that very large liabililty of the Free State Government to the British Government, and that there are now three and a quarter years of arrears since December, 1921, due from the Free State. If my estimate is correct, the amount now due from the Irish Free State to the British Government would be about £26,000,000. Even in these days of portentous figures that is a substantial sum. It is a sum which I think the Chancellor of the Exchequer would probably do well to try to get for the benefit of the taxpayers, and for which the taxpayers of this country would be exceedingly grateful. I ask my noble friend who is going to answer whether he will kindly tell us what steps have been taken by the British Government to ascertain the liability of the Free State under Article 5. I presume that some correspondence has taken place between the British Government and the Irish Free State, and I hope he will be able to lay that correspondence on the Table. But if we are to be told that no steps have been taken to ascertain this liability of the Free State, I think it is only right that we should be given the reasons for that abstention.

In another place, in May of last year, when the Labour Government, then in power, were being pressed upon this point, they gave to my mind an amazing excuse for their inaction. They said that the liability of the Free State under Article 5 could not be settled until the boundary question was settled. I hope I shall be able to satisfy your Lordships that this is an abolutely unreal, unsubstantial, and flimsy excuse, and I trust that His Majesty's present advisers will not put forward so fallacious a pretext. Let me first remind your Lordships that the Irish Free State are claiming a very largo accession of territory. If they were to get it (which I do not think is very likely) so far from their contribution being diminished it would be increased. If they did not get any extension, matters would remain as they are. If, on the other hand, anything was taken from the Free State (which, again, I think is not likely) then it would be a matter for adjustment hereafter. But this question of the Boundary Commission appears to me to afford no excuse whatsoever for the British Government not doing their duty under the Treaty and ascertaining the liability to which I have referred.

The matter does not quite rest there, because I shall suggest to your Lordships that this pretext for not carrying out the duty of the British Government under Article 5 is a pure afterthought. There was not one word of such a thing in the Treaty. The Treaty contains no provisions for postponing the ascertainment of the Free State liability until the boundary question is settled, although in the Treaty the existence of the boundary question was foreshadowed, and everyone knew that there would be a boundary question. We were told over and over again in another place, while the Treaty Act was passing through the House of Commons, that the Treaty was sacrosanct, that not one line or comma could be added to it, and Amendments, which in the opinion of many people were most desirable, were rejected on that ground. Are we to be told now that the Government are going to introduce a new provision into this sacrosanct Treaty—a provision greatly to the detriment of the British taxpayer—by which we are compelled, and have been for three and a half years compelled, to take no steps to ascertain the liability of the Free State and to enforce payment? Something new is to be introduced into the Treaty. The new and important pro vision is introduced, so far as I know without a shadow of any Parliamentary sanction, that no steps can be taken under Article 5 for ascertaining the liability until the boundary question is settled.

The matter does not even rest there, because in January, 1922, a most elaborate Agreement was come to between the two Governments, the British and the Free State, providing for many things, but you will not find in that Agreement one single word about postponing the ascertainment and payment of the moneys due under Article 5 by the Irish Free State until the boundary question is settled. On the contrary, there is an express clause—Clause 43—in that Agreement which refers to these payments to be made by the Free State under Article 5, and states that the payments should stand over, not till the boundary question is settled but until the amount has been settled in accordance with Article 5 of the Treaty. When that amount has been settled that clause in the Agreement makes express provision for payment of all arrears.

I think I ought to remind your Lordships of one other matter in connection with this pretext of postponing action under Article 5. If that was a valid excuse for not ascertaining and obtaining payment of the Free State liability, why was it not equally a valid excuse for postponing the payment of the contribution from Ulster? If large territories are to be taken away from Ulster in satisfaction of the Free State claim then there might be some justice in saying that we would not proceed against Ulster to get her to pay her contribution under the Act of 1920 until the boundary question is settled. But no such claim was ever put forward by Ulster, and I thank her for her honesty in this matter. Indeed, no suggestion was ever put forward on behalf of His Majesty's Government that there should be postponement in the case of Ulster. So far from their being any postponement, Ulster has had her contribution under the Act of 1920 ascertained and settled every year that has passed since the Northern Ireland Government was set up, and the sums which she has paid are somewhat remarkable. From November, 1921, when the Northern Government was set up, until April of last year, Northern Ireland paid in respect of her contribution under the Act of 1920 a sum of over £13,500,000. The contributions for the present year have not yet been settled, but they are estimated to amount at least to £3,600,000. There, I think, you have a very substantial and unanswerable precedent for asking the Free State to have their contributions settled and to pay them.

It is true, and it is only fair to say, that since the Government of Northern Ireland was set up considerable grants of money have been made by the Imperial Exchequer to Northern Ireland for such things as special constabulary, and other purposes. Those grants were wholly outside any question of the contribution of Northern Ireland under the Act of 1920 and were made for special purposes which commended themselves to successive Governments in this country. But even if the whole of these special grants made to Northern Ireland were taken into consideration the sums already paid by the Government of Northern Ireland, and which will be paid in the course of the present year to the Imperial Exchequer, would show a net payment of something like £10,000,000. That is a sum of £10,000,000 paid by Northern Ireland compared with not a single shilling paid by Southern Ireland.

I venture most respectfully and most urgently to ask His Majesty's Government to take these matters into consideration, and to take immediate steps to ascertain what is due from the Government of Southern Ireland to this country under Article 5 of the Treaty. I ask His Majesty's Government not to be oblivious to the pressing needs of the taxpayers of this country, and I hope that if they can secure payment of the money it will mean a substantial reduction in the taxation of this country. The Papers I move for are, in the first place, a financial statement in continuation of the two previous financial statements; in the second place, a statement showing the value of the property transferred to the Trish Free State free of charge, as mentioned in the two previous financial statements, and the value of the property transferred to the Free State for which they undertook to pay. I should also like a statement showing the details of these military stores, estimated at £40,000, which were handed over to the Irish Free State on terms of repayment, and an actual valuation of these stores. Lastly, I ask for any correspondence which has passed between His Majesty's Government and the Government of the Irish Free State as regards the enforcement of Article 5 of the Treaty. It may be— I do not know—that the Irish Free State Government were able to discover certain grounds for postponing a statement of their liabilities and for an exemption from payment of certain grants which could not well be stated in Parliament. If there is any such correspondence, if any pretext was put forward by the Irish Free State Government. I am sure His Majesty's Government would wish to lay these Papers before Parliament. I beg to move.

THE EARL OF CLARENDON

My Lords, in reply to the Questions put to me by the noble and learned Lord it would perhaps be convenient if I divided my reply into two parts; and for this reason. The noble and learned Lord has asked for information on what I may call two supplementary points which were not included in the Question as printed on the Paper. Before I proceed any further I should like to take this opportunity of thanking him most sincerely for having given me private notice that he intended to raise these two supplementary points in asking his Question to-day. In regard to the sum of £1,204,830, stated to be due from the Government of the Irish Free State to His Majesty's Government on March 31, 1924, £692,542—I am giving these amounts in round figures—has since been paid by the Irish Free State. A sum of £6,248 has been withdrawn from the British claim by agreement, leaving a balance of £506,045 which has not yet been paid. Of a sum of £123,446, stated to be due by His Majesty's Government to the Irish Free State Government, £65,260 has since been paid and £29,219 has been withdrawn from the claim by agreement, leaving a balance of £28,965 which has not yet been paid.

If the noble and learned Lord will turn to Command Paper No. 2160, there are one or two words I should like to say in reference to some of the items which appear there. With regard to item 5—balance of payments in respect of military stores supplied to the Irish Free State on repayment terms—I should like to come to that in the second part of my reply. But with regard to all the other matters, with the exception of item 3, on page 2—land purchase annuities—an item under the heading of C on page 4 (Adjustment of Attributable Revenue), and a small sum of £1,000 odd under item B1, the Free State Government has discharged its debts. There is only one other item to which I need draw attention, and that is item 7, on page 3, which is a small claim amounting to £245. That has been withdrawn by agreement.

With regard to the first of the two larger items to which I have referred—land purchase annuities—I should like to inform the noble Lord that this matter has been discussed not only by means of correspondence, but also by means of various interviews between members of the respective Governments, but so far it has been impossible to reach agreement. I should like, however, to inform my noble friend that the Treasury have hopes of arranging a further conference at an early date with a view of reaching some sort of agreement. Failing that, the matter will be referred to arbitration. With regard to the adjustment of attributable revenue this matter again is sub judice, but I may inform the noble Lord that there has been considerable difficulty in reaching any agreement on this question. The main difficulty, of course, has been owing to the Customs barriers which have been set up between the Irish Free State and Northern Ireland.

LORD BANBURY OF SOUTHAM

Which question is that?

THE EARL OF CLARENDON

That applies to the adjustment of attributable revenue, which comes under paragraph C on page 4 of Command Paper No. 2160. Considerable difficulty had arisen. The reason of the difficulty was that these Customs barriers had been set up between the Governments of the Irish Free State, Northern Ireland and Great Britain. I should like to inform the noble Lord that meanwhile the Free State Government have paid over 80 per cent. of the amount due, and the balance will, of course, be subjected to such adjustment as may be necessary when the figures are finally reviewed.

LORD DANESFORT

Will the noble Earl allow me to ask him what is approximately the balance due in respect of that attributable revenue?

THE EARL OF CLARENDON

The approximate balance is £56,163. With regard to that which I may perhaps describe as the most contentious matter in the noble Lord's speech, that which applies to the share of the Free State in the Public Debt and War Pensions, I have to inform him that the present Government have come to the conclusion that this is not the appropriate moment for the settlement of this question. The noble Lord has quoted a speech which was made in the House of Commons on May 31 by Mr. Thomas, who was then Colonial Secretary, and it appears to us that the position has not changed since that date. I should like to inform the noble Lord, however, that the formulation of the British claim is now under consideration; the Treasury is engaged at the moment in preparing it. With regard to the last part of the Question as printed upon the Paper, I should like to inform my noble friend that the Government will, at the earliest possible moment after the conclusion of the present financial year, issue a further White Paper which will disclose the financial position existing as on March 31, 1925, between the Free State Government and the British Government.

Now I turn to that which I described before as the two supplementary questions which the noble Lord asked me, and which were not embodied in his Question as it is printed upon the Paper. Let me first of all take the question of the military stores. If I remember aright, the noble Lord in his speech asked for certain details in regard to those stores. The stores consisted of machine guns, rifles and ammunition supplied to the Free State on repayment terms. The total amount originally involved was a sum of £145,000. A sum of £116,000 has since been repaid by the Free State, leaving a balance still unpaid amounting, in round figures, to £29,000. What has happened in regard to this matter is that a slight disagreement has arisen as to the price charged for these articles supplied by the British War Office at the urgent request of the Free State Government in 1923. The matter is now under consideration. The practice that the War Office adopted in regard to the sale of these military stores was simply this: They charged the Free State Government the same price is they would have to pay for similar material purchased elsewhere to replace that which was taken from stores at the disposal of the War Office. The amount is not a very large one, and it is hoped that before long the matter will finally be settled.

With regard to the other property which the noble Lord mentioned in his speech, reference to it will be found under Part II of the earlier Command Paper, No. 1930. With regard to the question of quit rents, let me make this observation. It has been ascertained on expert legal advice that the capital value of these quit rents which amounts, as shown in the Command Paper, to a sum of £247,420, must be deemed to have been transferred unconditionally to the Free State owing to the fact that the grant of Dominion Government had been made to the Free State. With regard to the rest of the property which is enumerated on page 4 of the Command Paper under headings A, B. C, D and E, the noble Lord will. I think, bear in mind the note which is printed under Item E, which states that "no immediate cash payment is due from the Free State Government in respect of the above property, but the proportion thereof that should be recognised as transferable to them free of charge will be arranged in the ultimate financial settlement" which will take place in due course. That, I think, is all the information that I can give at the moment to the noble Lord, and I hope that he will consider that the reply that I have been able to make on behalf of the Government is a fairly satisfactory one.

LORD DANESFORT

Before my noble friend concludes his speech, could he tell us whether any valuation has been made of that £4,750,000 worth of property; first, that which was to be handed over free of charge, and second, that which was to be handed over on payment?

THE EARL OF CLABENDON

Does it come under Article 5 of the Treaty?

LORD DANESFORT

No, it comes under that paragraph of the first financial statement which says—

THE EARL OF CLARENDON

I am afraid I have no information on that point at the moment, but if the noble Lord likes I can give him that information privately.

LORD BANBURY OF SOUTHAM

My Lords, I hope I may be allowed to congratulate the noble Earl upon the extremely clear speech that he has made. Not only was it extremely clear, but one could hear every word, which cannot always be said of the speeches of the great people who sit on the Front Bench. I should like to make one observation, if he will allow me, upon his statement. He said that since April, 1924, when a million of money was owed according to the financial statement, something like £500,000 had been paid off, leaving in round figures some £500,000 due. He further went on to say that there was a sum—I forget the exact amount—of roughly £26,000 which was owing by us to the Free State.

THE EARL OF CLARENDON

It is roughly £29,000.

LORD BANBURY OF SOUTHAM

May I point out that in an ordinary business undertaking if A is owed £500,000 by B, and owes B £29,000. he does not pay that £29,000 to B, but deducts it from the half million that B owes him.

THE EARL OF CLARENDON

That sum has not been paid by the British Government, but is still owing.

LORD BANBURY OF SOUTHAM

My point is that it should be deducted from the £500,000—that a balance should be struck and that the Free State should pay the £500,000 less the £29,000. Then I would like to make one or two observations upon the statement with regard to the sum mentioned by my noble friend, of £26,000,000, being the amount due for the Free State's share of the British Debt and War Pensions. My noble friend, I think, referred your Lordships to the statement made by Mr. Thomas in another place, and that statement was, as far as I remember, that until the Boundary Commission had functioned and the boundary question had been settled nothing could be paid. With all due deference to Mr. Thomas—he is not, I think, a business man—that seems to me to be a most extraordinary statement. Here is an agreement made between the Free State and Great Britain, that the Free State should have certain territory, subject to alterations later on, and should pay a certain amount towards the payment of British Debt and War Pensions. What has territory got to do with it?

Presuming, for the sake of argument, that the Free State territory is increased, then their liability will be increased and they should pay more than £26,000,000. Presuming it is decreased, then the liability is decreased, but the liability before the territory is decreased is not touched. Their liability until the territory is altered remains the same, and therefore if, under the present arrangement of territory, £26,000,000 is due, that £26,000,000 will always be due whether territory is extended or diminished. It seems to me that it is a matter which cannot be questioned. Now £26,000,000 of money is a very large sum even in these days. I think Lord Arnold last year described four or five millions as a small sum.

LORD ARNOLD

Not in that way.

LORD BANBURY OF SOUTHAM

But I think that even Lord Arnold would consider £26,000,000 to be a large sum, and one which we should be anxious to obtain. The present Government is not to blame for what has happened in the past. If the Free State is unable to obtain these £26,000,000 why do they not say so, and if they are bankrupt why do not they come pleading bankruptcy and saying what they can pay? Surely that would be the proper course. I think I have already said that I have every confidence in the present Government. I sincerely hope that they will take this question up, will remember that the British taxpayer has a claim upon this money, and will see that steps are taken to enforce payment, or if the Free State cannot pay, that they make some arrangement by which the amount may be reduced or written off.

LORD DANESFORT

My Lords, perhaps you will allow me to say two or three words in reply. I join most heartily in what Lord Banbury has said as to the clear and lucid statement which the noble Earl has made, and I have no doubt that he has given us all the information which the Government, perhaps, is able to put in his possession. There are two points to which I should like to refer which were touched upon by Lord Banbury. The Free State at this moment, apart from any liability under Article 5, owe us half a million of money. It was a million but has been reduced to half a million. We, it appears, a year ago owed them £123,000. By some extraordinary process, which I confess I do not understand, of that £123,000 which we owed them we paid nearly £100,000 when they owed us £500,000. I hope that was not the action of the present Government. If my debtor owes me half a million and I owe him £100,000, why should I pay him when he does not pay me? I say it is most insane finance, and most unjust to the people whose interest we are bound to consider—namely, the British taxpayer. Therefore I hope that my noble friend will represent to the Chancellor of the Exchequer the strong feeling which some of us have, that, that £l00,000 having been paid, we should press for the immediate payment of the £500,000.

The only other question is with reference to Article 5. I confess I had hoped that when we got a new Government in power, and a Government of business people who are desirous of protecting the interests of the British taxpayer, they would not have adopted the extraordinary, fallacious, and I will add stupid, excuse given by the late Labour Government for not ascertaining and enforcing the liability of the Free State under Article 5. I have endeavoured to show why it is a stupid and unfounded pretext, and I am not going to repeat my remarks, but I hope that the noble Earl will take steps to represent to the Chancellor of the Exchequer, and to anybody else concerned, the view which we have expressed to-night, that steps should be taken to ascertain and enforce payment. I understand that the noble Earl is going to give me further information at the end of the present financial year, and I suppose he will also give us the correspondence, which deals with the subject of Article 5. If I understood him rightly, the valuations have not been made of the large amount of property, worth £4,750,000, which had been handed over to the Free State Government, but when the valuations have been made I hope he will lay them on the Table.

THE EARL OF CLARENDON

That is my intention.

LORD DANESFORT

I beg to move for Papers.

THE MARQUESS OF SALISBURY

I think probably the more regular plan, having regard to the promise given by my noble friend, would be to withdraw the Motion. My noble friend has promised to give a selection of Papers, and that selection, although important, does not correspond exactly with the Papers asked for in the Motion.

LORD DANESFORT

If the noble Marquess assures me that that is the better course, I am content to adopt it, in view of the promise of the noble Earl, and I therefore ask leave to withdraw my Motion.

Motion, by leave, withdrawn.