LIFE ANNUITY PLAN. (Hansard, 27 May 1808)

§ Mr. Tierney
submitted a variety of calculations, tending to shew the inefficacy and inutility of the measure. If ever there was a period, when a man would be disinclined to increase his income at the expence of his capital, it must be at that period when there was a tax upon income, and none upon capital. He objected to the plan particularly, because it interfered with the sinking fund, and with the faith of the country pledged in consequence of that measure; but he did not do so in the abstract; he objected to it because it was indirect infraction of that measure, without being calculated to produce any advantage to the country. He was against any interference with the sinking fund, unless it was to restore it to the state in which it stood previous to the year 1802. In that case the public would begin, in the next year, or in the year following, to feel the advantages of it; but by the present measure this alleviation of the public burthens must be protracted for a number of years. The act stipulated that the commissioners should, from time to time, from year to year, lay out large sums in the purchase of stock. It was no answer to those who had contracted on the faith of these annual purchases, and who might have done so with the view of a speedy sale, to say, 'there is no harm done, in the course of ten years perhaps things will be restored to their proper and ordinary course.' Having once adopted the present measure, it would be in vain to say that the sinking fund was intended to be held sacred; for in agreeing to this proposition the house practised one of the grossest infractions upon it. The right hon. gent, dwelt on the extravagant inducement which this measure held out to 698 a man, probably 70 years of age, to leave his family and relatives destitute, seeing he could thus raise his own income in the proportion of 12 to 3, or instead of 100l. could procure for his own life 400l. per annum. If, therefore, the right hon. gent. was to carry through the measure, he hoped he would limit the age. But, on the whole, he submitted to the committee, that the present was a measure which ought not to be suddenly gone into.

The Chancellor of the Exchequer
had no expectation, that the progress of the measure proposed would be very rapid. The present was not a plan which he would have been inclined to propose, as affording resources for the service of the year; but he was convinced, from the information and applications he had already received on the subject, that it would be one of permanent advantage, and of which, though no question of revenue were connected with it, the advantages would be generally and satisfactorily felt. He was convinced there would be applications for liberty to avail themselves of this measure, from sources of which the right hon. gent. had at. present no idea. There were persons in the constant habit of taking annuities for themselves and others, to whom this measure would present the means of saving all the original expence of such a contract. Stript as the present measure, would be, of every expence of this kind, he was satisfied it would prove an object of public as well as of individual advantage. The right hon. gent, had not said any thing as to the morality of the measure, which was a strong objection to it on a former night; he should not, therefore, enter on this point, but should content himself with observing that there appeared to him to be nothing unusual, or inconsistent with political economy, in allowing persons the opportunity of providing for themselves in this manner. What were Friendly Societies? Were they calculated for the advantage either of the widow or of the children? They surely were not; but by them part of the income was laid aside for the benefit of the person himself, without any regard to his family. The right hon. gent. alluded to the proposal of sir George Saville, which, though not adopted by parliament, was still an authority in favour of such a measure. As to the idea of this being any infraction on the measure of the sinking fund, he admitted that it was so in manner and in words, but not at all 699 in spirit. It would have the effect of taking out of the market a quantity of stock, and of substituting in the place of it what would, by no means, be so, marketable a commodity. It would, in fact, give additional effect to the two objects of the sinking fund. By the former operation, the amount of the dividend only would be taken out of the market; by the present measure, the amount of the capital itself would be taken out of it. Thus, not only the redemption of the debt would be secured, but that object, would also be effected at an earlier period. Instead, therefore, of being an infraction on the sinking fund, it would add fresh vigour to it.

§ Lord H. Petty
said, that the right hon. gent, admitted he expected no great immediate effect from the measure, but that it would be gradual. In this his lordship could hardly agree; for if he at all understood the plan, the right hon. gent, expected the funds to rise; and whenever they did rise to a certain height, the measure was to cease. His lordship thought the plan altogether objectionable, in a political, moral, and financial point of view. He asked, would it be proper, or rather would it not be dangerous in the extreme, if the great bulk of the property of this country were allowed to be thrown into annuities? The right hon. gent. had referred to the case of benefit societies as one in his favour. If he (lord H. Petty), however, had been to select a case on the other side, he did not think he could have hit on one more completely in favour of his argument. In the case of benefit societies, part of the income of a week was converted into a fund for the support of the person during life; thus, a temporary was converted into a more permanent fund. But by the present measure, the permanent was to be converted into the temporary fund. His lordship was decidedly of opinion, that this measure would be prejudicial not to those alone who were induced to try its effect, but also to the public creditor. The right hon. gent, surely did not mean to state that these annuities would not be transferred, and of course would, in a different shape, bring the same quantity of stock again into the market? Did he mean to contend that it might not happen, that, from the casualties of human life, a person who had purchased an annuity might not he obliged to sell it again? Thus, though government might be ready to grant to persons wish- 700 ing to purchase annuities for their own lives, which must at all times be preferable to those on the lives of others, yet persons would often be found, compelled by some pressure, to sell their annuities to a disadvantage, and purchasers would also be found, tempted by the desire of a profitable bargain.

§ Mr. Huskisson
stated, that with respect to the noble lord's plan, it would not be interfered with by this measure, because certainly the Sinking Fund would in ten years be in as good a situation, notwithstanding the operation of this plan, as under that of the noble lord. This plan was not to hold out an inducement, but to afford an opportunity to persons wishing to purchase annuities, to invest their capital in that manner; and it would undoubtedly be a great convenience to many individuals, who might have to bequeath annuities to dependants, to have their lands discharged of such annuities by purchases under the present plan. The hon. gent, then shewed by calculations, that the operation of this plan would accelerate the period of the redemption of the public debt, without producing the inequality in the effect of the sinking fund apprehended by the noble lord.

§ Mr. Davies Giddy
thought that the plan now proposed would have the effect of encouraging a greater degree of frugality in the lower classes, by affording them an opportunity of applying their savings, with perfect security, to the increase of their incomes, and that in this point of view the benefit would overbalance any evil which might arise from it.

§ Mr. Biddulph
did not think there would be any sound objection to the adoption of this plan; on the contrary, he was friendly to its adoption, because in a free country like this there should be as great a diversity as possible of option afforded to persons wishing to lay out their capital with security; and to show that he was friendly to the adoption, he proposed that the annuities should be rendered more marketable by facilitating the insurance of the lives of the nominees, by taking off the tax upon the policies of insurance upon such lives.—The Resolutions were then agreed to.