LIFE ANNUITIES REPEAL BILL.

HC Deb 24 March 1828 vol 18 cc1314-9

On the motion for the further consideration of the report of this bill,

Mr. Calcraft

suggested, that it would be more expedient to suspend this bill, than to repeal it.

Mr. Herries

said, that the objection was to the tables and not to the principle of the bill itself. Any loss which might have, been sustained would not be remedied by the repeal of the act now. The only thing that could be done would be to prevent the granting of other annuities until new tables were prepared. In this view of it he concurred in the suggestion of the hon. member, that they should not at once repeal the act, but rather suspend it, in order to afford time for considering what; other tables could be got ready, which might put an end to the apparent loss; for he was not convinced that the loss was a real one. He admitted that they had good authority for saying that there was a loss; and on that ground the committee had recommended an immediate; consideration of the subject, and that other tables should be adopted. He concurred in the suggestion for suspending the act, but whether it were suspended or repealed, it would amount to the same thing; for the repeal would be on the understanding that it was to continue only till new tables could be prepared. It appeared: from Mr. Finlayson's letter that a loss had been sustained by the public, amounting to about 8,000l. a-week on the annuities sold under this act; and that loss had been attributed to want of due attention to the interests of the public, in not having some such measure as the present proposed some years ago, when the matter was brought under the consideration of the Treasury. A noble lord (Bexley) had been the first person blamed for this omission. Now, he would acquit that noble lord from blame altogether. The letter was received by him (Mr. Herries) on the 30th of April, 1827, five years after that noble lord had quitted the Treasury. As to lord Goderich, he was equally free from blame. He was glad the production of the Letter had been moved for, as it would be seen by it that the respectable individual by whom it was written had announced, that he would prove his statement by tables which he was preparing, but which were not ready. So that the proof was, in fact, not yet before the Treasury. But those to whom the letter was addressed were aware of the nature of the loss, and that it did not depend on the continuance of the act, but arose from annuities already granted, and which could not be taken away, being on lives which turned out to be longer than the usual average. Any alteration in, or even the repeal of, the act, could make no difference to the public with respect to those annuities, and for this reason—that when the funds rose above 80, the purchaser of the annuity could not get any advantage from the difference above that price. The price was above 80 at the time the letter was written, so that the Treasury could wait, without any loss to the public, until the tables were ready; and there was even a compensating power in the high price against any loss that might have been sustained before. He hoped the House would adopt the suggestion of the hon. member, and allow the act to be suspended, and not repealed.

Lord Althorpe

said, it was clear that a considerable loss had been sustained by the public from the annuities granted under the act. Blame might not be attributable to government for what took place before they received the communication alluded to, but he understood that annuities had since then been granted on the same disadvantageous terms to the public. If that were so, blame must rest somewhere. The communication of Mr. Finlayson was a sort of debtor and creditor account. He showed the amount paid by the purchaser, the amount of stock cancelled, and the amount which that stock would have produced from that time; and, comparing it with the value received by the purchaser in his annuity, he showed that, in one year, there had been a loss of 10,700l.; and, as a great proportion of the annuitants were living the loss still continued. The right hon. gentleman had said, that nothing could be done by government, in consequence of the communication made to them; but it should be recollected, that all the insurance offices had altered their calculations of insurance about that time; but it was singular that government should not have made a similar alteration, having the information before them as to the loss which the country was sustaining, by the rate at which the annuities were granted. Surely, they might have ceased to grant any fresh annuities, until the promised tables were ready. He agreed in what had been said about suspending the act for the present; for no man could doubt that the transfer was a loss to the public; but his great surprise was, that this step had not been taken before. The right hon. gentleman had said, that the letter of Mr. Finlayson was received only on the 30th of April, 1827, but that letter alluded to a former letter, written in 1819, of which nothing was said, and which was not before the House. It was said, that lord Bexley had told the writer to make his calculations and tables; but if a loss was then pointed out, why had not some steps been taken with a view to amend the act?

Mr. Herries

, in explanation, observed, that the letter of 1819 did not speak of the great loss to which the last letter adverted, but merely announced that the tables were unfavourable to the public. The subject was one of such extreme difficulty, that it ought not to excite surprise that no step was taken on it immediately.

Lord Howick

said, that when the letter should be before the House, it would, he had no doubt, be seen, that blame attached in some quarter for not having acted upon it earlier, as great loss had accrued to the public from the mistaken calculations on which the annuities had been granted. He agreed that it would be proper to suspend the act for the present.

Mr. Huskisson

said, the noble lord seemed to think that the public would gain on the contracts already made by the suspension of the act. The only beneficial effect from the suspension of the act would be, that no additional annuities could be granted, until new tables were made, but all the contracts already made must be continued. He was Secretary to the Treasury in 1809, when this measure was introduced. At that time, complaints were made, that individuals wishing to make a provision for themselves or families had no certain fund on which such annuities could be secured, without those many risks to which they would be exposed by purchasing from private individuals. It was unnecessary for him to point out the description of persons to whom such annuities were extremely desirable, or to describe the many practices, with respect to grants of annuities, by which property, the saving of a long life of industry, was sacrificed, and families brought to ruin. Considerations, founded on a knowledge of the existence of such practices, induced the government of that; day to adopt the plan of granting annuities for life, or for a terra of years. Mr. Perceval, then chancellor of the Exchequer, thought the plan extremely desirable; and some of the most intelligent men of that day were directed to make out tables, on which the value of the annuities was to be calculated. It was considered, that, in a country where the public stock or debt might be considered as a sort of interminable annuity, it would be extremely, useful, under the circumstances he had mentioned, that a part of it should be appropriated as annuities, terminable with lives, or at a given number of years. There was this difference between annuities so granted, and those purchased from annuity offices—that while in the latter a profit was expected to be derived by those who granted the annuity, the government sought no profit from the grant, and made it solely from the consideration of its advantages to that class of the community to which he had alluded. The calculations were made from the best data that could be then furnished; but it was found that the majority of the lives on which the annuities had been so granted, were longer than the ordinary average of life, and some loss was derived to the public in consequence; but he was astonished that it should be gravely stated, that the public had sustained a loss of 400,000l. on annuities, the whole amount of which did not ex- ceed 640,000l.; thus making the loss amount to two thirds of the whole. Some extraordinary delusion must have existed on this subject, to give rise to such statements. He admitted that the lives on which the annuities had been granted, were found to be rather longer than the ordinary average of human life, and that some loss had been thus sustained. The means by which such loss might be prevented in future, would be to have better tables; but he trusted that the House would not consent to the abolition of all annuities in future. That course would have a most injurious effect, by closing the door on the means thus afforded of securing to the class of persons to which he alluded the means of making that, provision for themselves on which they could calculate with certainty. He agreed that it would be better to suspend the operation of the act for a time; but he thought it would be highly prejudicial to a large class of the community if the plan was given up altogether.

Mr. Baring

admitted the great benefit which the public had derived from the system of granting government annuities; but expressed his surprise, that, after the communication which had been made to government on the subject of their disadvantageous bargain, no steps had been taken to correct the error. The public seemed to have been well informed of the advantage which the government terms gave them; for on looking at the list of annuities, it would appear, that two thirds of them were on women's lives. Now it appeared by the report of one of their committees last year, that the lives of women were, on the average, longer than those of men. It appeared to him, however, that Mr. Finlayson, in his estimate, had not taken into his calculation the interest of the money paid by the purchasers of the annuities.

Mr. Hume

said, that Mr. Finlayson had been directed to make a calculation on fifteen thousand lives. His work was a work of figures, and he did not deserve blame for exaggeration, for he expressed no opinion one way or the other. As to the letter sent to the Treasury, he could state that great remissness must have existed somewhere on this subject; for in the same year in which Mr. Finlayson's first letter was written, a similar representation had been transmitted to government. He had no doubt that on inquiry great blame would be to be attached in some quarter for negligence on this point.

Mr. P. Thompson

rose only to correct an error into which the Secretary for the Colonies had fallen. The right hon. gentleman had said, that it was impossible that the calculation could be correct, because a loss of 8,000l. per week was declared to have taken place, or upwards of 400,000l. per annum; being two-thirds of the whole annuities. Now, the right hon. gentleman had made a mistake between capital and interest; for Mr. Finlayson stated the loss to the public to be 8,000l. per week, or 400,000l. per annum, capital, not interest.

The report was agreed to.