BANK OF ENGLAND (CONSOLIDATED FUND.)—COMMITTEE. (Hansard, 7 February 1861)

§ THE CHANCELLOR OF THE EXCHEQUER

—Sir, I rise for the purpose of moving Resolutions on a subject of considerable importance; but at the same time those Resolutions are not, I think, of a nature to call forth any expression of judgment on the part of the House on the most important part of the plan which I shall have to propose. They are not Resolutions containing, in fact, the main proposition of that plan; but they are Resolutions required by the House as a necessary preliminary to allow me to submit the plan itself. The. Resolutions I have to submit are two; one to alter the mode in which the Bank of England at present receives payment from the State on account of its charge for the management of the National Debt; and the second, the mode in which the Bank of England makes certain allowances to the State, first of all on account of the exemption which it enjoys from stamp duty on its notes, and, secondly, on account of the profit which it is estimated that it derives from the issue of its notes. The mode in which the matter is regulated at present is this:—An Act of Parliament passed in 1808 assigns to the Bank, without any specific limit as to time, a certain remuneration for its trouble on account of the management of the public debt. The Act of 1844, passed by Sir Robert Peel, fixes the amount which the Bank should pay on account of its exemption from stamp duties, and fixes also a 147 certain amount and a certain rule in respect of the sum paid by it on account of its profits by the issue of notes. By the provisions of that Act, the sums due on these several accounts are to be deducted from the remuneration payable to the Bank on account of its management of the public debt. That arrangement of the Act of 1844 was perfectly agreeable to the mode of dealing with the public revenue which was in use at that time, and according to which it was common, especially when it was considered that there was absolute occasion for it, to make large deductions out of the revenue—of the payments to the public revenue—before it was brought into the account of the Exchequer. The only question on which I shall ask the Committee to give a vote to-night is virtually this—whether they will apply to these charges in connection with the Bank the principle adopted by the Act of 1854—namely, that the allowance which the Bank makes to the State in respect of certain privileges which it enjoys—shall be paid directly to the State and shall constitute part of the public revenue; or on the other hand, that the charge of the Bank against the State on account of the management of the public debt shall likewise be a charge on the Consolidated Fund, payable to the Bank in gross, instead of merely the residue after deducting the payments, as at present. This, as the Committee will see, is a very simple matter, and I think can hardly lead to any difference of opinion. With respect to the communications which have passed between the Bank and Her Majesty's Government, the Committee are probably aware that these embraced other changes; but these, I think, will be most conveniently discussed when the Bill which I shall hope to introduce is before the House, particularly as the measure will be very simple in its terms, and will in a great degree carry on the face of it its own explanation. I have only just presented to the House, in obedience to its order, certain papers, which, I believe, will complete any explanations which the Government have to offer on the subject of this measure. I may, however, state in a few words what the general effect of the arrangement will be should it receive the sanction of the House. There are four points on which changes are to be made over and above that which I ask the Committee now to sanction by direct Resolution. In the first place, we pro- 148 pose to fix a specified term of years during which the Bank shall receive a fixed rate of remuneration for managing the National Debt; in the second place, it is proposed to change the basis on which Terminable Annuities now stand, for the purpose of determining the remuneration due to the Bank. These annuities are now taken at twenty-five years' purchase; they will hereafter be reckoned at fifteen years' purchase, when they have been granted by Parliament for a period exceeding fifty years; and at ten years' purchase when granted by Parliament for that or a less term. We further propose to alter the rates of remuneration; and this, of course, is the point to which the attention of the House and the Committee will be principally directed. I will not now enter into any statement respecting these rates, which hon. Members will gather with more convenience to themselves from the papers to be laid on the table; but the general effect will be this:—The remuneration now received by the Bank for managing £736,000,000 of public debt is about £250,000 a year; while under the new rates it will be as closely as possible £200,000,—the difference being a saving to the public of £50,000 a year. Lastly, in agreeing to this reduced rate of remuneration, the Bank of England have likewise undertaken to render increased services to the public by affording facilities for the payment of dividends at their branches in the country to those who may wish to receive them, and by shortening materially, if they cannot altogether abolish, the periods of "shutting," a step which will, I believe, afford a very material increase of facility and convenience to all transactions in the funds. The Committee will, I hope, understand that if the papers have only just been presented to them, it is because the documents necessary for their information were only completed this morning, when a meeting of the proprietors of the Bank of England was held for the purpose of considering these arrangements. But, although I ask for no expression of opinion, and although the Resolutions I propose involve no approach to an expression of an opinion, upon the general propriety and fairness of the plan, I should certainly not think it right, even at this preliminary stage of the subject, to address the Committee without expressing my hope that, all things considered, they will regard this as a fair and equitable arrangement, and, above 149 all, without bearing testimony to the very considerate and conciliatory manner in which the whole of the communications connected with it have been conducted by the authorities of the Bank, and to the wise and enlightened spirit in which they have approached the consideration of a question which, if viewed in a spirit more narrow and less open to reasons affecting the great public interests connected with the maintenance and pros perity of that establishment, might have become far more difficult to deal with. With this explanation I beg to place in your hands the two Resolutions relating to the method of settling accounts with the Bank of England. The right hon. Gentleman concluded by moving the following Besolutions:—

"1. That it is the opinion of this Committee that any sums which are or may be by Law payable to the Governor and Company of the Hank of England, on account of the Charge for Management of the Unredeemed Public Debt, shall henceforward be paid out of the Consolidated Fund of the United Kingdom.
"2. That it is the opinion of this Committee that the payments now made by the Governor and Company of the Bank of England as prescribed by the Act 7 & 8 Vict., c. 32, by way of deduction from the Charges of Management of the Unredeemed Public Debt, shall henceforward be payable and paid by the said Governor and Company of the Bank of England as follows; that is to say, the sum of £60,000, being a composition for Stamp Duties to Her Majesty's Inland Revenue, and the whole allowance out of profits of Issue, being at this present time £128,078, to the Exchequer, to form part of tier Majesty's Miscellaneous Revenue."