§ Bill considered in Committee.
§ (In the Committee.)
§ Clauses 1 to 13, inclusive, agreed to.
§ Clause 14 (Board may raise money by bills).
§ MR. THOMSON HANKEY moved, in page 6, lines 28 and 29, to leave out "two million three hundred and two thousand pounds," and insert "five hundred thousand pounds." The object was to limit the power of raising money for permanent improvements. It appeared to him that the whole clause was an extraordinary one, and he was sorry that the Metropolitan Board of Works should have thought it necessary to insert it. The only justification he could possibly understand was that it was inserted in the Bill last year; but that was no reason whatever. It was perfectly inconceivable to attempt to raise money for permanent improvements by borrowing at three, five, and 12 months. It was very undesirable to borrow the whole of this money at a particular moment. The state of the money market might be such that it would be highly inconvenient to borrow. They might borrow money on disadvantageous terms, and so put an additional tax on the Metropolitan ratepayers. It was left to the Metropolitan Board of Works whether they would borrow the whole of the money on bills of three or six months. Suppose the state of the markets to be favourable, money might be obtained extremely cheap. But securities of the kind they gave ought not to be issued for three or six months, without the possibility of repaying them. It was perfectly monstrous. The hon. and gallant Member (Sir James M'Garel-Hogg), who had joint charge of the Bill, said that it might be exceedingly convenient that a portion of this money should be so raised. If that were so, he should waive his objection as to the principle. He believed his present proposal would meet the views of the Secretary to the Treasury, and he, therefore, begged to move his Amendment.
§ SIR HENRY SELWIN-IBBETSON
said, that the Bill was brought in by 1937 the Treasury under an arrangement with the Metropolitan Board of Works, and no objection was taken to it last year. He quite admitted the force of all that had fallen from the hon. Member (Mr. Hankey), and now that objection had been raised, he agreed with him that it would be far better to limit these powers in the way the hon. Member proposed to do. Some power of that sort existed, and it was in the interest of the ratepayers that money should be borrowed for a short period whenever it was not possible to raise the money on advantageous terms. The Metropolitan Board had to raise money compulsorily for carrying out these works; and it was quite possible that at the time they had to raise the money there might be difficulty in getting the money at a proper rate, and it might be advantageous to take short bills until the time was more favourable.
§ LORD FREDERICK CAVENDISH
thought the Metropolitan Board of Works ought to be much obliged to the hon. Member who had brought this matter forward.
§ SIR JAMES M'GAREL-HOGG
said, that not being really in charge of the Bill, but being in favour of it, he might say that after the advice that had been given, he should be glad to accept the Amendment of the hon. Member (Mr. Hankey). He might say that the Bill had been brought in for the last three or four years. Before that time the Metropolitan Board of Works came to Parliament and took power to raise money for carrying out improvements. The Treasury thought proper, a few years ago, to exempt the Metropolitan Board from carrying that out. The proposals now made brought before the purview of Parliament every year the whole of the liabilities of the Metropolitan Board. There was a statement of everything the Metropolitan Board had borrowed, and of the various improvements which had been sanctioned by Parliament. He should like to point out that, in former times, they could choose the time when they could raise loans. They were not obliged to go into the money market at a particular time, but could go in at any time they pleased that was advantageous. It was well known in the money market that the Metropolitan Board had to raise money every year, to carry out their 1938 works. The Board wished to obtain terms that were advantageous to the public at large; and, therefore, last year they went to the Treasury to ask for power to issue a certain number of short bills, so that they might take advantage of money being cheap, and need not go into the market. Hon. Members knew that there were such things as rigging a market, and knocking it down when a loan was expected; and that was disadvantageous to the public. Therefore, they sought power to issue these bills, in order to prevent the necessity of raising money in a manner that might be injurious to ratepayers. The Metropolitan Board of Works was not able to raise money by these bills without the consent of the Treasury, and they acted in the manner most advantageous to the public interest.
SIR UGHTRED KAY-SHUTTLE-WORTH
said, the hon. Member for Peterborough (Mr. Hankey) was entitled to the thanks of the House for calling attention to the subject. From what was said by the Secretary to the Treasury, it was quite clear the subject was not sufficiently considered last Session, when legislation took place of which he could not entirely approve. He should like to ask two questions whilst they were on this Bill. It was a new mode of raising money by the Metropolitan Board of Works. He wanted to know what security there was to prevent fraud on these bills? Another explanation he would like to be given was as to how the banking of the Metropolitan Board of Works was done? That was a subject which he thought ought to be more fully discussed by the House at some other time. It was obvious, from explanations given, that the Metropolitan Board of Works did not bank with the Bank of England. He had heard that the Metropolitan Board of Works had a very expensive system of banking. It was said that there was a large sum of money left at a certain bank by the Metropolitan Board which might as well be left at the Bank of England, and for which the ratepayers of London might have got a large sum of money. He should like some explanation as to the precautions proposed for preventing the fraudulent issue of these bills.
§ SIR HENRY SELWIN-IBBETSON
would remind hon. Members that he was not responsible for the action under this 1939 Bill last year. It was thought to be for the interest of the public that power should be given to allow the Metropolitan Board of Works to raise money in this particular way. He could not give any answer as to the banking account, because he had nothing to do with it.
§ SIR JAMES M'GAREL-HOGG
thought the hon. Member who had used the term "fraudulent" could not have made himself acquainted with the facts. The bills were issued by the Board, and countersigned by the Treasury. He did not quite catch what the hon. Member said about banking account; but the facts of the case were these. They obtained interest for a certain portion of the money of the Board. Their bankers were the London and Westminster Bank. A great many rumours had been set about, and statements more than erroneous had got into the public prints. He had not taken the trouble to answer them; because, if he did, he might have nothing else to do. The London and Westminster Bank became the bankers of the Metropolitan Board of Works 10 or 11 years ago. That bank gave interest which the Bank of England did not. In one year the interest which the ratepayers of London received on deposits was upwards of £30,000. That was better than leaving the money idle at the Bank of England. He did not know whether the hon. Member wished for any further explanation; but, if so, he would be happy to give it.
§ Amendment agreed to.
§ Clause, as amended, agreed to.
§ Clauses 15 and 16 agreed to.
§ Clause 17 (Mode of Issue of Metropolitan bills).
§ MR. COURTNEY
said, this was a clause which prescribed the forms and conditions under which bills were to be issued, and by what authority they were to be sanctioned. It appeared they were to be issued on the warrant of the Treasury; but it was not provided that any notice of this warrant should appear on the face of the bills, and the warrants would not be inseparably attached to the bills so as to become part of them. It was quite possible that bills might be issued by the Board without the warrant of the Treasury, or, at all events, without 1940 the observance of every prescribed formality. The bills were negotiable, and would probably pass into the hands of bankers without any warrant; and having no reason to suspect informality, the question would then arise, whether those who had taken them for value ought not to be protected, even though the bills had been irregularly issued? It might be that the Courts of Law would protect such holders without any express provision on their behalf, as it was the essential and distinguishing characteristic of a bill of exchange, that a person taking it for value, without notice of any equities binding it in the hands of the previous holder, held it discharged from these equities; but the point should be made clear. Those who took the bills bonâ fide ought to be protected, and their rights should be perfect. He did not wish to arrest the progress of the Bill on the present occasion; but he would ask whether, next year, words could not be inserted to protect the holders of those bills from loss by the bills having been irregularly drawn?
§ SIR JOSEPH M'KENNA
hoped the Government would not assent to the proposal. Those who took the bills of the Metropolitan Board of Works, if they had been irregularly issued, ought not to have any greater facilities for recovering the amounts than those at present existing in analogous cases.
§ MR. J. W. BARCLAY
could not agree with the observations of the hon. Gentleman (Sir Joseph M'Kenna), because the object was to enable the Metropolitan Board to get money at a cheap rate. In order to do that, it was necessary that their bills should be secure.
§ SIR JOSEPH M'KENNA
simply wished that no more facilities should be given to the executive officials of the Metropolitan Board of Works than to those of any other public body to make irregular bills of exchange indefeasible securities.
§ Clause agreed to.
§ Remaining Clauses agreed to.
§ Bill reported; as amended, to be considered To-morrow, at Two of the clock.