§ MR. JOHN REDMOND (Waterford)To ask the Secretary to the Treasury, if his attention has been called to the stoppages which have been made out of certain grants payable to County Councils in Ireland to meet alleged financial deficiencies in the working of the Irish Land Act of 1903; can he state how these 1380 deficiencies have arisen; if he is aware that, if the Treasury persist in their present action, it will have the effect of dislocating local government all over Ireland and also have a most injurious effect on the progress of land purchase in Ireland; and will he publish the rules under which the Treasury have acted in this matter.
(Answered by Mr. Runciman.) Under Section 29 (2) of the Irish Land Act, 1903,the Guarantee Fund is liable to make good any deficiency on the Income Account of the Irish Land Purchase Fund. So far as these deficiencies are caused by the issue of guaranteed stock at a discount, the Ireland Development Grant, as one of the constituent parts of the Guarantee Fund, is the first to be charged under Section 38; so that no charge for deficiencies arising from that cause can fall on the Local Taxation Grants so long as the Ireland Development Grant is able to meet them. But there are other deficiencies on the Income Account with which the Local Taxation Grants, as constituents of the Guarantee Fund, are directly chargeable, and I fear there is no possibility of avoiding the occurrence of such deficiencies when advances at 2¾ per cent. interest are provided for by the public issue of stock bearing the same rate of interest, and no margin is allowed between the rate of interest payable and the rate of interest receivable to cover incidental losses. These losses arise from the following causes:—
- (1) Arrears of payment of the purchase annuities;
- (2) The system of issuing stock entitled to a half-year's dividend on the first following dividend day, although the subscribers to the stock are allowed to pay up their subscription by instalments which may extend up to, or even beyond, that dividend day. It is clear that, when the National Debt Commissioners have to pay a half-year's dividend on a certain day, and have not had the use of the money for a full six months before that day, a deficiency must result;
- (3) The gale day on which the purchase annuities are payable is in each case one month earlier than the
1381 dividend day. This interval is necessary to enable the annuities to be collected and paid over to the National Debt Commissioners before the dividend day. But the result is that the payment received from a tenant on his first gale day includes interest for one month less than the period in respect of which dividend is payable on the stock; - (4) The capital of the Land Purchase Fund, so far as not required for advances, is temporarily invested by the National Debt Commissioners in securities. The interest on these securities is received on varying dates, and at the date when the balance of the Income Account must be struck there is always a temporary deficiency due to the fact that a certain amount of interest which has accrued has not yet been received into the account;
- (5) On large transactions, such as those of the Land Purchase Fund, it is impossible to have the whole of the capital moneys invested and earning interest on every day of the year. There must always, therefore, be a loss of income from unproductive balances.
§ A careful analysis of the charge of £70,996 which has been made upon the Local Taxation Grants shows it to be attributable to these five causes in the following proportions—
| £ | |
| (1) Arrears of annuities | 9,119 |
| (2) Unearned dividend on issues of stock | 23,750 |
| (3) Advance dividend | 13,650 |
| (4) Interest due but not received | 15,500 |
| (5) Unproductive balances | 8,977 |
| £70,996 |
§ The arrears of purchase annuities are for the most part temporary. I understand that since the account was made up on 31st January last a sum of £4,046 has been recovered on account of the £9,119 then in arrear. The chief item of charge is the unearned dividend of £23,750 arising out of the mode of issue of the stock, which is required by custom and the convenience of the City. It is open to question whether this charge could not 1382 properly be treated as a capital charge to be paid for by annuity out of the Development Grant. But an amendment of the Act would be necessary to enable this to be done, as the Act at present requires (Section 29) (1), that the dividends on the stock shall be paid out of the income of the fund. The advance dividend charge will not be made good until the purchase annuities are completed, many years hence. A further charge of the same kind must arise on every issue of the stock. The deficiency of income which arises from unproductive balances is an inevitable and a permanent loss. The only charges which are of a temporary nature are those relating to arrears and to interest accrued but not received. After analysing and reviewing all the charges, I have come to the conclusion that it should be possible to avoid charging the Local Taxation Grants in full for those items by making use of the working balance which was rendered available by the Labourers Act of last Session, and I propose to have the Treasury Rules amended to enable this to be done. I may add that the Treasury Rules were published in House of Commons Paper, No. 151, of 1905.