§ MR. JOHN REDMOND (Waterford)I beg 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 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.
§ MR. RUNCIMANUnder 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 1426 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 capses:—(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 subscriber 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 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 riot 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 Grunts shows it to be attributable to these five causes in 1427 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; total, £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 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.
§ MR. JOHN REDMONDThe Answer which the hon. Gentleman has given is of so long and complicated a character that it will be necessary for us to see it in print before we can thoroughly grasp its significance. But may I ask him if I am right in what I gather as to the meaning, so far as I have been able to gather it, that the charge put down against these counties is not a genuine charge; that is to say, nothing of the nature of a real or permanent 1428 charge, but more or less in the nature of a book-keeping charge, and will be wiped out in the ordinary course? Then I gather further that—the hon. Gentleman will tell me if I am right—the real permanent charge is this charge in connection with the unearned dividend of £23,000. If I am right in that, I wish to ask him this Question—Is it a fact that the Treasury have issued regulations to the effect that when land stock is issued to any person in, say, March or April, on the 21st June six months interest is to be paid to the owner of that stock, although not earned; and if so, whether that is not in violation of the 28th section of the Land Act, which specifically provides that interest on land stock is only to be paid at the rate of 2¾ per cent., and if that is so, are not the owners of this stock receiving for these two or three months more than interest at the rate of 2¾ per cent.? A further question—Out of the Development Grant £50,000 for four years was to be set aside to meet the charges on the working of the Land Act. What has become of the £200,000? Is it earning interest, and if so, why is not the interest devoted to meeting these charges? I will put further questions when I have opportunity.
§ MR. RUNCIMANWith regard to the last supplementary Question, I should like the hon. Gentleman to defer it. With regard to the first, as to the arrears of annuities, I cannot say how far they will be temporary or permanent. I have already said that about half of the arrears outstanding when the accounts were made out have since been paid. With regard to the second Question, as to the dividends paid for the short period, I quite admit that on the face of it the view which has been put forward by the hon. Member appears to have a good deal of reason behind it. He will be aware that we cannot always arrange for the issue of stock on the 31st December or 30th June. That is obvious, and in the flotation of a large loan like the last—£7,000,000—it is impossible to have the whole sum paid up upon one fixed date; so we are advised by those who want to place the stock to the best advantage. The third point has been already considered by the legal advisers of the Government, and I am afraid that they have decided against him.
§ MR. JOHN O'CONNORMay I ask, does the new rule, to which the hon. Gentleman refers, have a retrospective effect, so as to apply to the sums now charged to the various counties in Ireland?
§ MR. RUNCIMANSo far as the amount of interest is concerned, I am afraid that the new rule will not apply. The rules referred to by the hon. Gentleman the Member for Waterford, were rules drawn by the Treasury.
§ MR. JOHN O'CONNORI beg to ask the Secretary to the Treasury if the sum of £50,000 per annum out of the Irish Development Grant has been duly carried to the income account of the Irish Land Purchase Fund for the last four years, in accordance with Section 38 of the Irish Land Act of 1903; if so, is the sum of £200,000 still available for the payment of dividends on Irish land stock in accordance with Section 29 of the said Act; is the whole or any part of the said sum of £200,000 still unexpended; if so, is interest accruing thereupon, and what is the amount of such interest, if any; is there from time to time a balance of funds arising from the sale of land stock on hand awaiting distribution amongst vendors of Irish lands; if so, is the same lying at interest at any bank or elsewhere, and what is the amount of such interest, if any; and is such interest as the above available for payment of the aforesaid dividends.
§ MR. RUNCIMANThe sum of £200,000 has been paid from the Ireland Development Grant to the Income Account of the Irish Land Purchase Fund, and has to the extent of £02,000 been used in meeting deficiencies of income, there being originally no power to use it otherwise. Section 15 of the Labourers (Ireland) Act, 1906, however, directs that as from the 31st March, 1906, the unexpended portion of the £200,000 shall be used as a working balance, and shall not be reckoned as part of the Income Account of the Irish Land Purchase Fund in determining whether that income is insufficient under Section 29 (2) of the Irish Land Act, 1903. The working balance so obtained amounts to £98,000, and forms part of the general fund which is invested as closely as possible. All funds arising from issues of guaranteed 1430 2¾ per cent, stock, so far as they are not required for the purpose of immediate advances, are invested in securities of a temporary nature. The income derived from such investments is applied towards payment of the dividends on the stock.
§ MR. HAYDEN (Roscommon, S.)I beg to ask the Secretary to the Treasury whether he can state what is done with the money raised for the purposes of the Land Purchase (Ireland) Act, 1903, during the interval between the issue of the stock and the payment of the money over to the landlords; whether the money is invested in any way; if so, what amount of interest is paid upon it; is it lodged in bank; if so, in what banks in England or Ireland, and do these banks pay any interest on the amount in hand; what is the amount already received under the various issues; how much of it is unallotted; how is it in vested; and what interest is received upon it.
§ MR. RUNCIMANThe money raised for the purposes of the Irish Land Act, 1903, is carried to the credit of the Irish Land Purchase Fund under Section 28 (4). This fund is under the control of the National Debt Commissioners, who invest the cash placed to its credit, so far as not required for immediate advances, in securities of a temporary nature. The uninvested portion of the fund is lodged at the Bank of England, but no interest is allowed. The total amount of cash received in respect of issues of stock is £18,823,839, of which £18,371,826 has been advanced under the Act, and the balance of £452,013 is invested in £160,000 Treasury bills at an average rate of interest of 3¼ per cent., and£290,000 Exchequer Bonds at 3 per cent.
§ MR. HAYDENCan the right hon. Gentleman say what amount of this money at one period was lying in the bank bearing no interest, and whether during any portion of that time any of the money was lying at the Bank of Ireland bearing no interest?
§ MR. T. W. RUSSELL (Tyrone, S.)Is the right hon. Gentleman able to say, in view of the serious state of affairs which has arisen in connection with the finance of the Land Act, which seems to be completely broken down, that he can hold 1431 out any hope of the revision of the whole matter?
§ MR. RUNCIMANIt is not for me to make any announcement on the subject. With regard to the balances lying at the Bank of England, I cannot give the figures without notice.
§ MR. JOHN REDMONDIs the hon. Gentleman aware that from time to time enormous sums have been lying in these banks without bearing interest?
§ MR. RUNCIMANThe Bank of England is the only bank used, and it is not usual for them to pay interest on balances lying there.
§ MR. JOHN REDMONDThis subject is of enormous importance, and I must put a Question to the Prime Minister. Apparently the whole finance of the Act of 1903 has broken down. Will he take this Minute into consideration, and see whether it is possible to have an early opportunity for discussing it, as both he and the House will see how impossible and inconvenient it is for us to attempt to discuss it by Question and Answer?
CAPTAIN CRAIGArising out of the first part of the Answer referring to the £450,000, may I ask whether it is not a fact that several millions of land is so far forward in the matter of sale that there is no necessity for a balance of this kind?
§ MR. LONSDALE (Armagh, Mid.)May I ask when it is proposed to make a further issue of land stock, and what will be the amount?
§ THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Sir H. CAMPBELL-BANNERMAN,) Stirling BurghsWe entirely recognise the great importance of this Minute, and if any special negotiation is required to secure a special opportunity of discussing it, we will be ready to enter into that negotiation, but I should think one of the Votes of the Estimates would afford an opportunity.
§ MR. JOHN REDMONDI would ask the right hon. Gentleman if he will try and arrange that one of the first days possible should be allotted to Irish Estimates, so that we may raise the question soon.
§ MR. MORTON (Sutherland)Is it not a fact that interest can be got from the Bank of England, on balances?
§ [No Answer was returned.]