HC Deb 01 December 1911 vol 32 cc912-31

(1) For the purposes of this Part of this Act there shall be established under the control and management of the Board of Trade a fund called the unemployment fund, into which shall be paid all contributions payable under this Part of this Act by employers and workmen, and out of moneys provided by Parliament, and out of which shall be paid all claims for unemployment benefit, and any other payments which under this Part of this Act are payable out of the fund.

(2) The accounts of the unemployment fund shall be audited in such manner as the Treasury may direct.

(3) Any moneys forming part of the unemployment fund may from time to time be paid over to the National Debt Commissioners and by them invested in accordance with regulations made by the Treasury in any securities which are for the time being authorised by Parliament as investments for savings banks moneys.

(4) The National Debt Commissioners shall present to Parliament annually an account of the securities in which moneys forming part of the said fund are for the time being invested.


I beg to move, in Sub-section (3), to leave out the words "paid over to the National Debt Commissioners and by them."

I have a series of Amendments to the Clause on the Paper. Under the Bill as drawn any moneys forming part of the unemployment fund may be paid over to the National Debt Commissioners and invested by them in securities which are authorised by Parliament for savings banks moneys—Consols, or, at any rate, similar low interest-bearing securities. The effect of the three or four Amendments which stand in my name will make the Sub-section read, "Any moneys forming part of the unemployment fund may from time to time be invested by the Board of Trade in accordance with regulations made by the Treasury in any securities which are for the time being authorised by Parliament, trust funds or in any other securities for the time being authorised by the Treasury."

In the Sub-section (4), instead of "National Debt Commissioners," I shall move the consequential Amendment to insert instead thereof the words "the Board of Trade," which shall present the accounts. The object of the Amendment is that the unemployment fund should be allowed to earn a greater rate of interest, which would be possible if the investment powers were widened. I would point out to the Committee and to the Financial Secretary to the Treasury that there would be a difficulty in any National Debt Commissioners investing in anything except the funds mentioned in Sub-section (2) as originally drawn. Therefore, I have left out the National Debt Commissioners as the body which is to be responsible for the investments, and I have inserted instead the Board of Trade, because they are under no such disenabling ordinance. The object is to get a higher rate of interest, very likely ½ to 1 per cent. or ¾ to 1 per cent. more per annum upon the funds. That would have an immediate effect, of course, upon all those who are likely to come upon the fund. It is an advantage that the fund should be kept at its highest possible amount, because if any deficiency occurs either extra contributions have to be levied or the benefits have to be reduced. It is to the interest of workmen and employers alike that these funds should be invested so that they may earn with due safety the highest possible rate of interest. The safety Clause which I am providing is that the investments shall only be trust securities, or such as are authorised by the Treasury, so that the Treasury will have fairly full control over the fund. When this was before the Committee upstairs we had a debate, and a rather comic debate upon it. The Financial Secretary to the Treasury objected to the suggested alteration for many reasons, none of which appeared to be very relevant except the one reason that there would not be any large fund definitely retained in the Unemployment Insurance Fund, that that fund was likely to be a fluctuating fund, sometimes large, and sometimes small, and that at any rate it ought to be kept in a liquid condition, easily realisable. The Financial Secretary apparently contemplated that it would be invested in Consols, and that there would be less risk of any loss on realisation owing to the chances of the market, as he described it, if the investments were kept in Consols. When it was pointed out to him that there had been great changes in Consols, and that if the Bill had been in force for the past ten years there would have been likely to have been considerable loss, in that particular form of investment, he replied that we need not be so contemptuous of the argument, because the Government as owners of the Consols, while it made a loss in one way might gain in another. We have been wondering ever since what the Secretary of the Treasury meant when he advanced that argument, and he will now have the opportunity of telling us what he really did mean then. The matter was pressed on the President of the Board of Trade, who made a promise which I do not think he has redeemed. He said, This is a Treasury matter, and I have to be very careful in what I may propose in regard to it. Continuing, he said, Let us see what is eventually decided in regard to this point under Part I. of the Bill— Unfortunately nothing has been decided under Part I., because of the closure tactics— and what the Treasury agree to, and then I, in consultation with the Treasury, will see how far we are able to meet the desires expressed in various quarters of the Committee to bring it into form with Part I."—[OFFICIAL, REPORT, Standing Committee B, 9th November, 1911, col. 192.] That still did not satisfy the Committee, and the right hon. Gentleman the Leader of the Opposition, who was present then, further pressed the matter. The President of the Board of Trade replied, I venture to say to the Committee if they would be good enough to give me the opportunity of considering this proposal in consultation with the Treasury I will endeavour to meet the point. The real difficulty in connection with my hon. Friend's Amendment is that it does alter the framework of the Bill. If the Committee will allow it to stand in that way I will undertake, with the Treasury, to see how far we can adopt the principle which is in Part I. and extend the powers of investment of the fund. The Leader of the Opposition then asked, "Why not do it now," and the President of the Board of Trade said:— I am afraid I cannot go further than that. That is an undertaking which I really think the Committee might be satisfied with."—[OFFICIAL REPORT, Standing Committee B, 9th November, 1911, col. 198.] The Committee were not satisfied with that. It was pressed to a Division, and the Government had a majority of one. I only quote that to show the House, not how narrowly the Government escaped annihilation, but to show that it was a point which interested both sides of the House, and that it was not a proposition which came from this side at all. It came from the hon. Member for Hexham (Mr. Holt), and it was supported, I think, by a very able economist, the hon. Baronet the Member for Swansea (Sir A. Mond), and from many other parts of the House, including, I believe, the hon. Member for Stoke (Mr. J. Ward). An Amendment that has had that history should, I think, have been very seriously considered by the Government. The Government may have considered it, but, if so, the result is not reflected on the Paper, because they have put down no Amendments to meet the point. This may mean many, many thousands per year to the employers and workpeople of this country, and, therefore, is something that certainly ought to have the most serious consideration of the Government. I hope now that the President of the Board of Trade has had the opportunity of consulting in private the Financial Secretary that, in their joint wisdom they will be able to accept the Amendment.


I beg to second the Amendment.


The hon. Member has told us of a promise, and he stated with perfect accuracy that the President of the Board of Trade said that he would consider the matter if the Committee left it to him, but, as the hon. Member has pointed out, the Committee decided to vote on it, and therefore there was no promise from the President of the Board of Trade. Of course this is a matter which has been very carefully considered, and, in fact, it is a matter which has been considered by previous Governments, and in principle it has been the subject of inquiry by a Select Committee of Parliament. I noticed that the only argument which the hon. Member is able to bring forward in support of his proposition, a very good argument in itself, and I am not saying it is not a good argument, but the only argument which he can bring forward in support of his proposal is that it would mean a higher rate of interest. Of course it is always desirable to have a high rate of interest, other things being equal. Any business man will know when he makes an investment he has to consider the nature of the investment and the kind of object he has in view, while the rate of interest is but one consideration, and in many cases not the most important consideration. That is a very obvious matter, but the hon. Member has dwelt on that one point, and he has said it might make a difference of ½ per cent. or even more. My own opinion is that ½ per cent. is the outside of the difference. That could never mean many thousands per year on this fund. The hon. Member has not taken the trouble to make his calculations or he would never have put that statement before the House. The hon. Gentleman asked what I meant and I will tell him what I did mean. This is an entirely different question from that which was raised under Part I. In Part I. the friendly societies are allowed to invest the money of their own members in a wider range of security, and that is right. That is the old power they have had, and they are investing the money of their own members who control the society and who are investing their own money. Where other money is invested under Part I. that wide range of security is not provided for, and the thing is dealt with as it is dealt with in Part II. I merely mention that not on the merits, but to show that the argument which was used in Committee as to Part I. was an erroneous argument.

What is the position? The Government is managing this fund, and it has a very considerable responsibility in so doing. What it asks is that it should be allowed to keep the money in securities which it guarantees itself. Supposing it provided that it might invest the money in outside securities, would it not be a reasonable thing for the Government to say, "If we do that, we must insert the provision, which exists in Acts such as the Colonial Stock Act of 1870, that the Consolidated Fund is not liable"? Would it not be a reasonable thing that we should have a depreciation fund? If you do either of these things, where is your ½ per cent.? But this really is not a business proposition. It is not to the advantage of the fund, or to the advantage of those who are interested in the fund, that this wider range of securities should be provided. Before I come to that point, I should like to point out the general objection to allowing a Government Department to go into the stock market and buy, say, railway stocks, debentures or preference, Colonial stock, or any of these trustee securities. You immediately get pressure on the Government Department to buy particular stocks. It is said, "You have bought such and such a railway stock, why not buy this other railway stock" It is not a desirable thing. It is a thing which no Government Department has done before, and I do not think it is a desirable thing to introduce. It would give rise to a great deal of difficulty and criticism. This very subject was considered so recently as 1902 by a Select Committee. There was a very strong reason at that time why the Select Committee should consider favourably the proposal for extending the range of invest- ments, because there had been great depreciation in the price of Consols due to the scheme of Lord Goschen reducing the interest by so large a proportion as one-sixth. The question of trustee savings bank securities was considered by that Committee. They had more reason to deal with the matter than we have under this Bill, as I shall presently show. But they came to the conclusion that it was undesirable to do it. Among other reasons they gave this; they said— The State holds this Fund as a banker in return for the guarantee of absolute security which this implies. They were speaking of savings bank funds. The State is entitled to deal with the money entrusted to its care by investing it only in securities which are guaranteed by the State. I do not think the State guarantees this money in the same absolute sense. Still, it is obvious, if you look at the Bill, especially Clause 87, that the State is taking a very considerable and real responsibility in regard to this fund. The second reason of the Committee was that investment in securities less readily convertible into gold might lead to much greater loss than was likely to be compensated by any increase in interest. That is the general objection. It is undesirable to give a Government Department the right to, or to provide that a Government Department should go into the market and buy a great variety of securities. It is much better that the Government Department, unless there is strong reason to the contrary, should confine itself to dealing with securities guaranteed by the Government. But in this case there is no business reason why you should extend the power. In the interests of the fund it is not desirable. What is this fund? I will now try to explain to the hon. Member what I failed to make clear to him in Committee. He thinks that all that the National Debt Commissioners can do is to put the money in Consols, and take the risk of the market. Of course, that is not the case; they are not confined to Consols.


I did not say so.


I am afraid the hon. Gentleman gave me to understand that it was a question of Consols, even if he did not say so definitely in his speech. At all events, let us go on to the merits of the question. They are not confined to Consols. When you consider the nature of this fund there are other investments open to the National Debt Commissioners much more suitable than Consols for the greater part of the fund. We have to consider what this fund is. It is not a fund which you build up from year to year, like providing a sinking fund, for example. It is a fund which you collect in the year and which, broadly speaking, you spend in the year. It is a fund which it is contemplated may be reduced to nothing. In Clause 87 the Government is given power to make advances to it. In time of very serious unemployment there will be no money in the fund; it will always be a varying fund. It will fluctuate between one year and another; not only that, but between one season of the year and another. Although that appears to the hon. Member for Colchester to be a contemptible point, I do not think that any business man will refuse to admit that it is a very important point. The question of an extra ½ per cent. in interest to this fund is not the most important question. I say that it is more than counter-balanced by the advantage of dealing in this matter with the National Debt Commissioners. What do the National Debt Commissioners do? They are dealing with a variety of securities—Consols, Local Loans, Irish Land stock, Transvaal stock, Treasury Bills, Exchequer Bonds, and securities of that sort. Suppose they have a short investment to make for this fund. In Exchequer Bonds or Treasury Bills they have an investment which they know will give them their capital back in a short time, and in regard to which there can be no important fluctuation in price.

You have a very different state of affairs if you invest in Colonial or Indian stocks. You cannot always realise the money without a large market margin. You cannot realise it always very quickly if it is a large sum of money. They have the great advantage that they can deal with this fund at the cheapest possible rate, and in this case the easy and cheap realisability of the fund is more important than the rate of interest. Suppose money is wanted for this fund, and that money is available from the Savings Bank Fund. The money can be obtained. They can sell Consols to that fund without losing the turn of the market, without paying a penny brokerage, by simply exchanging between one Department and the other at the mean price. They cannot do that with outside securities. Therefore, there is not the slightest doubt that the most economical way of dealing with fluctuating securities for investment and realisation is to deal with the securities which at present are dealt with by the National Debt Commissioners. They have a great many facilities for investing or for realising investments without costing the fund considerable sums. Everybody knows that when you are dealing with these stocks in the market you have to run the risk of the market. I am not talking about depreciation of the stock. When there is no depreciation of the stock you have to buy at a higher price and sell at a lower. You can avoid that in a large majority of cases, or in a great many cases at any rate, by the plan proposed in the Bill. I ask the House to maintain the provision for two reasons: The first is that, generally speaking, it is undesirable that a Government Department should be dealing in the market, raising some funds and depressing others, and subject to the Stock Exchange influence which that necessarily implies. I do not suggest anything wrong by that, but still you would always have pressure put on the Department to secure that certain stocks not on the list should be put on the list. That is very undesirable. The other consideration is that the fund has no interest in this proposal, but will be better off under the plan proposed by the Government than under the plan proposed by the hon. Member for Colchester.


The Secretary to the Treasury has made an interesting speech, and he has laid down a new rule of political conduct. He has also set up a new standard of Ministerial deportment. Ministers now are to be allowed to give pledges upstairs or here, and if a Division is taken in order to enforce——


I beg the hon. Member's pardon. I do not know that he was present at the Committee.


Yes, I was.


It is a most extraordinary statement that the hon. Gentleman makes. What my hon. Friend said was that if this matter was not pressed to a Division he would consider it with the Treasury. The matter was pressed to a Division. It was a purely conditional promise. [HON. MEMBERS: "No, no."] I beg hon. Members' pardon. There was a conditional promise. If I may be allowed to say so, I was sitting by my right hon. Friend and I know exactly what he said. The matter has been considered by the Treasury since then, and we have not seen reason to change our minds.


I would like to point out to the right hon. Gentleman—and I will give a quotation in a minute—that if on its merits the question was worthy of consideration, the fact that a Division was taken upstairs does not in the least alter its merits. It was an unconditional promise that was given. Here is an extract from the report:— Mr. Buxton: If the Committee will allow the matter to stand in that way, I will undertake with the Treasury to see how far we can adopt the principle in Part I. of extending the powers of the investment of the fund. Mr. Bonar Law: Why not do it now? Mr. Buxton: I am afraid I cannot go further than that. That is an undertaking with which, really, I think the Committee ought to be satisfied."—[OFFICIAL REPORT, Standing Committee B, 9th November, 1911, col. 198.] The Secretary for the Treasury will see that what he said was not strictly accurate. Of course he meant it to be. He has forgotten the incident, but the pledge was not conditional as he said it was.


My hon. Friend has just read the words, "I think the Committee ought to be satisfied." The Committee were not satisfied. We have considered the matter again. There was no promise to alter the Clause.

4.0 P.M.


Objections came from all parts of the Committee, and hon. Members voted with the Government who would not have done so but for that understanding. A Division was taken, as my right hon. Friend has said, and a majority of one was recorded for the Government. Does the Secretary to the Treasury seriously contend that that absolves the Minister in charge from his pledge, and from the effect of that pledge, and that the Clause ought not to be restored? Remember the Division in a way strengthened his hand, and enabled the President of the Board of Trade to go to the Treasury and say that he must have wider powers. The Secretary to the Treasury argued the whole of this case very elaborately on a false basis. This is not a compulsory Clause; it is an enabling Clause. The Treasury is asked, or rather the President of the Board of Trade is asked, to give sufficient latitude in the investment of funds as to enable those who have charge of them to earn a higher rate of interest; something approaching that which is done now by the friendly societies and the trade unions. It will be perfectly open for the Treasury to make such rules as will meet the very point which the Secretary to the Treasury makes. Of course, it is not intended to have a big lock. The Government is in such a position that it can always draw upon unappropriated balances when it is in a tight place. Let me point out to the Secretary to the Treasury that he himself made a most extra ordinary statement in regard to the possibilities of investment. He spoke as if the ordinary stocks of railway and other companies were not a suitable subject for trustee investment——


Really, my hon. Friend should recollect that I expressly spoke of preference stocks.


I apologise for that. In any case nobody contends that the whole of this fund should be locked up in this way, although the Government has the advantage of unappropriated balances with which it can deal. But if it is found—and this is the whole point—by the light of experience that there is a floating fund which can earn a higher rate of interest than we are earning, are powers to be denied for it to be done? Surely the Treasury is preserved. They are able to make rules. The only object is not to limit it strictly to Treasury investment, to Consols and to Exchequer Bills. After all, we know there is no investment as unsatisfactory as Consols. People talk as if Consols were a fluctuating security. That is not so. They are what is called in the City a "sagging" security. You have got this difference, the Government for its own purpose—it may be a perfectly legitimate one—may want to bolster up these. Therefore, in any fund it has got at its disposal, if it has an excuse, the fund could be spent in bolstering up the Consol market. Is it desirable that the money subscribed by the workmen and their employers should be used for this purpose?


What about depreciation?


Nobody thinks that the depreciation has reached bottom yet. All that is asked is that a latitude, an option, should be given under Treasury rules. I recollect the Solicitor-General, with all his immense ingenuity, found it very hard to make out a good case in Grand Committee for the retention of this Treasury red-tape. I do submit to the House that now it should have the opportunity of reconsidering the matter here in view of the pledge given by the Government. In view of the obvious advantage to be gained by adopting this Amendment there should not be obstruction merely by Treasury tactics on this occasion. The House should allow now what was denied by only a majority of one upstairs, and adopt a course manifestly dictated by commonsense and the ordinary principles of business.


The right hon. Gentleman's last sentence on this subject really touched one point which does concern the House. The real question is whether the fund can get any advantage out of an Amendment such as this. The right hon. Gentleman says, "No," and he says "No" on three grounds. In the first place, because Consols and Exchequer Bills are a more convenient form of security. In the second place, because investment in trust funds will not be so safe. In the third place, if you have investments of this kind, whatever they may bring in, this will be very little more—put it at ½ per cent. I will deal with these three points. In the first place, the Consols and Exchequer Bills are more readily realisable. Surely there is nothing in the Amendment to prevent the Board of Trade, on the advice of the Treasury, investing in Consols and Exchequer Bills if they want to do so. The right hon. Gentleman spoke of Exchequer Bills on their merits. He seems to think that there is something in this Amendment which would prevent investment in these securities.

All that the Amendment says is that if by chance a better investment, under equally good conditions, of other stock comes along it is not to be barred out as it would be under the Bill as it stands. The second point I think was that other stocks are not so safe. Who is going to make the investment? Not some Stock Exchange gamblers, as the right hon. Gentleman said, but the Board of Trade acting on the advice of the Treasury. Really, when the right hon. Gentleman goes on to talk about ½ per cent. being not worth doing it for, and of the necessity of providing a depreciation fund—well, if you are going to have strictly pure finance and provide a depreciation fund to meet every possible contingency, well and good. I have no doubt there are a great many financial purists who would say that we should have a depreciation fund for Consols. [An HON. MEMBER: "Certainly."] I think that is a perfectly sound way of doing business, but I would rather like to know whether the Financial Secretary suggests that even under present conditions there should be a depreciation fund. Personally, I think there ought to be.

I think certainly there are many good reasons which might be given for the existence of such fund. But I only want to say that it is no use saying that ½ per cent. is not worth having. In two or three years of good trade this fund may very easily amount to £4,000,000. A ½ per cent. on £4,000,000 is £20,000, a very valuable and a very large increment to place at the disposal of the Government. Really, I cannot understand why, as the investment is to be controlled by one Government Department with a supervision of the Treasury—if we have our way—why the Government should not reconsider their decision, and accede to the desire of a very large portion of the Committee upstairs.


I beg the House in the first place not to rest under the impression which it might easily derive from some of the speeches made that what is now being proposed is the same as what was some time ago proposed in the Grand Committee. What was proposed in the Grand Committee was that the National Debt Commissioners should have the power to invest outside Government securities, and that in the choice of their investments they were to be guided by the Insurance Commissioners. There were several objections to that, one of which was that the National Debt Commissioners never have invested outside Government funds, and secondly that the National Insurance Commissioners have nothing to do with Part II. of the Bill. That was the proposal in the Committee. Far be it from me to say that that is not a proper matter to receive consideration. It has received consideration. What is now proposed by the hon. Member for Colchester (Mr. Worthington-Evans) is not what was proposed in the Committee, but something quite different. Let us bear in mind what the proposal now is. It is that the National Debt Commissioners should not invest this money at all, but that it should be invested by the Board of Trade, not in Government security, but in wider funds.


With the consent of the Treasury.


Certainly. But how does that stand? On behalf of the Board of Trade I wish to say the view they take is that they have quite enough to do without taking upon their shoulders unnecessarily what is really Treasury business. I desire to be perfectly candid with the House. I made inquiries, and I find there are one or two cases where the Board of Trade have funds to invest, but in these cases their only power is to invest in Government securities. May I call attention to the analogy between Part I. and Part II. of the Bill. In Part I. there is the question of investment, and how that investment is to be made? In this way: You have there much larger accumulated funds, and far more important, but subject to one exception which I will point out in a moment the House will find, if they turn to Clause 50 of the amended Bill, that the funds there to be invested by the National Debt Commissioners, are to be invested under terms exactly corresponding to the terms of the Clause now under discussion.

The exception is with regard to that part of the fund which arises from the workman's or the contributor's contribution if he belongs to an approved society; that is to say, if a man or a woman belongs to an approved society the money is of course paid over to the approved society as the House well knows, and the approved society is then responsible for meeting its own obligations, and is given the power to invest its funds. Which of these analogies is the proper analogy to follow in the present ease? I submit inasmuch as we are dealing with funds the deficiency of which is not made up by a new levy or contribution from approved societies, we should keep the two-parts of the Bill alike, and we ought to deal with the funds in the same way. It is from that standpoint that the Board of Trade presses the view upon the House that they do not at all desire to have cast upon them in addition to all the other duties they have to perform, the duty of investing money which never at any time is likely to be a large sum, and they suggest that the true analogy is to be found in Clause 50 of the Bill. I hope now we may come to a conclsuion upon this matter. There is another point we should like to deal with before half-past four. Having regard to the provisions in the other part of the Bill, we are really asking nothing unreasonable with regard to this matter in this Clause.


I hope the House will follow the lines which have been laid down by the Solicitor-General. Here are funds which it is absolutely essential should be invested in the best possible manner. The Board of Trade may be an excellent body, but it knows nothing about investments, and to take this matter out of the power of the Department which should know all about investments, and put it in the hands of the Department that knows nothing about them, seems to me absolutely absurd. [An HON. MEMBER: "The Treasury have to be consulted."] This proposal is a contradiction of terms. Why not leave out the Board of Trade altogether and leave the matter in the hands of the Treasury. With regard to investments in the savings bank, that has been chosen with regard to the utmost safety. I see that when this matter was before the Committee the hon. Member for Swansea said, The National Debt Commissioners, I understand, can only invest in Consols, and no prudent business man of to-day would look upon that as any great security. The only thing that my firm ever lost any money in was an investment in Consols."—[OFFICIAL REPORT, Standing Committee B, 9th November, 1911, col. 196.] Hon. Members below the Gangway are deeply interested in this matter and they ought to see that the premier security of this country is kept in its proper position. I shall support the Government if this proposal goes to a Division.


I suggest that this is a very modest Amendment, and I cannot understand why it is not accepted. If you look at its terms it is only to enlarge the discretion of the Treasury, and it provides that investments are to be made in trust funds or in any other security for the time being approved by the Treasury. Somebody has to make the investments, and as to what the investments are to be the Treasury have to approve of them.


The Treasury will have no control whatever over the trust funds, and only over the other securities.


I am pointing out that the result of this Amendment if accepted will be to leave the Treasury the power of making those investments.


They do not make the investments.


The investments are to be in any trust funds or any other securities for the time being approved by the Treasury.


But the Treasury have not to approve the trust funds.


The person who makes the investment, I do not care whether it is A, B, or C, will make it on the terms of the Amendment. He can make it either in trust funds or in any other securities for the time being approved by the Treasury. All this Amendment is going to do is to enlarge the discretion without confining it in any way. Surely it would be a retrograde movement to confine the powers of investments to savings bank moneys. It was supposed in the days of our ancestors that the only safe security was Consols. We have got very much beyond that, and, when an additional ½ per cent. would make all the difference in a fund of this kind, surely it is only reasonable you should give at least the same powers which a trustee making an investment of trust funds would have. No one can say, for instance, that an investment in London and North-Western Railway stock would imperil the fund. The Amendment is one which cannot do harm, and may do a great deal of good.


I want to say, as one of the Liberal Members who voted against the Government in Committee, that I have been entirely convinced by the statement of the Financial Secretary to the Treasury. I think the arguments he adduced were quite convincing. We have to remember the Amendment is in a somewhat altered form. In Committee we dealt with a suggestion that this should be done by the Insurance Commissioners, but now we are asking the Board of Trade to make these investments. Personally I think it would be disastrous if the Board of Trade were placed in the invidious position of making investments in ordinary trustee securities. They would be subject to pressure to invest in this or that particular security, and would be open to the charge that they had passed over the better stock. I think the comparatively small advantage in any possible increased interest would not outweigh that very great disadvantage.


The hon. Member opposite said we were putting the Board of Trade in an unfortunate position, but I venture to suggest we are not placing any great difficulty or any very unusual burden upon the Board in this matter. After all, though the Board of Trade are charged with the duty of investing those funds, they will, as a matter of fact, be invested through the Government brokers with the advice and under the approval of the Treasury. The great point is to remove the investments from out of the hands of the National Debt Commissioners, because their operations are very confined; in fact, they are confined to certain Government stocks. If you leave it in their hands you are excluding from the purview of this fund certain investments equally secure, very important investments indeed which yield a larger rate of interest, even if it is only the ½ per cent. extra which the right hon. Gentleman the Financial Secretary to the Treasury appears to regard with so much contempt. The Solicitor-General has pleaded that we should come to a decision on this point because there is another matter he wishes to be dealt with. I quite sympathise with his desire to discuss further Amendments. It is not our fault we shall have no opportunity of doing so, or of considering some very important points. But there is a further matter in this connection to which I desire to call the attention of the House. If you accept the Government proposal to keep this in the hands of the National Debt Commissioners, you will not be placing this Part of the Bill on the same basis as Part I. There is a radical difference between Clause 86 and Clause 50, which the Solicitor-General has quoted, and if the hon. and learned Gentleman will look at the end of Sub-section (3), Clause 50, he will see that the Commissioners have the power in making investments to give preference to stocks or bonds issued under the provisions of the Acts relating to borrowing for raising capital for the purposes of the local loans fund. At the present moment you cannot draw an analogy between Part I. and Part II. of the Bill. I do urge on the Treasury to take into consideration the possibility of extending the operation of this fund—of extending for it the field of investment, so as to include the large class of securities which the Chancellor of the Exchequer last night included under Clause 53, without any discussion whatsoever. This is probably one of the most important financial changes that has taken place this Session, inasmuch as the area of investment was extended to include any stocks, mortgages, or other securities issued by any local authority within the meaning of the Local Loans Act, 1875, and charged on any rates levied by or under the order or precept of such authority. I do not quarrel with that provision. I should indeed like to thank the Chancellor of the Exchequer for having given us that extension: it is an extension for which we have been contending for several years past, and for which the great municipalities have been clamouring without success for a very long time. I hope that as the Chancellor of the Exchequer has seen fit to concede us this point in regard to investments under Part I., he will, while the analogy may not be in a strict sense an analogy at all, extend the same privilege to investments under Clause 86.


On the whole I agree with my hon. Friend the Financial Secretary to the Treasury. I am not sure the House really recognises the very peculiar nature of this fund. We are accustomed to think an insurance fund is a comfortable, solid fund, which substantially provides great blocks of money to be permanently invested. As the Financial Secretary to the Treasury has pointed out, this fund is quite unique in this respect. It starts with six months' premiums in hand. That is something like £1,250,000. Thereafter, according to the actuaries' report, there is a sum, which I will roughly call £2,500,000, payable in benefits, and a slightly larger sum retained in premiums after you have deducted from the total amount received the cost of administration. You start with a million and a quarter, and have a margin of something over £100,000 every year. We know that these unemployment percentages vary very much from year to year. It is perfectly possible that the percentage in one year may be twice as great as the average. Take, for instance, the years 1908–9, when you had an unemployment percentage of nearly twice the normal size. I do not want to imply that with twice the unemployed percentage you would get twice the amount of unemployment benefit, but you might easily have an excess of claims on one year by, say, a million and a-half. When you have this great liability to variation with a very small margin, you surely must have a fund invested in very easily liquidated securities. No one interested in trustee funds in general or in Colonial stocks would wish that the Government should have any large investment in these securities. If the Government had a big block of them it would be very annoying to other holders of those particular funds to find the prices going down. I think that Consols will be the only form of investment available for this fund. I had the opportunity, some years ago, of examining, on a committee of which I was a member, the Comptroller of the National Debt as to the investment of the Life Insurance Fund of the Savings Bank. He admitted that, even for the purposes of that fund, he was practically confined to Consols. He was allowed by Act of Parliament to arrange for other investments, but it was not possible for him to do it. For these reasons I, with regret, think that the President of the Board of Trade

is not the man for this job. I would, therefore, suggest that it is best to leave the matter as it is left in the Bill.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 167; Noes, 62.

Division No. 420.] AYES. [4.29 p.m.
Acland, Francis Dyke Hackett, John O'Connor, T. P. (Liverpool)
Ainsworth, John Stirling Hancock, J. G. O'Doherty, Philip
Allen, Arthur A. (Dumbartonshire) Harcourt, Robert V. (Montrose) O'Grady, James
Allen, Charles P. (Stroud) Hardie, J. Keir O'Kelly, Edward P. (Wicklow, W.)
Anderson, A. M. Harmsworth, Cecil (Luton, Beds.) O'Malley, William
Atherley-Jones, Llewellyn A. Harvey, T. E. (Leeds, West) Palmer, Godfrey Mark
Baker, H. T. (Accrington) Hayden, John Patrick Pearce, Robert (Staffs, Leek)
Banbury, Sir Frederick George Helme, Norval Watson Phillips, John (Longford, S.)
Barnes, George N. Henry, Sir Charles Price, C. E. (Edinburgh, Central)
Beauchamp, Sir Edward Higham, John Sharp Priestley, Sir W. E. B. (Bradford, E.)
Birrell, Rt. Hon. Augustine Hinds, John Pringle, William M. R.
Boland, John Pius Hodge, John Radford, George Heynes
Bowerman, Charles W. Howard, Hon. Geoffrey Raphael, Sir Herbert H.
Bryce, J. Annan Hughes, Spencer Leigh Rea, Walter Russell (Scarborough)
Buckmaster, Stanley O. Hunter, W. (Govan) Reddy, Michael
Burke, E. Havlland- Isaacs, Rt. Hon. Sir Rufus Richardson, Albion (Peckham)
Burns, Rt. Hon. John Jones, Sir D. Brynmor (Swansea) Richardson, Thomas (Whitehaven)
Buxton, Rt. Hon. Sydney C. (Poplar) Jones, Edgar (Merthyr Tydvil) Roberts, Charles H. (Lincoln)
Byles, Sir William Pollard Jones, Leif Stratten (Notts, Rushciffe) Roberts, Sir J. H. (Denbighs)
Cameron, Robert Jones, William (Carnarvonshire) Robertson, Sir G. Scott (Bradford)
Carr-Gomm, H. W. Jones, W. S. Glyn- (T. H'mts, Stepney) Roch, Walter F. (Pembroke)
Cassel, Felix Jowett, F. W. Roche, Augustine (Louth)
Chapple, Dr. William Allen Joyce, Michael Roe, Sir Thomas
Clough, William Kennedy, Vincent Paul Rowlands, James
Clynes, John R. Lambert, George (Devon, Molton) Samuel, Rt. Hon. H. L. (Cleveland)
Collins, Stephen (Lambeth)
Compton-Rickett, Rt. Hon. Sir J. Lansbury, George Scanlan, Thomas
Cornwall, Sir Edwin A. Lawson, Sir W. (Cumb'rld, Cockerm'th) Schwann, Rt. Hon. Sir C. E.
Cotton, William Francis Lewis, John Herbert Seely, Col., Right Hon. J. E. B.
Craig, Herbert J. (Tynemouth) Low, Sir F. (Norwich) Sheehy, David
Crawshay-Williams, Eliot Lundon, Thomas Sherwell, Arthur James
Crooks, William Lyell, Charles Henry Shortt, Edward
Crumley, Patrick Macdonald, J. R. (Leicester) Simon, Sir John Alisebrook
Davies, Timothy (Lincs., Louth) Macpherson, James Ian Smith, Albert (Laces., Clitheroe)
Dawes, James Arthur M'Callum, John M. Soames, Arthur Wellesley
Delany, William McKenna, Rt. Hon. Reginald Spicer, Sir Albert
Denman, Hon. Richard Douglas Magnus, Sir Philip Stanley, Albert (Staffs, N. W.)
Devlin, Joseph Marshall, Arthur Harold Straus, Edward A. (Southwark, West)
Dillon, John Mason, D. M. (Coventry) Sutherland, J. E.
Donelan, Captain A. Meagher, Michael Sutton, John E.
Doris, William J. Meehan, Patrick A. (Queen's Co.) Thomas, Abel (Carmarthen, E.)
Duncan, C. (Barrow-in-Furness) Menzies, Sir Walter Walsh, Stephen (Lancs., Ince)
Edwards, Sir Francis (Radnor) Molloy, Michael Ward, W. Dudley (Southampton)
Elibank, Rt. Hon. Master of Molteno, Percy Alport Wardle, George J.
Esmonde, Dr. John (Tipperary, N.) Mooney, John J. Wason, Rt. Hon. E. (Clackmannan)
Esmonde, Sir Thomas (Wexford, N.) Morrell, Phillip Wason, John Cathcart (Orkney)
Essex, Richard Walter Morton, Alpheus Cleophas Webb, H.
Esslemont, George Birnie Muldoon, John White, J. Dundas (Glas., Tradeston)
Farrell, James Patrick Murray, Capt. Hon. Arthur C. Whitehouse, John Howard
Ferens, Thomas Robinson Nannetti, Joseph P. Wilkie, Alexander
Flavin, Michael Joseph Neilson, Francis Williams, P. (Middlesbrough)
George, Rt. Hon. David Lloyd Nicholson, Charles N. (Doncaster) Wilson, W. T. (Westhonghton)
Gill, A. H. Nolan, Joseph Wood, Rt. Hon. T. McKinnon (Glas.)
Gladstone, W. G. C. Norton, Capt. Cecil W. Yoxall, Sir James Henry
Glanville, Harold James Nugent, Sir Walter Richard
Goldstone, Frank O'Brien, Patrick (Kilkenny) TELLERS FOR THE AYES.—Mr. Gulland and Mr. Wedgwood Benn.
Greig, Colonel J. W. O'Connor, John (Kildare, N.)
Ashley, W. W. Cautley, H. S. Fell, Arthur
Beckett, Hon. William Gervase Cecil, Evelyn (Aston Manor) Fletcher, John Samuel (Hampstead)
Benn, Arthur Shirley (Plymouth) Cecil, Lord R. (Herts, Hitchin) Gwynne, R. S. (Sussex, Eastbourne)
Benn, Ion Hamilton (Greenwich) Clyde, James Avon Hamilton, Marquess of (Londonderry)
Boyle, W. L. (Norwich, Mid) Collins, Godfrey P. (Greenock) Harris, Henry Percy
Brassey, H. Leonard Campbell Craig, Norman (Kent, Thanet) Henderson, Major H. (Abingdon)
Bridgeman, William Clive Denniss, E. R. B. Hill, Sir Clement L.
Carlile, Sir Edward Hildred Dickson, Rt. Hon. C. Scott Hills, J. W.
Cator, John Eyres-Monsell, Bolton, M. Hoare, S. J. G.
Hope, James Fitzalan (Sheffield) Mount, William Arthur Thomson, W. Mitchell (Down, North)
Horne, E. (Surrey, Guildford) Newdegate, F. A. Thynne, Lord A.
Hume-Williams, W. E. Newman, John R. P. Touche, George Alexander
Kerr-Smiley, Peter Kerr Nield, Herbert Ward, Arnold S. (Herts, Watford)
Kimber, Sir Henry Paget, Almeric Hugh Ward, John (Stoke-upon-Trent)
Kinloch-Cooke, Sir Clement Peel, Capt. R. F. (Woodbridge) Whyte, Alexander F. (Perth)
Kyffin-Taylor, G. Pole-Carew, Sir R. Wood, John (Stalybridge)
Lawson, Hon. H. (T. H'mts., Mile End) Rawlinson, John Frederick Peel Wortley, Rt. Hon. C. B. Stuart-
Locker-Lampson, O. (Ramsey) Salter, Arthur Clavell Yate, Col. C. E.
Lowe, Sir F. W. (Birm., Edgbaston) Samuel, Sir Harry (Norwood)
MacCaw, Wm. J. MacGeagh Snowden, Philip TELLERS FOR THE NOES.—Mr. Amery and Sir A. Griffith-Boscawen
Malcolm, Ian Stanier, Beville
Mildmay, Francis Bingham Stewart, Gershom

And, it being after Half-past Four of the clock, Mr. DEPUTY-SPEAKER proceeded, pursuant to the Order of the House of the 25th October, successively to put forthwith the Question on any Amendments moved by the Government, of which notice had been given, necessary to dispose of the business to be concluded at Half-past Four of the clock this day under the Order of the House of 25th October, as amended by the Order of the House of 30th November.