HC Deb 13 February 1917 vol 90 cc517-30

Motion made, and Question proposed,

"That a Supplementary sum, not exceeding £41,709, be granted to His Majesty, to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1917, for the Salaries and Expenses of the Office of the Committee of Privy Council for Trade and Subordinate Departments."

Sir C. HENRY

I would like to ask my hon. Friend for some explanation of this amount. I would especially ask when the obligation was entered into and the date from which interest to the corporation first became payable.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. G. Roberts)

I will certainly respond to the Appeal that has been made by my hon. Friend and will endeavour to give him the information which he desires. This is the amount of the subsidy paid in November last to the British Italian Corporation, Limited, under an agreement dated 8th June, 1916, the object of which is to promote closer commercial and financial relations between Great Britain and Italy. The maximum amount of the subsidy payable for a period of ten years under clause 1 of the agreement is 5 per cent, on a paid-up capital of £1,000,000. That is £50,000. The sum of £41,709 represents 5 per cent. on the capital certified to have been paid up on 30th November, 1916, namely, £834,180. Having regard to the fact that this question was discussed at some length in the latter part of the Session, I hope that my hon. Friend will be satisfied.

Sir C. HENRY

According to what my hon. Friend has said, it is a prepayment of interest. The payment is not made when the year is completed.

Mr. ASHLEY

I am thankful to the hon. Gentleman for giving us this financial information, but as it is now some two or three months since the last debate upon this subject I think before we pass this Vote he ought to tell us something of what this corporation has done. We are asked to pay this additional sum of money, which is 5 per cent, up to November, 1916, but we are not given one word of explanation as to what this corporation has been doing since the last discussion. I would therefore ask the hon. Gentleman to amplify his statement, and to tell us what this corporation has been doing in the meantime.

Major NEWMAN

This corporation is apparently only half of the project. The British Italian Corporation, Limited, with a capital of one million pounds, was registered on the 20th July with nine directors, of whom six were to be British and three Italian. I should like to know, in the first place, if the sixth British director has been appointed. Originally only five were appointed. Has the sixth been appointed subsequently? There was in addition a subsidiary company to be formed, under the title of the Compagnia Italo Britannica with a capital of 10,000,000 lire (£400,000), one half of which was to be taken by the British-Italian Corporation, Limited, and the other half by the Credito Italiano and their friends. On this subsidiary company there were to be nine directors, six of whom were to be Italian and three British. The two companies were to work together in close collaboration, and arrangements had been made in which their interests, as far as possible, would be indentified, except that the subsidy of the British Government would naturally remain for the benefit of the British company exclusively. We know that the Italian corporation has been formed and has got to work, and the taxpayer of this country has been calied upon to make his first additional contribution of £41,709, but I would like to know something about the other sister company. I take it that these two banks are to foster trade between the two countries. It is an admirable idea, but it is an innovation in our habits of banking in this country, though one which I know the House approved of when the matter was brought forward, and we do not know how far the thing has gone, and what work the Italian Corporation has been able to do in the short time it has been formed. We do not know if this sister company has been formed yet, or whether it has got to work. I should be very pleased if the hon. Member could give us a little more light on that point.

Mr. G. ROBERTS

I am afraid that I am unable to give the information sought for. As a matter of fact, this company was only formed recently, and the agreement was entered into in June last year. Therefore, the amount which now appears on the Supplementary Estimate practically represents the first year's subsidy, which is guaranteed in this agreement. The subsidy is for ten years, and the intention is to place next year's subsidy on the Estimates, thus affording the Committee a full opportunity of discussing the whole matter. We are hopeful of then being in a position to give some information to the House, thereby allowing the Committee properly to discuss the whole matter, but at present I think it will be seen that the operations of the company have been of such short duration that there is little or nothing to report at this stage. When the matter does appear on the Estimates in the forthcoming year we are hopeful that we shall be able to place some information before the House which will allow us to discuss the matter adequately. With regard to the appointment of the sixth director, I confess that I am not in possession of that information, but if the hon. and gallant Gentleman will address a question to me in the ordinary way I will endeavour to ascertain for him. With regard to the Italian company, I understand that, like its British counterpart, it is in course of formation, and that it is getting into operation. We hope to have a report to submit to the House with regard to it as well as with regard to the British company.

Sir G. TOULMIN

I do not think the hon. Member has given the House all the information to which it is entitled. This is the first occasion on which we have been called upon to pay this sum, and we might have been told, for instance, how far they have succeeded in getting the whole of the capital they propose to get. I understand it is proposed to get £1,000,000. You have not got £1,000,000.

Mr. ROBERTS

I thought I announced that the £41,907 represents 5 per cent, on the capital paid up, which amounts to £834,180.

Sir G. TOULMIN

Does the hon. Member mean that £1,000,000 of capital has been subscribed, but that only £834,000 has been paid up? If they have got their capital, that is a fact satisfactory to us, but if they have attempted to get £1,000,000 and have only got £834,000 that is an indication that the thing wants carrying further than at present. We ought to know how far the business has pro- gressed, whether they have opened any branch in Italy, and what the arrangements are here. The House is entitled to further information. It does not like to press Ministers who are only just taking these things up, but it is right that it should see that these things are properly prepared when such large demands are made upon us, especially in a case like this, where a grant is first made. Of course, we know that it will be done next year and every year for the next ten years, and each-year we shall require a review of it. It is a new experiment which will have to be watched extremely jealously. I do not in the slightest oppose it; in fact, from what I have heard it is a very satisfactory arrangement. I am speaking of it as an arrangement between the two countries, without entering into the question whether it is a good thing for the Government of this country to start in the banking business. I know that the effect produced in Northern Italy has been good, but I think the House ought to have more information before it is asked to vote this first instalment.

Mr. ASHLEY

I was very disappointed with the answer of the hon. Gentleman. He comes down and asks the House to Vote £41,000 for a certain Anglo-Italian company, and he gives one or two brief financial details, but when I get up and ask him what the company has done he gives us no information. This has not happened on one Vote alone. It has happened on every single Vote this afternoon. It happened on the first Vote. There was no information given and no attempt to give information. There was a long discussion, but there was no information: given regarding the pooling of Ministers' salaries. It is the same on this third Vote. It is perfectly true that Ministers have-only lately taken up their posts, but it is not treating the House of Commons and the individual Members of the House of Commons in a way they are entitled to be treated, and I object to being asked to vote these sums of money without any information being given on the part of Ministers. A Member, coming down to the House of Commons, is supposed to sit here and vote for anything which the Government put forward, and he has to do it because he wants to do whatever the Government in power desires, and absolutely no information is given to him.

Sir F. BANBURY

My recollection is that the original Vote, authorising the Government to pay an annual subsidy of 5 per cent, upon the capital for ten years, was passed last December as a War obligation. That is only two months ago. I understood from the hon. Gentleman that the company was started last June, which is about seven and a half months ago, and about £800,000 was called up. Five per cent, on that would be about the sum which we are asked to vote now—that is, the amount for a year—but the company has not been in existence for a year, for the Bill was only voted about two months ago. It seems to me that when we are asked to vote money for this purpose we should vote for only 5 per cent, upon the capital for the months during which the company has been in existence.

Sir C. HENRY

I think that the right hon. Baronet is correct. As I understand from my hon. Friend, the capital was only paid up in November. Is it part of the agreement with the Italian Bank that the interest is to be paid in advance, as seems to be done by this Supplementary Estimate? I would ask my right hon. Friend the Member for Dewsbury (Mr. Runciman) to enlighten the Committee on this, because I think that he was in charge of the Department when it opened the negotiations?

Mr. PRINGLE

The late President of the Board of Trade would know all about this. When we had the War obligations before us I made the utmost endeavour to elicit information both from the Home Secretary and the hon. Gentleman who now represents the Board of Trade. But on that occasion they pleaded that they were new to their job, and scarcely knew the inside of their offices, that this was done by their predecessors, and that I should apply to them. Here is an occasion on which a Vote has to be taken in pursuance of the obligations which were then sanctioned. We are told that there is an additional sum required. As to how this sum has accrued and in respect of what obligations it is payable, no light is thrown except that it is a war obligation that is to run for the next ten years. We are told that the agreement is dated the 8th of June, 1915. Obviously, if that is so, the capital could not have been subscribed at that date. Apparently the large part of the capital was not subscribed until November last. I do not know how the sum of £41,000 has accrued as interest on capital which was only subscribed in November last, or for how long a period we are providing in this supplemental Estimate. I have some difficulty in calculating while on my feet, but it seems to me a large sum for a short period up to the 31st March. The hon. Gentleman has told us that the sum subscribed is £800,000, and consequently the amount mentioned here is the amount payable. He cannot tell us anything about the operations of this corporation. Has it actually gone into business? Has it done anything to encourage trade between this country and Italy? I do not know whether anything has been done or not. Has this interest to be paid irrespective of whether the corporation has done anything or not? On all these points there is complete silence. Here we are left in the same position as in the first Estimate. Nobody seems to know anything, and there seems to be nobody in the House who can prompt Members. The Solicitor-General has made a speech of considerable length, but he merely stated a number of generalities with his usual facility and lucidity. What we want in this case is detail. Apparently the new Government has a soul above detail. Possibly the result of having a War Cabinet is to impress upon subordinates of the Government that they can treat detail as a matter of absolutely no consequence. I hope that the Committee of this House, in the course of these Supplementary Estimates and of the main Estimates of this Session, will show that they do not share that view.

Major NEWMAN

I find in the OFFICIAL REPOHT of the 31st of July that the then Chancellor of the Exchequer, answering a question put, I think, by an hon. Member for a Liverpool Division, said that a British company, under the title of the British-Italian Corporation, Limited, with a capital of £1,000,000, was registered on the 20th of July, and "there will be no public issue, the capital having been subscribed privately, chiefly among bankers." In that event the interest on that amount would run from that time. I do not know how the figures, £3,060 and £41,000, are brought in, but I would suggest to the hon. Member for Norwich that perhaps, we have got here the directors' fees included. I do not suppose that they are working for nothing. Has the bank made any profit in the interval? I would like to know exactly what capital has been subscribed and when it was subscribed. We have had a date in November mentioned several times already, but here we have it that the capital was subscribed in July.

Mr. HOGGE

On page 5 of this Estimate I see that the original Estimate for this purpose is represented by a short dash. The revised Estimate is also represented by a short dash of equal length with the original, and the additional sum required is given as £41,000. Will the hon. Gentleman explain that, so as to help to clear up the financial muddle into which we are getting to-day? To ask for an additional sum of £41,000 and not to show the revised Estimate or the original Estimate and to ask us to believe that is about as much as asking us to believe that this Cabinet is as indispensable as the last. I hope that somebody will tell us what this British-Italian Corporation has done. I understand that, when the War broke out, large financial and industrial interests, particularly in the north of Italy, were in the hands of Germans, and one reason why Italy did not come sooner into the War was that the Germans had so great a grip upon the industrial North. This corporation, with a fairly respectable capital, upon which the British Parliament representing British taxpayers have to grant certain interest, has been set up and given certain privileges. What has it done? Has it got hold of the trade in Italy, that was being promoted by the Germans, for instance? Have any Italian firms, through Italian and British banks, been put into contact with British firms, and have any prospective and potential business alliances been created between any Italian business firm and any British business firm? We are entitled to know that, and I am glad that the hon. Member for Blackpool insists on that.

Surely, when a company presents a balance-sheet, it tells what it has done with its money! This balance-sheet does not tell us how much money was there originally or when it was revised. It only tells us that we have got to make up the difference by collecting it from British taxpayers. The hon. Member in charge of this particular Estimate is a Labour Member. I think I remember the hon. Gentleman when below the Gangway, in the good old days, delivering speeches with the same voice as that with which he now answers questions as to the exploitation of the capital of the people by capitalists. He is now in charge of a capitalist undertaking, and can give us no explanation. I begin to wonder how far you can trust the financial purity of even Labour Members when you put them on that Front Bench. I really think that it is due to the Labour party, which he represents in the Government, that he should clear his character with regard to this particular corporation, and tell us what this-corporation has done for the money which we have provided.

Mr. ASHLEY

We must recognise that the Government do not understand this. Estimate, and that there is not much use in the Committee going on; but I give warning that it will be raised again on the Report stage, when I hope that additional information will be given to the House.

Mr. FIELD

This seems to be a most extraordinary document, because under the original Estimate there is no figure, and under the revised Estimate there is no-figure, and under "additional sum required" we have £41,700. Then we have the total original Estimate as £401,720. If this kind of a document was presented by a business man, say in a bankrupt concern, or anything of that kind, I think that the Judge would be likely to put that man into a lunatic asylum. I have been here a good many years, and I have never seen a Supplementary Estimate of that character before, and I think that we ought never have one again. We are asked to vote without any information. It is just carrying out the behests of the Government. Things are brought forward and we must vote, like a lot of children in a school. I believe that there is a branch of the Board of Trade in Ireland controlled from England. I do not know how it is done in Parliament so far as my inquiries have gone. I became a Member of this House twenty-five years ago, and apparently the Board of Trade gives no more information now than before, and affords no statistics or particulars. I do hope that such an Estimate as this will not be presented to the House again, and that the House will resent such a ridiculous document being brought before it asking us to vote £401,000 without any information whatever.

Mr. G. ROBERTS

I can assure the House that I am willing to give it any information I possess, and if I do not give it, the reason is that I do not possess it. Nevertheless, I will endeavour to make clear what the purpose is. It apparently is thought that this sum is a pay- ment of interest, covering a certain period, whereas, what the agreement contemplates, is the payment of 5 per cent, by a given date, not as interest, but as a subsidy in the form of interest, for a given period. I am not responsible for the terms of the agreement which was entered into, as I have stated, in the middle of last year. The subject was really fully discussed towards the end of December. [An HON. MEMBER: "NO!"] It was fully discussed towards the end of December, and I certainly did not contemplate that the matter would require a great deal of discussion now. I think the subject will be understood if we disabuse our minds of the idea that this payment is regarded as interest for a particular period, and the terms of the agreement contemplate the payment of the subsidy on the principle of 5 per cent, on the capital paid up by the 30th November of this year. I think that will be accepted as an explanation to-night. That is the agreement which was entered into, and it is not a matter for discussion now. It was discussed by the House of Commons on the War Obligations Bill in November last, and by the adoption of the Bill, the terms of the agreement were accepted by the House. The further question is, whether I am able to give some information respecting the operation of the British-Italian Company, or of the Italian company. I confess that in the present state of the operations of those companies I am not in a position to do so. I have stated that it is the intention to place this matter on the Estimate year by year, thereby affording the Minister in charge an opportunity of making the statement as to the operations of the companies in the event of the Committee demanding such an explanation. I hope I have succeeded in making the point clear. I think the confusion has evidently arisen from this payment having been regarded as interest and not as a subsidy.

Sir F. BANBURY

I am not quite satisfied with the answer of the hon. Gentleman, who says that there is a difference between a subsidy and the annual payment of interest. It does not matter whether you make the annual payment of interest as interest, or as a subsidy; it is 5 per cent., and there is really no difference between the two. What I want to know is whether this sum covers the period of the whole year and when that year expires. If the year does not expire until after the 31st March, how can you vote the money that is to be paid after the 31st March, and when does it terminate? Surely the company only began operations three or four months ago, and having only raised this capital three or four months ago, they cannot expect to get a subsidy of £40,000 in that period. The subsidy is to be calculated per annum and is only to be 5 per cent. I am afraid the explanation is by no manner of means clear. With regard to the statement of the hon. Gentleman that the matter was fully discussed in December, I am afraid that I must differ from him. The matter was intended to be fully discussed when it was brought forward by the late Government, and I myself intended to raise the question, because I felt it was a mistaken policy and ought not to be done. It was my intention to raise the question when the late Government brought the matter forward, but I forget now what happened; at any rate, it did not come before the House, and when it did come before us there was a new Government and naturally one did not wish to embarrass it; one was quite aware that the new Government could not be attacked for the mistakes of the late Government. But surely whoever has now charge of these matters ought to have found out for himself during the last two or three months what the charge was for, and to what we had committed ourselves. It seems to me nobody knows. All they have done is to adopt the policy of the late Government without ever affording any explanation to the House. As to what period this sum covers, whether the money has been found and at what period, and, if so, when that period expired.

Sir C. HENRY

I have always maintained that the mistake that the late Government made was to put this transaction in the War Obligations Bill. I thought it was a transaction which ought to be put in a separate Bill, which would have contained the terms of the agreement, and so would have been disclosed to the House. Members would then have been afforded an opportunity of investigating the terms, and if this information had been brought to their knowledge discussion at the present time would not have occurred. But even to-day we do not know the terms of the agreement which was entered upon, and we have never had a proper explanation of them given to us. I was always under the impression that £50,000 was guaranteed to the subscribers of a £1,000,000 here in London as interest on the capital. Now we are told that it is a subsidy, and I hope my hon. Friend later will be in a position to give us an explanation of all the facts.

Mr. OUTHWAITE

I could scarcely follow the explanation given by the hon. Gentleman on the Front Bench. Are we to understand that this sum of money is to secure 5 per cent, on the capital of this corporation irrespective of any return of profit they may make themselves, or is this House to vote 5 per cent, on the capital of the company without regard to any percentage of profit they are making? Is this subsidy to secure to this corporation 5 per cent, on the capital irrespective of their activities, and irrespective of whether they are making 20 to 30 per cent, profit? Are we still, in such circumstances, to go on paying this subsidy of 5 per cent.

Mr. PRINGLE

It seems to me that the situation is not yet clear. The hon. Gentleman has told us that is a payment ment for a certain period, but he has not told us when the date arrives. I think he ought to have given us that information, and how long a period this payment covers. I may remind the hon. Gentleman that a discussion took place on this subject on the War Obligations Bill, and we were told then that we would have an opportunity for further discussion of this matter when the Estimates came on, that in each year in which the guarantee was payable a sum would be voted on the Estimates, and the House of Commons would have an opportunity of investigating the operations of the company and ascertaining whether it was fulfilling the expectations of its promoters. We have endeavoured to ascertain what has been done, and we have received absolutely no information; we have not been told the date at which this sum accrued, nor why it is to be paid, or how long a period is covered.

Colonel YATE

The hon. Gentleman on the Front Bench is not responsible. Will he tell us who is responsible?

Major NEWMAN

May I point out that in regard to this matter, as recorded in the OFFICIAL REPORT, the then Chancellor of the Exchequer told us that the British Government agreed to contribute to the company by way of subsidy during each year—that is ten years after incorporation—the annual sum of £50,000, the equivalent of 5 per cent. The company was registered, he told us, on the 20th July. I take it, therefore, that what we have to do is to pay 5 per cent, on the 20th July on whatever capital is called up by the company.

Mr. STANLEY BALDWIN (Lord of the Treasury)

There appears to be a muddle where no muddle is necessary. As to the agreement made in the time of the late Government, I confess frankly that I have not read it. I have been engaged in my present work just fourteen days, and I have not been able to look into all these questions for which other Departments are responsible, but I hope to do so by and by. In this discussion we have got into confusion as to whether this sum is calculated as if it were interest. But it is really a subsidy payable once a year, and payable from 1916 for ten years. That is provided for in the agreement that was drawn up, by paying 5 per cent, on the capital paid up on the 30th November, with a maximum amount of a million. It is calculated on the capital stated for last November, and you get the figure in the Estimate, and that figure is for the year 1916, not for any financial year as we understand it in this Committee. Therefore, a sum calculated in the manner which I have described will appear in the Estimates for the next nine years. There is nothing really in the point made by my hon. Friends in regard to the original or the revised Estimate.

Mr. PRINGLE

There ought to be a figure in the revised Estimate.

Mr. BALDWIN

I would be quite willing to accept the far greater experience and judgment of my hon. Friend on a matter of that kind. The Committee is probably aware that the terms of the agreement are covered by the War Obligations Act, which provides that this money shall be paid out of moneys voted by Parliament, or, if those moneys be insufficient, shall be charged on and paid out of the Consolidated Fund. It was thought right to present the Estimate this year, and it is proposed that that Estimate shall be provided in future years. It is only fair to remember that if the Estimate were not passed the obligation would have to be honoured because there is power to honour it by making payment out of the Consolidated Fund under the Act. I feel very strongly it is desirable we should know the details and contents of the deed that was drawn up in connection with this company. All I can say upon this is, that I hope the Committee will see that until the end of the War period, which we all trust will not now be long deferred, it is not desirable to publish details, because it is not this country alone that is involved, but we have as partners in this business, our Allies. As soon as this necessity for a period of secrecy has passed, the Government will be only too pleased to make public the terms of the agreement, and the House will have a full opportunity of discussing them. I hope the Committee will feel I have done the best I could under the circumstances to describe the position, and that the Committee will be content to allow the Vote to pass.

Sir F. BANBURY

I am obliged to my hon. Friend for his explanation. I understood him to say the payment has nothing to do with the financial year, but that it is voted for 1916. The company was started, I believe, on the 30th November.

Mr. BALDWIN

What I said was that the sum that is payable is a subsidy calculated as interest on the capital as it stood on the 30th November last year.

Sir F. BANBURY

When was the company started?

Mr. BALDWIN

I am afraid I cannot say.

An HON MEMBER

In July.

Sir F. BANBURY

If the company was founded in July, 1916, and if we are to take each year standing by itself, and are to give them a subsidy of either £50,000 or 5 per cent, calculated on the amount of money called up, if that is smaller, and if the amount called up is £800,000, the subsidy due being therefore £40,000 odd, and if they are to have the same subsidy in 1917 the position is this: That for the six months we are asked to give them double what they are entitled to, whereas they only ought to receive a subsidy of 2½ per cent., seeing that they have only been in existence six months.

Mr. BALDWIN

My right hon. Friend is assuming that they are having interest whereas they are having a subsidy which has been calculated in the manner I have described. If the arrangement had been that the company were to have 5 per cent. a year my hon. Friend's point would hold perfectly good, but it is not quite in that position. It is a subsidy, the amount of which is to be 5 per cent, on the capital got.

Sir F. BANBURY

But, surely, it was to be an annual subsidy, and in that case you cannot make it a bi-annual subsidy. You cannot say the company shall have an annual subsidy of £50,000, and then interpret that by saying it shall be payable for six months. Suppose you engage a new secretary for the Food Control Department, at a salary of £2,500 a year, and supposing he was engaged last July. The six months will have elapsed, but you will not pay him £2,500 for that six months. You will only give him £1,250. I submit that the same principle applies to everything, and I am certain no one would like to pay as much for six months' working as for a whole year's working. No doubt the company would be very glad to receive it, and if we pass this Vote we shall be giving the company double what, I maintain, they are entitled to.

Sir G. TOULMIN

If I understand the explanation of the hon. Member for Bewdley correctly, my right hon. Friend is not quite correct in his assumption. There are ten subsidies to be given to this company. This is one of them, and we thus get quit of one-tenth of our obligation. We are paying them 5 per cent, on the capital, as it stood in November, and there will be no further sum due to them until another November comes round, when we shall have to give them 5 per cent, on account of £1,000,000, if they have got it, or on so much as they have got. We are not paying them in advance, and we are only getting rid of our liability for one year. It depends on the details of the agreement, I imagine, whether we are to wait till the year has finished before payment is made. But, seeing that the payment is to be calculated on the capital as it stood in November, I think the money might reasonably be voted now.

Question put, and agreed to.