§ In order to remove doubts it is hereby declared that the increase in the Stamp Duty imposed by Section thirty-nine of the Finance Act, 1920, on statements as to capital of companies did not and shall be deemed not to have applied in any case where the Treasury are satisfied that—
- (1) the new issue of capital would in ordinary course have been made before the increased rate of Stamp Duty became payable, and that
- (2) such issue was postponed by reason only of compliance with the request of the Chancellor of the Exchequer for the postponement of private appeals for capital in view of the new issue of Treasury Bonds, and for no other reason,
§ Brought up, and read the First time.1299
§ Mr. R. McNEILL
I beg to move, "That the Clause be read a Second time."
I confess that I had reason to anticipate that you might be doubtful about this Clause being in order as it stands on the Paper. I am going to ask you to allow me to move it in the amended form, a form in which the Government would recognise it as a familiar friend. If I move it in that form I think I shall be in order, because it will avoid the objection to which you referred.
§ The CHAIRMAN
I still have certain doubts, but as they are doubts and not certainties, I give the hon. Member the benefit of them.
§ Mr. McNEILL
I am quite certain my right hon. Friend is prepared to accept this Clause, because it is not a question here of taking away from him anything in the way of revenue, or a very inconsiderable amount. It really is only to give him an opportunity to repair what was an obvious oversight in the Finance Bill of last year. Let me explain shortly. Early in January, 1920, the Chancellor of the Exchequer was about to issue a Government Loan, and I think it was in the form of bonds. In order to keep the line clear for the Government Loan a request was issued from the Treasury—I think it was on 15th January—urging companies and other firms who might be contemplating making new issues of capital to refrain from doing so for a short time for patriotic motives, and in order not to interfere with the Government loan. In point of fact, so far as I have been able to ascertain, something like £20,000,000 of capital, or thereabouts, was issued in total disregard to the appeal which had been made to the public by the Chancellor of the Exchequer, and this £20,000,000 of capital took advantage of a very favourable time in the market.
A small number of persons and companies, thinking themselves bound under the national circumstances, responded to the appeal which had been made by the Chancellor and refrained from making issues of capital which they had in contemplation. By doing so, they sacrificed a very favourable moment for making their issues. But they were prepared to do that and take their chance of finding another favourable period. Before they 1300 were able to make their issues the Government put up the duty from 5s. to 20s., and the consequence was that this small number of patriotic concerns incurred the extra taxation, amounting in all to somewhere about £100,000. Under these circumstances when the Finance Bill was before the House, an Amendment practically identical with that which is down now, was put on the Paper by Lord Carson. Owing to some misunderstanding, Sir E. Carson, as he then was, was under the impression that the then Financial Secretary to the Treasury, now President of the Board of Trade, had accepted this Amendment. Sir E. Carson was not in the House when his Amendment was called and the consequence was that it fell through. The Chancellor of the Exchequer cannot stand up in this Committee and pretend he was going to take advantage of the response made to the appeal of his predecessor, but if there is a difficulty in accepting the Amendment in its present form I presume it would be open to the Government to put down, in more practical form, an Amendment on the Report stage. If the right hon. Gentleman is prepared to do that I am perfectly willing to agree.
§ Sir R. HORNE
I very readily agree with the view that my hon. Friend has put before the Committee to the effect that where the Government can be assured that people have acted upon its suggestion and suffered, something ought to be done. If one can come clearly to the conclusion that there were firms and companies so adversely affected in the issue of capital at this particular time then, I think, the Treasury would recognise an obligation to deal with the matter. I do not think it is possible to deal with the matter in a particular form of legislation, for reasons which are obvious when they are stated. My predecessor in office, who was in fact involved in this matter, very strongly took the view which he expressed to some people who felt they had been adversely affected, that it was impossible to find any appropriate remedy to the position. The facts are that the Chancellor of the Exchequer indicated a desire that the line should be kept clear for the Government loan. The subscription list of that loan terminated on 28th February, and there were six clear weeks between that date and the time when it was announced in the Budget speech that there would be an increase in the Stamp Duty on further issues.
1301 Accordingly, if there was any corporation or company that had a desire to make an issue at that particular time they had quite an appreciable period in which to make such an issue. Then there occurs the difficulty of deciding who should be relieved—if there are any who deserve it. It may be said there were some companies in the position that the six weeks available were not suitable. After all, the Chancellor of the Exchequer has to determine whether they have a real claim or not. It is very difficult for the Chancellor of the Exchequer to determine upon which ground he can give the relief. After all there is only the word of the people involved. He may be suspicious that the claim was unfounded, and the word of one company would be as good as another. We are hampered by the situation. But I am perfectly willing to do this. I would be glad to have a meeting with the hon. Member to discuss the matter further and, if it is possible on the Report stage, I should be very glad to take such action as may recommend itself, to me after full consideration of the whole matter. At the present time the situation is clogged with so many difficulties that I cannot give an assurance that I can ever see a way for a remedy.
§ Mr. McNEILL
May I just say a word in reply? To begin with, so far as the difficulty that the Treasury could not tell what concerns had or had not had to postpone their issue, I do not believe that any difficulty of that sort would arise. I should have thought myself that in any well-managed business there would be some record of it on the minutes of the board of directors. I have in my hand a report of one concern—the Imperial Banking Corporation—of which Lord Inchcape is chairman—which states that the prospectus "would appear this week but for the request of the Chancellor of the Exchequer that the new issue should be held over till Government Bonds were out of the way." I should imagine that there are not a great many cases of that kind. I think there is very little doubt that there would be some record on the minutes. At any rate, as my Amendment states, "where the Treasury are satisfied" I shall be perfectly content to leave it to my right hon. Friend to satisfy himself, and am certain that he will deal fairly with it. But when he tells me that his predecessor holds the opinion—which he apparently is inclined to endorse—that every claim that 1302 these concerns might have is forfeited because they do not take advantage of a particular interval of time, I do not think that that is a position that he can take up. It amounts to this, that the Chancellor of the Exchequer, having made this appeal to the patriotism of capital concerns, is willing to penalise them if they did not make their issue at a time when it would have been impossible for them to do so, and because they did not do so they are to suffer, while those concerns who metaphorically told him to go to the devil have not been penalised. I think that is a temper which the Government ought to be very chary indeed of raising in the money market. After all, it is surely of the highest possible importance that the Exchequer and the City should keep on good terms. As the right hon. Gentleman has offered to meet me, I shall be very proud to do so; but I hope that he will allow me to be accompanied by gentlemen who may be directly concerned—as I am not—I am only bringing the matter forward as one of public importance—with the issues of capital to which I have referred. I shall then be very grateful to accept his offer. But I do not like to part from the Amendment altogether without some very strong ground for hope that a case so strong as this is will not be allowed for any reason to be passed over. Therefore, I reserve to myself the right to put down this Amendment in the same or some amended form on the Report stage, when I hope there will be a better opportunity than there is at 3 o'clock in the morning.
§ 3.0 A.M.
§ Mr. KIDD
Might I suggest to the Chancellor of the Exchequer that one way of getting out of the difficulty of distinguishing between the real and the unreal claims might be that in those cases of which he has had notice within a reasonable time that his request had been complied with and the issue held back, that in these cases consideration should be given in order to exempt them from any outlay they would otherwise incur? The previous Chancellor of the Exchequer acknowledges this particular case; therefore there should be no difficulty about proof. Surely the Government will find some means of relieving these people of the great extra expense which otherwise they would be put to. With regard to the point that there was some delay. The Chancellor spoke in the 1303 month of January and the issue took place in the month of April. I hope the Chancellor of the Exchequer will feel that the responsibility rests with the Government of devising ways and means of exempting from this big outlay a firm which was so loyal and patriotic as to take the risk which they did at the request of the then Chancellor of the Exchequer.
§ Sir W. JOYNSON-HICKS
I should like to ask the Chancellor of the Exchequer whether he can give a little more favourable answer? Some few years ago I had some amount of legal experience in the issue of new capital. A company does not make up its mind to issue new capital all in the air. There are consultations with lawyers, brokers, and the whole paraphernalia must be gone through. If there is one thing in this world of legal proof it is that a company had made arrangements to issue capital on a certain date and to postpone its issue on account of the request of the Chancellor of the Exchequer. It would be the easiest thing in the world, it seems to me, to prove where a fraudulent claim has been made and where a claim is genuine. There are letter books and books of every kind. I have no interest in any case whatever, but I think the Chancellor of the Exchequer should make a little more favourable reply. It does seem a very hard case which has been put before the Committee.
§ Mr. PRETYMAN
I did not quite gather whether the Chancellor did give an undertaking to do something. We have had the statement made that a very important company, at the request of the Exchequer, delayed an issue until April, and the effect of that was that the Exchequer demanded a tax. The limitations, I understand, must be rigid.
§ Sir R. HORNE
I am afraid I have entirely failed to convey to the Committee the action which I was proposing to take. It is perfectly obvious that the Treasury cannot pay away money unless the evidence is perfectly clear. What I, ventured to suggest was that I should be given the opportunity of really arriving at some particular knowledge about this matter. I can give no pledge before I am made thoroughly aware that there is a case which deserves such consideration. I will promise to make investigation 1304 with the help of the Mover of the Motion, and that is as far as I can pledge myself. The Committee have jumped to a conclusion and think I ought to have gone farther. I am not prepared to jump to a conclusion. I am prepared to give my best consideration to the matter. I am not prepared now to say that a case is made until I see the evidence.
§ Mr. McNEILL
I want to clear this matter up. I shall be delighted to meet my right hon. Friend and discuss the matter, but for what particular purpose I There are two things to be done. A case for amending the Bill either in this form or in some similar form is made out. What I understand my right hon. Friend is asking is that we should give him evidence as to whether some particular firm or company does or does not come within the terms of the Amendment. That is quite a different thing. After all, what sort of evidence does my right hon. Friend want? I have given him conclusive evidence, at all events, of one concern where the issue was delayed at the request of the Exchequer, and where in point of fact they have to pay 20s. tax instead of 5s. What more does he want? My right hon. Friend wants evidence that there are other concerns that come within the terms of the Amendment. That I quite understand. Although I am quite ready to meet him, I do not myself see that it is going to forward matters very much as far as the Amendment is concerned. I still think that he might give me an undertaking that, after discussing with me what the particular terms of the Amendment might be, he will at all events amend the Bill so as to cover these particular cases, which amount altogether to about £100,000. The particular case I mentioned to him is about £37,000. If he will do that, I will ask leave to withdraw the Amendment. I do not want to put the Committee to a Division at this time of the morning. When we discuss the matter again on Report it may be necessary to come to a Division; I hope it will not, but I hope my right, hon. Friend will make the Amendment in the Bill that has been indicated.
§ Sir R. HORNE
I still fail to understand my hon. Friend. The Amendment to the Bill can only be necessary if there are cases which it is intended to cover. That is exactly what I want to be satis- 1305 fied about. Personally I have not seen the evidence of the case. If there is no case, then it is not necessary to have the Amendment in the Bill. I want to be satisfied that there is some case that requires such a Clause. After all, I do not think I am asking too much.
§ Mr. McNEILL
I may tell my right hon. Friend I am now satisfied, if he will make an Amendment if I can prove that there is a case. After the kind way in which my right hon. Friend has met me, I will ask to withdraw the Amendment.
§ Motion and Clause, by leave, withdrawn.