- (1) There may be issued by the National Debt Commissioners for the purpose of local loans by the Public Works Loan Commissioners, any sum or sums not exceeding in the whole the sum of twenty million pounds.
- (2) The sums so issued shall be issued during a period ending on the day on which a further Act granting money for the purposes of these loans comes into operation, and in accordance with the provisions of the National Debt and Local Loans Act, 1887.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. PRINGLEThe Clause is a very important one, because it gives power to the Local Loans Commissioners to issue, for the purposes of local loans, any sum, or sums, not exceeding in the whole £20,000,000. It further provides in Sub-section (2) that
The sums so issued shall be issued during a period ending on the day on which a further Act granting money for the purposes of these loans comes into operation, and in accordance with the provisions of the National Debt and Local Loans Act of 1887.I have not got the provisions of the original Act with me, and I am not intending to enter into the conditions there laid down, but there is a very important matter which arises in connection with these loans. That is the rate of interest. It is a question which closely affects many local authorities which receive loans under the terms of this Act, and I am told 2238 many of them regard the rate of interest as excessive at the present moment. Under these conditions it is a matter which the Committee should take into consideration. What is the fair rate of interest, having regard to the present conditions on the money market, which, under this Bill, should be charged to the local authorities? Large numbers of these local authorities are in very serious financial difficulties, and it is obvious that, for the purposes of local loans under this Bill, every effort should be made to enable them to obtain the money they require on the easiest possible conditions. In the case of previous loans, I believe the interest charged has been at a very high rate. It has been mentioned that some local authorities are paying as much as 6 per cent. for local loans. Considering the rate at which money can now be had—although there is a tendency for the interest rate to rise—the Committee would be interested to know the terms on which loans could be issued. I hope the Financial Secretary will be able to give an answer, as there are a number of hon. Members keenly interested and who have had representations made to them from local authorities in their constituencies. Such a statement may have the result of shortening the debate.
§ Mr. J. JONESMay I be allowed to speak as representing one of the poorest districts in Great Britain, particularly so far as the Poor Law Authority is concerned, and my district is also poor in the matter of assessment. I would ask the right hon. Gentleman if he would give us some understanding in this matter. We have borrowed £750,000 since the Armistice, and we are now told that the rate of interest is 6 per cent. Cannot something be done to assist us, 2239 for we are now asking for another £250,000—£1,000,000 has been, or has to be, borrowed by one of the poorest districts in the United Kingdom. Hon. Members opposite may not appreciate our position, but we happen to live in a dockside district. We happen to have a great amount of casual labour. We have a large number of middle-class people living in the same district, but we have no aristocracy in West Ham. We have no one who rides in a "boiled rice" car. It was the ordinary working class and middle class and we have been compelled to borrow £1,000,000 and now we are being charged this 6 per cent. interest.
The poor must keep the poor and our local authorities have done so gallantly. They have been prepared to pledge their credit to the best of their ability and now they find themselves hopelessly in debt. We are going from bad to worse. The rates in West Ham are 26s. in the £. Taxation in the West End has gone down, so far as Poor Law relief is concerned. They are selling their workhouse, they are getting rid of their infirmaries, but the poor have to keep the poor. Inside the County of London there is equalisation of rates, but outside we have no equalisation of rates. We have got to pay and to meet the responsibility. We have got to borrow £1,000,000 and pay 6 per cent. interest upon it. Surely we are entitled under this Clause of the Bill now before the Committee to have some recognition of our position. We cannot go on as we are. We are trying to save the situation, but I remind the House of the fact that to-day the Victoria and Albert Docks and the King George Dock are stopped. Why? Because of the fact that the men cannot live upon the wages that are being paid to them. They come to the board of guardians, and we have to borrow the money to keep them, and we help to subsidise the wages paid by the shipowners and the dockowners. Yet we are asked to pay 6 per cent. interest on the money we are asked to borrow. I could understand the attitude of some Members of the House who are interested in finance. I know nothing about finance except the lack of it, but I want to ask those Gentlemen why are they putting this pressure on us. The time 2240 may come when we will stop supplies. That is what we are getting to. All we can do is to refuse to administer and you will be up against the stiffest proposition you have ever faced. Because we are poor we have to pay more. The City of London can sell its workhouse and its infirmary because they are getting rid of their poor. We have got not merely to shoulder the burdens of our own people but the burdens of the people who are shifted from other districts inside the City.
§ The DEPUTY-CHAIRMANThe hon. Member should realise that this Bill only deals in loans from the Local Loans Fund and does not extend to borrowing from other sources.
§ Mr. JONESI only wanted to get in what I wanted to say. We have to borrow money to carry on. We cannot carry on unless we get money at a reasonable rate of interest. Six per cent. is being charged to us in the East End of London, and surely I am entitled to ask that the Government shall exercise some control over the amount of interest charged. Because we are poor we have to pay more. Therefore I am asking that, in continuing this old legislation, the Government will let us have a reasonable rate of interest, otherwise it is going to lead to chaos.
§ Mr. WISEMay I ask the Financial Secretary to the Treasury if there is any redemption in this Public Loan Bill. I have always understood that these were permanent loans. There seems to be no chance of getting rid of the 6 per cent. interest if the loan is permanent. The last issue, I understand, was £100 stock at 50, carrying 3 per cent. interest, which is a yield of 6 per cent. When money gets cheaper, if you are unable to pay off these loans, it appears that 6 per cent. would be charged all through. Would it not be advisable to have these loans with redemption, so that the heavy interest could be paid off. If that is not possible might it not be better in the future to have redemption attached to such loans as the Local Loan Fund.
§ The FINANCIAL SECRETARY to the TREASURY (Sir W. Joynson-Hicks)On the Second Reading of the Bill I made a rather long speech on the matter which I want to make quite clear. Hon. Members will realise that the price of 2241 money varies just as the price of boots or clothes. I do not know the details of the loan to which the hon. Member for Silvertown (Mr. J. Jones) was referring, but if it was a loan raised a few years ago just after the War—
§ Sir W. JOYNSON-HICKSThe hon. Member spoke of two loans, one of £750,000 and one of £250,000.
§ Sir W. JOYNSON-HICKSI gravely doubt if the £750,000 loan came from the Local Loans Commissioners, because they provide only for the smaller authorities. Manchester, Liverpool and West Ham get loans in the public market.
§ Sir W. JOYNSON-HICKSI do not think the Ministry of Health has power to lend money.
§ Sir W. JOYNSON-HICKSYes, the Ministry has to sanction the loan, then the local authority has to go into the market and get its loan on the best terms it can.
§ Sir W. JOYNSON-HICKSIt may be, I do not know, but none of the money has been loaned under the provisions of this Bill, or from the Public Works Loan Commissioners. This Bill only provides facilities for the smaller local authorities who cannot go into the market and borrow money on good terms, but the rate of interest is gradually coming down.
§ Sir W. JOYNSON-HICKSI beg the hon. Gentleman's pardon.
§ The CHAIRMAN (Mr. James Hope)It is quite evident that the loans to West Ham are not in order on this Bill.
§ Sir W. JOYNSON-HICKSI tried to explain to the hon. Member that these loans do not come under the provisions of this Bill. The interest on loans during the last few years has gone down. In 1920 it was as high as 6½ per cent. That 2242 gradually came down to 5½ per cent. in 1922, and in October of that year to 5 per cent. The interest charged this year is as low as 4¾ per cent. I think that perfectly answers the question of the hon. Member for Penistone (Mr. Pringle). If it were possible, we would be glad to lend the money for less. Our sole duty is to lend the money to the smaller local authorities at the very lowest rate we can, without involving a charge on the taxpayer. We have to borrow the money ourselves, add a small charge for administration, and then lend it at the lowest possible rate.
§ Mr. A. V. ALEXANDERMay I put a point the Financial Secretary has not answered quite clearly. The hon. Member for Silvertown (Mr. J. Jones) represents an area where they have had to borrow an extensive sum to deal with abnormal expenditure incurred by the local authority to relieve unemployment. The right hon. Gentleman will agree that while places like West Ham and Sheffield have been able to go and borrow money in the open market they have also had to have recourse to loans from public sources and that loans have been sanctioned by the Ministry of Health.
§ The CHAIRMANThat is not in order. This Bill refers to loans issued by the Public Works Loan Commissioners, and the Ministry of Health has nothing to do with it.
§ Mr. ALEXANDERAs a matter of fact some of these loans have been used for a dual purpose both for public works and for Poor Law purposes for the relief of unemployment, and some of the money used locally for the relief of unemployment through the Poor Law or town council or jointly has been borrowed from the Public Loans Commissioners.
§ Sir W. JOYNSON-HICKSWe only lend to the smaller local authorities.
§ Mr. J. JONESWe are at the mercy of the bankers.
§ Sir W. JOYNSON-HICKSThe Commissioners only lend to the smaller authorities and not to the larger ones.
§ Mr. McENTEEWhat does the right hon. Gentleman describe as the "smaller local authorities"?
§ Sir W. JOYNSON-HICKSI think it means those with a rateable value of under two hundred thousand pounds.
§ Mr. A. M. SAMUELThe Financial Secretary has not quite grasped the point made by the hon. Member for Ilford (Mr. Wise). We quite understand these loans are small sums borrowed by small local authorities, the money for which is raised by the Government in large sums in order to enable these authorities to borrow at the smallest rate possible. What the hon. Member for Ilford said was that there was no sinking fund or power of redemption. Quite recently, on account of the tightness of money, it has been necessary to issue local loans of £100 worth of stock at £50, with 3 per cent. interest, equal to 6 per cent. There is no right of redemption in the hands of the Government to enable the Government at any certain date to pay that stock back unless it goes on the market and pays £100 for the £50. Why does not the Treasury add to its terms when it borrows money from the country for these local loans a date of redemption, saying it can pay the money back at a certain date and not allow these loans to remain as Consols are, to all intents and purposes, a perpetual annuity? The thing to do is to allow the Government to pay back after a long period, at par of course, and to have a small sinking fund paid by the borrowers, the small authorities, so that the loans would be paid off gradually and would therefore cost the Government and the smaller authorities a lower rate of interest.
§ Mr. SHORTThe right hon. Gentleman in his reply said that this Bill only applies to smaller authorities. I would like him to give us a list of the local authorities to which loans had been given under the Bill, and also to explain clearly and precisely the line of demarcation that distinguishes the larger local authorities from smaller local authorities, because it has appeared to me, judging from his own statement, that smaller local authorities are badly handicapped. For instance, he says that the Loans Commissioners have to borrow the money, pay interest on the borrowed money and then they lend it to smaller local authorities at something in the neighbourhood of 4¾ per cent. It seems to me that this is a very roundabout 2244 way of doing business, and reflects a great deal upon the intelligence or method or policy of the Treasury. We are entitled to ask if some more precise statement on this very important issue could be made. In my judgment these smaller local authorities are being compelled to pay a larger amount of interest than they would have to pay if we initiated a better system than that which is incorporated in the Bill. This has an important bearing upon all questions with which local authorities have to deal, particularly housing. They have to erect houses for the working classes. They have to borrow money, and if they have to borrow money at 4¾ per cent. when it is quite possible to obtain money at 3 or 3½ per cent.—
§ Mr. SAMUELYou cannot get it.
§ Mr. SAMUELI happen to have had some experience of these municipal matters. If the smaller municipal authorities can get the money locally at a less price than the price quoted by the Treasury, they have every right to do it. But they cannot get it, and the Treasury, by this roundabout way, is enabled to lend them the money cheaper.
§ 2.0 A.M.
§ Mr. SHORTMy hon. Friend is not in the Treasury or the Government, and we know very well it does not work out in the way he suggests. I was very careful to make the reservation, to qualify my statement. If these smaller local authorities can borrow money at 3 or 3½ per cent., I say their interests are being prejudiced by having to pay something in the neighbourhood of 4 or 4¾ per cent. This borrowing of money at this high rate of interest certainly handicaps these smaller local authorities in dealing with great domestic problems, such as building houses for the working classes. I am not satisfied with the explanation that has been given by the right hon. Gentleman. I turn for a few moments from the considerations I have put before the Committee to ask a few questions about the Eyemouth Trustees.
§ The CHAIRMANThe question before the Committee is whether Clause I should stand part of the Bill.
§ Captain BERKELEYI am bound to say that while I have every sympathy with the case put by the hon. Member for Wednesbury (Mr. Short), I cannot quite agree with him as to the hardship these particular provisions inflict upon the smaller local authorities. My sympathies are with the larger local authorities, who stand in need of far greater sums of money than the smaller local authorities. I should like to ask the Financial Secretary to the Treasury why the larger local authorities should not be allowed the same privileges in obtaining cheap money as the smaller local authorities. It is in the interest of public policy that cheap money should be readily obtainable by these local authorities. I suppose at this time of night we are all more or less frivolous, but this is more or less a serious question. We are debating a Bill which authorises the Treasury to make loans for 20 millions of money. I would ask the Financial Secretary whether it is not possible, within the four corners of this Bill, to make money available to the larger local authorities?
§ Mr. SAMUELThey can get it themselves.
§ Captain BERKELEYThey cannot.
§ Mr. SAMUELThey do.
§ Captain BERKELEYIf I may answer the hon. Gentleman who has just interrupted me, his case is completely demolished by the statement of the hon. Member for Silvertown (Mr. J. Jones), who has told the Committee that his corporation, a large local authority, has to pay 6 per cent. for the money.
§ The CHAIRMANThe money in this Bill is for the purpose of certain local loans, and I take it that this Local Loans Fund is governed by previous legislation, which does not allow money to be paid to the larger local authorities. If that be so, the hon. Member is out of order.
§ Captain BERKELEYI have no wish to dispute your ruling in this matter. I was merely led away by the interruption from the other side of the Committee. I should like to ask the Financial Secretary if it is within his powers to extend these privileges to the larger local authorities? I hope he will be able to consider the point I have put forward.
§ Mr. T. JOHNSTONI wish to refer particularly to the remarks made by the hon. Member for Farnham (Mr. A. M. Samuel). I think he struck the essential point of the discussion, but I also think his facts are wrong and I can prove it. I have been a member of a local authority, I have served for a long period of time on principal bodies, and I have been convener of a finance committee. The hon. Member for Farnham said that if the local authorities could get cheap money, they ought to be allowed to do so, but the party of which he is a member has for years prevented local authorities getting facilities for cheap money that they could get locally.
§ Mr. SAMUELWhat population?
§ Mr. JOHNSTONA population of 12,000. I can give populations of 20,000 to 25,000, if desired. The hon. Member for Farnham knows perfectly well that the Post Office Savings Bank money gets 2½ per cent., that that money goes to the Treasury, that there is a quarter per cent. allowed for management, and that the depositors get 2½ per cent. The Government gets that money and it lends it back to these same people or their municipal authorities for house building at 6 per cent.
§ Mr. SAMUELIf these local authorities all came on the market and tried to get money, they would be competing against themselves and put up the price. When the money is lent by the public to the Post Office, the public has a right to get the money back on the nail, but when local authorities borrow money from the Treasury they have the valuable concession that they are not called upon to pay back the money except at their convenience at some later date.
§ Mr. JOHNSTONSmall depositors at the Savings Bank have the right to withdraw the money any day of the week, but their money grows steadily week by week, month by month and year by year, and there is no point in the hon. Member's argument at all. We have fought against this trouble for years and endeavoured to keep our money locally in our own hands to finance our local enterprises with cheap money, and we found we had no statutory powers. But that was only the beginning of it. We then formed our Town Council into a limited liability company, a Municipal 2247 Bank, Limited, and we asked our citizens to deposit their money with us. We gave them a half per cent. more than the Post Office. We invested their money in their own enterprises, gasworks, waterworks, and so on. It has run for 3½ years, and last year we financed our enterprises at less than 3 per cent.
§ Mr. SAMUELSuppose you were called upon?
§ Mr. JOHNSTONWe have got all that arranged for. But when the Bill that has been introduced into the House comes on for Second Reading we shall be able to discuss all the technical details. The point with which I am concerned now is that the local authorities, if you will allow them, could get cheap money instead of financing housing schemes at 5 and 6 per cent. They could be financing housing schemes at less than 3 per cent. [HON. MEMBERS: "No!"] It is being done, and I can give an instance where it has been done. I have a balance sheet which shows that only £2 19s. per cent. was paid for the money.
§ Mr. J. JONESIt is honesty.
§ Mr. JOHNSTONAll I am concerned about for the moment is this—the point made by the hon. Member for Farnham (Mr. A. M. Samuel) that local authorities ought to be allowed to get their money on the cheapest possible terms. If the hon. Member was really interested in lowering municipal taxation, in allowing municipal authorities to finance their enterprises on the cheapest possible basis, he would do everything he possibly could—
§ Mr. SAMUELI agree.
§ Mr. JOHNSTONIf the hon. Member agrees, I am thankful to have a convert, and I hope he will join us in breaking down these barriers. I remember reading, before I was a Member of this House, that Mr. McKenna—he was Chancellor of the Exchequer at the time—when there was a Bill brought in to give municipal authorities in this country power to establish municipal savings banks, was prevented from passing it by the financial interests in this House. Even during the War I remember perfectly well the City of Birmingham—I 2248 think the Minister of Health was Lord Mayor—came to this House for permission to run a municipal bank. All it got was really power to deal in War Savings Certificates, and under the most stupid restrictions that made it impossible to carry on and made their effort impossible. They came back again later and got somewhat wider powers, but they are not what they ought to be.
§ Sir W. JOYNSON-HICKSMay I rise to a point of Order? I submit that it is not in order to discuss the whole method of composition of municipal banks and any particular Acts of Parliament passed in this House with regard to Birmingham. It is quite outside the scope of the Bill now before the House and the rate of interest at which the Local Loan Commissioners are to lend money.
§ The CHAIRMANIt would not be in order to go at length into the powers and procedure of municipalities like Birmingham which is outside the scope of this Bill. I take it that the hon. Gentleman was only using Birmingham as an illustration. I trust the illustration will not become an argument in itself.
§ Mr. JOHNSTONI had no intention of making it an argument in itself. I do not want to pursue the subject further except to say that a distinguished colleague of the Financial Secretary to the Treasury, the present Minister of Health, in opening an additional branch of a municipal bank in Birmingham the other day, declared publicly that the bank had been so successful, it had meant so much to thrift in Birmingham, it had meant cheap money to Birmingham, it had put the city on a different financial basis altogether, that people now owned their houses who never would have owned them, and that he was pleased to be there to open a new branch of the bank. He said:
It may be called Socialism, but I am not afraid of the name if it is a good thing. If it is Socialism and a good thing, then I welcome it and I will support it.That is all we are asking for on this side of the House. Do not take your ideas of finance from the high priests of the London money markets, who stand to make a tremendous gain out of the continuance of the system. The Financial Secretary to the Treasury knows better than I do how the interest upon the National Debt has affected every 2249 social reform in the country. As I understand it, in this Bill you are proposing to find a sum of £20,000,000 to lend to the smaller local authorities at an excessively high rate of interest, 4¾. You can get money cheaper than that. I say quite sincerely that the Financial Secretary to the Treasury will deserve well of his country, he will make a tremendous reform in the financial system of this country, and he will save millions to the people of the country, if he will face the whole question of financing local authorities from a different point of view, and not from the point of view of the Bank of England and the financiers. I know he is pretty well tied up to them. I know he has to get from the Prudential Assurance Co. and other big institutions like that tremendous sums of money sometimes on short terms loans. But sooner or later they will have to face it; you simply cannot continue monkeying with this system much longer. £100 borrowed at 5 per cent. doubles itself in a little over 14 years. The tremendous amount a interest will paralyse you and prevent you dealing with housing and slums and prevent any social development in the country at all. The Financial Secretary to the Treasury, quite apart from the mere terms of the proposals he is putting before the House now, is not playing a statesman-like part—I do not use that in any offensive sense—by accepting the old method, by sticking in the old rut, by refusing to face the fact of the people who suck up the interest upon public loans of the country, which was preventing all social development. I submit that this House is not doing its duty if it gives the Financial Secretary a ready assent to the proposals which are in this Bill.
Mr. T. THOMSONI hope the Financial Secretary will answer the points raised by the hon. Member for Ilford (Mr. Wise) and the hon. Member for Farnham (Mr. A. M. Samuel). Experience in the past of these perpetual loans has shown that they act very hardly upon the smaller local authorities, and also upon housing societies who have to come to the Commissioners for money. It does seem extraordinary that our financial authorities should go into the market to borrow money at £50 for £100 3 per cent. stock. It does seem somewhat curious finance, and I 2250 would ask the Financial Secretary if any of this money is to be raised on the basis of perpetual loans without a break period? To have borrowed during the War at the rate of 6 per cent. without a break does seem to be penalising, not only the Government but the local authorities to whom, and to the utility societies, the Public Works Loan Commissioners have lent money, and who, but for the special concession, would have been very heavily mulcted in interest charges. I would ask whether in the future this money will be borrowed on the same basis without a break period and as perpetual loans? It is all right at 2½ per cent. to borrow on the basis of perpetual loans, but when it is 6 per cent., for a country which ought to borrow on more favourable terms, it puts the Treasury and the local authorities in a very adverse position. Before we give this sanction for further borrowing, the Committee is entitled to some assurance from the Financial Secretary that the policy which has undoubtedly worked very hardly upon those who have borrowed from the Public Works Loan Commissioners should not be continued. It does seem the height of folly that it should have ever been sanctioned on a basis of 6 per cent. without any break period. If we are going on the old lines it will cripple the small local authorities with a rateable value under £200,000, and who are paying excessively high rates. The Government are making a profit out of the local authorities.
§ Mr. EDEI want to put a point regarding these small local authorities. In August, 1919, I was staying in Farnham, when I was telegraphed for to attend a meeting of the urban district council upon which I had a seat and which was to deal with an offer from the Public Loans Board. They offered a loan at the rate of 6 per cent., and in the deed of mortgage we had to give an undertaking that if at any time the rate of interest in the country went up, we should agree to the rate of interest we were charged going up. That was the general form in which such loans were made at that time. Five or six months afterwards the interest on our loan was increased from 6 per cent. to 6½ per cent. That was for 60 years. Since that time the rate of interest on loans has been falling and I want to 2251 know whether in cases where loans are granted under these conditions the contrary process will now operate?
It would be obviously unfair to allow the charging of these small local authorities with the "peak" rate of interest. In the particular county to which the hon. Member for Farnham and myself belong, the small authorities were worse off for having to go to the Loan Commissioners than the large authorities for which the county council raised a loan. Sir E. Coates, once Member for Lewisham, managed to secure for them, by his great business acumen, a loan from the Alliance Company at 5¼ per cent. They got their money through his good offices while the smaller local authorities, representing a large part of the population of Surrey, had to take money from the Public Works Loan Commissioners under the irksome conditions I have narrated. I hope the Financial Secretary will see that, as the price of money goes down, these small authorities will get the advantage, as they had to shoulder the disadvantage when the rate went up. Localities should be encouraged to get money from the people resident within their own borders, for there is a considerable sum of money obtainable from residents in localities who are prepared to lend money on things that they can see. I know Epsom Urban Council, before I was a member of it, did an illegal thing and issued water works debentures at 2¾ per cent. The amount they wanted was subscribed locally—people who had done well in one race on the Downs put their money into the water works. I think that this is the last year on which there will be a draw of these debentures. The citizens were interested in the thing, and I am sure the money would not have been obtained as cheaply in the market, and it is quite possible that the people who obtained the money in ways which do not commend themselves to everybody, might have reinvested it in the same form and might have lost it instead of still having it now. I do hope that on both those points the Financial Secretary will be able to meet the smaller local authorities who have to negotiate in the money market under very difficult conditions.
§ Mr. McENTEEI happen to live in the same area as the hon. Member for Silver- 2252 town (Mr. J. Jones), and like others living there I am affected as he is. I know that the Poor Law guardians are not able to borrow under the authority of this Bill, and I asked a question as to what local authorities would be able to borrow. Why should there be any limit? If there is an advantage to a small local authority why should you compel a larger local authority, frequently an exceedingly poor authority, to go into the open market to borrow money at 6 per cent., or even more, while a smaller local authority is able to get its money at a much cheaper rate under the terms of this Bill? I have not yet heard any answer to the question of why money put into the Post Office Savings Bank should not be taken by the Treasury and used to lend to local authorities. I have heard it said by people who claim to be financiers that the trouble is that people who put money into the Post Office Savings Bank may go back next week and demand part of it again. I am not a financier, but I have sufficient common sense to know that the money in the Post Office Savings Bank on any Friday is not less than it was on the previous Friday. The intention behind all this seems to me to be to cover up the whole system of money lending in this country and to conceal the real facts. I believe that the State, through its financial system, is deliberately, through this Bill and other financial Bills, aiding and abetting moneylenders to fasten their tentacles more closely round the people of this country. Unless you have some reason why should you prevent local authorities establishing their own banks and using the money put into friendly societies? The friendly societies are perfectly willing, Everybody knows that the friendly societies and those who put their money into the Post Office Savings Bank and other thrift societies would infinitely prefer to see their money loaned to the municipality in which they live than handed over to the care of the Treasury. They know that the money is simply being loaned back to them at a higher rate of interest. The financiers, through Acts of Parliament, are preventing local authorities getting cheap money. The law compels municipalities to get their money in a certain way. You must go to the Ministry of Health for power to borrow, and the Ministry will only give you power on condition that you go into the market or 2253 borrow in the way that they permit you, so that the people who live on interest can continue to live on interest and do no work. You can live without doing work because you can make laws which compel municipalities to borrow from you at a rate of interest which you, by rigging the market, compel them to pay. Why should you say to one municipality, You cannot borrow money from this source, you must pay a higher rate of interest by borrowing from another source? It is all in the interests of the financial ring generally.
I would like to remind the Committee that there is a place called Guernsey, where they got over this question of interest altogether. It is long ago, it is true, but the principle could be put into operation again if it was not for the strength of the financial interests which are behind this Government and other Governments. They did not borrow money at all. They issued their own money and built their market. There is no financier in this House who can show any valid reason why we should not build our own houses in England on exactly the same principle that the people of Guernsey built their market. They paid no interest. They simply accepted bonds issued by the Government and circulated in the same way as Treasury notes and paid them off in time by the payment of rent and ultimately burned the bonds. I would like some of you gentlemen who are financiers to show me any valid reason why that should not be done in this country to-day by any local authority and why it should not be done nationally. These Acts of Parliament were put there by financiers in the interests of financiers to enable some people in the community to live on the backs of others and not do any work for it.
§ Sir W. JOYNSON-HICKSI have been asked questions about the larger municipalities. All these questions I dealt with on the Second Reading, but I shall deal with them again. The reason is that the larger municipalities can borrow cheaper than the small ones. Take a place like Manchester or Liverpool, where there is a large amount of local patriotism and a larger amount of local money. If they want to issue a loan they issue it in their own locality, and get it at once 2254 from their own citizens. There has been no request from the larger municipalities to join in this scheme at all. They have not needed it. If there is any larger local authority that cannot borrow at less than 6 per cent., then I am afraid they will not get the money at less than 6 per cent. from the Loan Commissioners, for it means the security is bad. If Liverpool and Manchester want money they can get it at less than 6 per cent. If any other large municipality cannot get it at less than 6 per cent. the security is not good. I do not know why; perhaps they have borrowed too much. As to the savings banks, I must ask the hon. Member to read the statement I made on the Second Reading. The hon. Member asked me why this money was being lent back to them at 4¾ per cent. The Savings Bank Commissioners, who are very shrewd people, are lending the money to us at over 4 per cent. to-day.
§ Mr. McENTEEDoes that simply mean that one Department of the Government is making a profit out of the other?
§ Sir W. JOYNSON-HICKSWhat it means is this. The savings bank moneys are kept entirely separate because they belong to savings bank depositors. In the lump they are getting to-day over 4 per cent. Probably the hon. Member knows that many years ago savings bank moneys were put in Consols, and Consols went down and there was a loss in the capital money. It is being gradually replaced. Savings bank money at one time paid 3 per cent. and I look forward to the time when if this high value of money lasts it will pay 3 per cent. and possibly more. It will have a bad effect on the Stirling Bank if the savings bank can give 3 or 3½ per cent. As to the question put by the Member for Mitcham (Mr. Ede), I must ask him for particulars. I asked the Treasury official and he says quite frankly his recollection does not tally with that of the hon. Member. If he gives me particulars, I will answer him in the House at Question Time or elsewhere. As to the perpetual loan, that is long before my time. At this time it does not seem a very profitable transaction. Public Loans are not being issued to-day at £50, but they have gone up to £65. That does not mean 6 per cent. or anything like it. Some few years ago these loans were issued at £100.
§ Mr. J. JONESI want to press the case of those local authorities who are by force of circumstances placed in a peculiar position of difficulty. In our own district we have over a million population, and because it is a district mainly inhabited by casual labourers we are forced into the position of continually borrowing money. If we were a local rural village we could get money at 3 per cent., but because we are a great industrial area occupied mainly by casual labourers we have got to pay 6 per cent. That is the only rate at which the bankers will give us an overdraft. Has the Government no power? I ask hon. Members opposite who represent the banking interest whether they cannot use their influence. Are we going to be put in pawn for ever? That is what it amounts to. We have already borrowed over £1,000,000, or 24s. 10d. on the rates. Surely we are entitled to ask the hon. Gentleman if he cannot do something to assist us. The Bill, nothing but the Bill. That is Shylock demanding his pound of flesh. This Bill only means that the smaller local authorities can get assistance and they do not need it as much as we do. They can have their money at 3½ or 4 or 4¾, but we have to pay 6. It will take us 20 years to get out of our present debt, apart from what may happen. I read a speech delivered by the Prime Minister in which he said the next year would be as bad as last year in the matter of unemployment. We are to-day paying out in West Ham, apart altogether from the ordinary Poor Law relief, £27,000 a week in connection with unemployment.
§ The DEPUTY-CHAIRMANI have told the hon. Member previously that that has nothing to do with this Bill.
§ Mr. JONESI am sorry I was out of order. I never was in order. I only want to say that I am entitled to draw attention to the fact that, while small local authorities under this Bill are entitled to get money cheap, we of the bigger authorities who have the greatest responsibilities have to have the market price which is what the hon. Members opposite think we ought to pay. We have been put in pawn. A time will come when the workers will revolt against this existence. These great industrial areas are getting down to the 2256 bottom and cannot go further, and I would like to appeal to the right hon. Gentleman to use his influence to help us out of the financial difficulties in which we find ourselves.
§ Clause 2 (Certain debts not to be reckoned as assets of local loans fund), ordered to stand part of the Bill.