PUBLIC WORKS LOANS BILL. (Hansard, 11 July 1924)

§ Mr. W. GRAHAM
I beg to move, "That the Bill be now read a Second time."
This, again, is a Bill which, I think, the House will agree does not call for very lengthy explanation. Like the Bill just dealt with, it is an annual Measure, which fixes the maximum amount that may be issued by the National Debt Commissioners to the Local Loans Fund for the use of the local authorities. In this case the amount fixed is £25,000,000, and that, of course, has regard to the demand which may be made on the Local Loans Fund for housing and other schemes with which lion. Members are familiar. As in past years, the provisions are substantially unchanged. Sometimes there has been a discussion in this House on the Second Reading of this Bill as regards the rate of interest charged by the Local Loans Commissioners, but, of course, that is very largely governed by the provision that has to be made for dividends on the 3 per Cent. Local Loans Stock, which has to be raised for this purpose, and to cover the cost of the administration and provide for certain expenses which arise 2698 when Stock is issued. When all these things are taken into account, the present rate of 4¾ per cent., which is, in the main, the governing base, becomes plain and, I think, wholly defensible. Of course, hon. Members must also recollect that the object of the Local Loans Fund, under statute, is to be self-supporting, because if any other principle were introduced, and if, in fact, the rate of interest were varied accordingly, I think the result would be something in the nature of a concealed subsidy to local authorities. If subsidies are to be given, that is, obviously, not the way in which they should be given, and to a large extent that explains the arrangement which is made.
The House may permit this further word of explanation. Last year, I think, some hon. Members raised the question of the allocation of half of the proceeds from the sale of National Savings Certificates into the fund for local housing and other schemes. That was the subject of investigation by a Committee presided over by Mr. Montagu, of which I happened to be a member, and, broadly, the result came to this, that the arrangement as to allocation was continued, but, rather greater freedom was granted in the use of the fund, and the House will agree, I think, that it is wrong that there should be a restriction on a fund of that kind, when it is in the interest of the taxpayers that greater freedom should be enjoyed. The only long Clause in the Bill is that regarding the somewhat unfortunate experience of the Eyemouth Harbour Trustees and relates to a loan of £10,000, of which, if I remember rightly, rather more than £6,000 has been repaid. It is provided that in any year in which the surplus falls short, we must provide for the deficiency; in other words, it is written off in terms of this Act from time to time. We do that this year, because we must ensure that there will not be a deficiency in the Local Loans Fund. The Clause in itself is fully explanatory but there is also the White Paper which has been circulated to hon. Members. I do not think there is perhaps any further explanation which I am called upon to give at this stage.

§ Sir FREDRIC WISE
I apologise to the Financial Secretary for asking a few questions, after the heavy morning he has had, but there are one or two points I 2699 would like to put to him, especially as £25,000,000 is a very large amount. Am I to understand that amount is in pounds or in stock? Two or three years ago this stock was issued at £50; therefore, the point as to whether this is pounds or whether this is stock is an important one. I quite appreciate the necessity for having this loan, and that it should be large, but you are gradually increasing the amount year by year, as far as I can gather. In the old days, if I remember aright, I think this stock was issued by tender, and I wish the Financial Secretary would look into this matter, and see whether it would not be cheaper to issue this stock by tender. It might interfere with the Treasury Bills, but it might be worth seeing if it would be cheaper in that way, and to issue, perhaps, a smaller amount. I notice that in 1920, £15,000,000 was issued at the price of 50; in January, 1921, another £15,000,000 was issued at the price of 50; in November, 1921, £20,000,000 was issued at the price of 52; and in 1922, £30,000,000 was issued at the price of 57. The present price, I believe, is about 64. Might it not be much better from the nation's point of view not to issue this at this discount? Would it not be better to create new local loan stock, say, on a 4¾ per cent. basis? There is great advantage to the investor if he can buy stock at that discount, but when you think of the issue made in 1920 and 1921 of £100 stock at 50 which is to-day standing at 64, I do not think the nation has benefited very much in regard to that, although I realise money rates are very much cheaper than in those days. I also appreciate the fact that this stock is not redeemable. I wish the Financial Secretary will look into the matter as to whether it would not be more advantageous to issue a new stock nearer par than to issue this stock which would probably have to be issued in the neighbourhood of 60.

§ Mr. GRAHAM
I can only speak a second time by permission of the House, but in reply to my hon. Friend's first question the amount, of course, is in pounds. As regards the issue of new stock I am afraid that without consideration I could not say very much this afternoon. My hon. Friend in his speech referred to stock which now stands 2700 at about 64. My right hon. Friend does not propose to raise what is really not a new but an important issue in this matter. I will undertake to make inquiries between now and the Report stage and see if what my hon. Friend has suggested can be done. Perhaps with this necessarily brief reply the House will now allow us to have the Second Reading of this Measure.