HC Deb 24 May 1932 vol 266 cc324-8

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. LANSBURY

Perhaps I shall be allowed to say a few words on the question of conversion. We on this side feel that it is very late in the day to be even thinking about this proposition, not to mention putting it into an Act of Parliament. We think that long ago both the Treasury and the House of Commons ought to have taken in hand this question of reduction of the rate of interest that is being paid. This proposal, so far as it goes, may be a good one, but I am afraid we shall have to weary the Financial Secretary still further. We all sympathise with him, and congratulate him on the manner in which he is carrying through a very difficult task; and, although we are obliged to press him in this way, I am sure he will understand that that does not mean that we do not appreciate the very difficult job that he has in hand, and the manner in which he is carrying it through. We should like to know, if he can tell us, something about the terms and conditions that are going into this prospectus—at what sort of figure the future rate of interest is going to be fixed, and whether it would be possible to put into the prospectus the condition, which is now so applicable to wages, that, if the value of money goes up, the rate shall go down, just as in the case of wages. Earlier in the evening I pointed out that this year what my right hon. Friend calls the rentier class, who hold the stock of the National Debt, are going to get £80,000,000 more of value than we think they are entitled to—

The DEPUTY-CHAIRMAN

I am sorry to interrupt the right hon. Gentleman, but I understand that the prospectus in this case is not one that is to be issued, but one that has been issued some time ago, and that the question of conversion cannot arise on this Clause at all. I may be wrong in that; perhaps the Financial Secretary can tell me.

Major ELLIOT

I fully agree that it is desirable to discuss questions involving conversion and so on—

Mr. LANSBURY

Is this conversion?

Major ELLIOT

No. The Clause provides that There shall be charged on and issued out of the Consolidated Fund or the growing produce thereof any moneys required for the purpose of any undertaking contained in any prospectus to purchase and cancel 4 per cent. Consolidated Loan. The prospectus in question was issued on the 29th December, 1926, and contained these words: His Majesty's Government undertake for a period of 10 years, so long as the price of the Loan is at or below par, to apply moneys at the rate of £2,500,000 during each quarter year for the purchase of the Loan in the market for cancellation. The Clause refers to the terms of that prospectus, and not of one to be issued in the immediate future.

Mr. LANSBURY

The words are: contained in any prospectus. Surely the Clause ought to state what prospectus is referred to. What has led us astray has been the fact that we understand that the Government are proposing at some time to try to convert a very large batch of War Loan—[HON. MEMBERS: "Five per cent."]—whatever the percentage is. The words are: in any prospectus.

Major ELLIOT

The prospectus of any Conversion Loan would not be a prospectus for the purchase and cancellation of loan that would be coming on the market when the terms of the new loan and the new prospectus would be issued. It is not in any way. governed, nor could it be governed, by this Clause.

Mr. LANSBURY

It seems to me that we ought to have insisted upon the right hon. and gallant Gentleman making a speech and telling us what the Clause really meant, because you may purchase and cancel Four per cent. War Loan and issue it as something else at a lower rate. That might have been the intention under this Clause, and there is nothing here to show that that was not in the mind of of the Government. But I still stick to the point that the words contained in any prospectus mean contained in a particular prospectus. It may mean one that you are going to issue or one that you have already issued. Therefore, I think the word "any" should be taken out and you should put in what you are really referring to.

Sir S. CRIPPS

Surely the right hon. and gallant Gentleman is wrong in his interpretation of the Clause? The Clause is dealing with a charge which may be made upon the Consolidated Fund for moneys required for the purpose of any undertaking—then there are four words in brackets, "contained in any prospectus "—for the purchase and cancellation of 4 per cent. Consolidated Loan. It is an undertaking to purchase and cancel the Loan. It is not a prospectus to purchase and cancel, but an undertaking to purchase which may be contained in any prospectus before or after or in future. A prospectus may be issued next month containing a proposal to purchase and cancel 4 per cent. Consolidated Loan. That might well be a prospectus for the purpose of converting the 4 per cent. Consolidated Loan into a 3 per cent. Consolidated Loan with a provision to purchase that amount of 4 per cent. Consolidated Loan which was not voluntarily converted.

The DEPUTY-CHAIRMAN

I think the hon. and learned Gentleman is making a mistake. I did not say the Government could not issue a prospectus to purchase and cancel and give an undertaking, but in order to issue new stock in its place the authority of this House will be required.

Sir S. CRIPPS

I was under the impression that authority would be sought in this House in a separate Measure. This is making provision for some future prospectus. Certainly the words cover it, and, if they ought not to do so, they should be altered. An undertaking may be given to purchase and cancel 4 per cent. Consolidated Loan. Whether that is replaced either by another loan or the money raised by Treasury Bills or out of Ways and Means or in other ways, we are not concerned with, nor does the Clause deal with that. In my submission, clearly the Clause could be applied to a subsequent issue of any kind of loan or security which was designed to take the place of Consolidated Loan, and by this Clause it would be possible to deal with that portion of the Consolidated Loan which the Government thought fit to purchase and cancel provided, for instance, the holders did not wish to convert it. If the right hon. and gallant Gentleman says it is only intended that this should apply to the one prospectus which has already been issued on the 29th December, I suggest that the proper thing to do is to say so in this Clause and not to leave it in doubt, but to put into the Clause on the Report stage the words "contained in the prospectus issued on" such and such a date. But that means he will make it quite clear to everybody what is being dealt with and that this Clause cannot be used for any subsequent deal.

Mr. CHARLES WILLIAMS

I can understand the difficulty of the Front Opposition Bench. They are so used to badly drafted Bills in the last two years that they cannot understand a Bill which is drafted properly. All that can be done under the particular Clause is that the Government, having regard to a particular loan, can cancel it rather more quickly than before or rather more slowly. Those are the only things that we are concerned with under this Clause. The Opposition finds such grave difficulty in getting it into their minds. It seems a very simple thing if they would only read it carefully. I really think it is a very simple Clause which they cannot properly object to. It is merely a matter of drafting, and I do most strongly object to sitting up late at night at any time because the Opposition want to see a certain amount of time taken up.

Mr. RHYS DAVIES

The Committee will be very indebted to the hon. Member for Torquay (Mr. C. Williams) for the enlightenment he has thrown on the problem. We all welcome his intervention in Debate on all occasions because he makes everything so clear to us. Nearly everyone who has spoken has offered advice to the Government. I am going to take the humble course of asking questions. I know very little about these problems and do not want to display my ignorance. When we were on Clause 10 we were told we were dealing with external debt. On Clause 19 we are dealing with internal debt. I believe, when any of these funds are converted, the Government always obtains an advantage in this way. They issue notices to all bondholders—

The DEPUTY-CHAIRMAN rose—

Mr. DAVIES

I hardly thought I should be out of order so soon. I wondered whether it was possible on this Clause to get to know whether the Treasury in fact benefit by removals and deaths and by the fact that people are not to be traced.

The DEPUTY-CHAIRMAN

This is merely giving power to the Treasury to cancel certain debts. I am afraid the general question of the internal debt cannot arise upon this.

Major ELLIOT

I was asked a specific question by the hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps.) He said, "Why say any prospectus?" You should say, "the prospectus of 28th December, 1926." There was only one issue of a prospectus but there were millions of copies. The undertaking was contained in each of these prospectuses that we desire to honour, therefore, it is necessary to have "any prospectus." This is in fact a common form which we are carrying out. The right hon. and learned Gentleman warned me to beware lest in any future prospectus I might be bringing myself within the terms of this Clause. We shall note the warning and take care that we do not run any risk of doing something inadvertently now that he has drawn our attention to the danger.