§ Sir Harold Webbe (Westminster, Abbey)
I beg to move, in page 16, line 33, to leave out Sub-section (5).
This Amendment stands on the Order Paper in the name of the hon. Member for South Croydon (Sir H. Williams) and other hon. Members. My hon. Friend who was to have moved this Amendment has asked me to convey to you, Sir Dennis, and the Members of the Committee his apologies for his inability to be present, because he is engaged on the very laudable work of launching a War Weapons Week in his constituency. Subsection (5), which this Amendment seeks to remove from the Bill, provides that the provisions of Clause 19 shall apply only in those cases where the net annual value of the property is £100 or less. I submit that any such limitation of the provisions of the Clause is illogical, and the effect of the Amendment, if carried, would be to extend to all mortgagees regardless of the value of the property the obligations which are placed upon the limited class to which the Sub-section refers.
970 I am aware that yesterday there was considerable discussion on this general question, and I owe the Committee an apology for not having been in my place during that discussion. But I hope it will be forgiven to a comparatively new Member that he did not realise that, on a Clause which was concerned solely with persons who were to receive compensation, a discussion would take place on the related but, I submit, entirely distinct question of the persons from whom contributions should be exacted. I shall try not to cover too much of the ground which was covered yesterday, but I feel that I must ask the Committee to examine in relation to this Sub-section some of the arguments which have been adduced in support of the exemption of mortgagees from any obligation to contribute.
The first argument is what I may call the sanctity of contracts argument. It is argued that to exact from the mortgagee a contribution under this Measure, would be to strike at the sanctity of the contract between the mortgagee and the mortgagor. Considerable argument was put forward in support of that view by various hon. Members. I should be the last, having regard to my own political convictions and the constituency which I have the honour to represent, to seek to do anything which would impair confidence in mortgages and similar investments, but I submit that this argument is academic rather than real in the circumstances of to-day. I am not a lawyer, but I have often heard it laid down by judges and other lawyers as a sound principle of law that it is not sufficient to consider merely the terms of a contract but that one must, on occasion, go behind the actual letter of the contract and examine what is in the minds of the contracting parties. I think there is no doubt about what was in the minds of the parties to a mortgage contract. The mortgagee considered that he was entitled to rely on the personal undertaking of the mortgagor, the property being, so to speak, his collateral security. It was the responsibility of the mortgagee to take such steps as he considered necessary to protect that collateral security in his own interests against the hazards to which it might be exposed. If he failed to do so and disaster followed, then, so to speak, his blood must be on his own head.
971 That was accepted by the mortgagor as the position. But the hazards to which this Bill relates are of quite an exceptional character. They certainly could not have been in the mind of either party at the time the mortgage contract was made. Therefore, I suggest that to impose on the mortgagee a responsibility for making contributions does not, in that sense, strike at the sanctity of the contract. Moreover, this Clause as it now stands, with this Sub-section included, is to me utterly illogical. If it is proper and right to exact from the mortgagee a contribution when the annual value is £100 or less, how can it become a crime to exact a similar contribution when the annual value reaches £101? I suggest that this is an illogical distinction and an illogical limitation and, if we are to rely on a general argument of that character, it must be all or nothing.
There is the second argument that the mortgagee is not, in fact, interested. That also begins, apparently, when the annual value exceeds £100. The hon. Member for Walsall (Sir G. Schuster) pressed that argument very strongly, and in support of his contention that this was the position, he said that never in his long experience had he come across a case of a mortgagor being successful with his property and going back to the mortgagee and offering him an increased rate of interest or a share of the property. If I may follow that argument, I would say that in my own much more limited experience I have never heard of a case of a banker who went to his client and said that he was so pleased with his bargain and so confident of the security of the client's personal undertaking, that he would hand him back the deeds of the property which, in a moment of unwarranted suspicion, he had asked him to deposit. The hon. Member for Bassetlaw (Mr. Bellenger) yesterday, in a speech which, I think, many Members of the Committee will deplore, suggested that the mortgagor in fact left the mortgagee wittingly to rely solely on the property. I think he did less than justice, particularly to the small house-property owner. The phenomenal success of the building societies is evidence that a very large part of the property owners who con tract mortgage obliga- 972 tions take a much higher view of their responsibilities than was suggested. But we cannot be blind to the fact that a disaster such as this Bill contemplates might, at any moment, make the mortgagor, however eager to carry out his obligations, completely unable to do so and it cannot be denied that in such circumstances this Measure would be of very substantial benefit to the mortgagee. On that, the general ground, it seems that he ought to pay. In any case I cannot, as I say, understand the logic of calling for a contribution from the mortgagee when the annual value is less than £100 and not doing so when the value exceeds that amount.
Finally, there is the argument of practicability. If there is the will, there is the way, and suggestions have been made by various hon. Members of ways in which to meet this general question. I conclude with one small general point. The Chancellor has told us that this Bill may involve expenditure by the Government of very large sums and that he may have to come back to Parliament to ask for substantial increases in the sums which are contemplated under it. I suggest that if those greater demands have to be met, the broader the back on which the load can be placed the better. Here is a field for exacting contributions, a field of people who, as it seems to me, might justly be called upon to contribute. For those reasons I hope the Chancellor of the Exchequer will consider this Amendment.
§ The Chairman
Before the Debate continues, may I say that I allowed the hon. Member to go to considerable lengths as he was moving an Amendment, but the Committee will recollect that the whole question of this limitation of the mortgages concerned was very fully discussed yesterday on Clause 10. It is true that the question arises in two different forms, one with regard to the contributions and the other with regard to the capital value of the mortgages, but I am sure that I may, without endeavouring to exercise undue authority, rely on the Committee not to discuss the principle over again. We must treat that as having already been decided, and, strictly speaking, subject to a reply from the Chancellor of the Exchequer, I think that this Amendment ought to be put to the Committee without further Debate.
§ The Chancellor of the Exchequer (Sir Kingsley Wood)
I have nothing to add to the statement which I made yesterday on the general question, but I would like to say a word upon the Amendment to delete Sub-section (5). It is true that certain figures are set out in the Clause, £100 in one case and £250 in another, but I am not wedded to those figures. Amendments are put forward suggesting other figures. I propose, with the assent of the Committee, to take the matter into consideration with a view to meeting what I understand to be the wishes of the Committee that the amount should be increased. I will very gladly do this. I hope to have an opportunity during the next few days of seeing whether we can get agreement upon the figures.
§ Brigadier-General Clifton Brown (Newbury)
Will my right hon. Friend take into consideration also the agricultural point of view? I have an Amendment down to alter the figure £250.
§ Amendment, by leave, withdrawn.
§ Sir H. Webbe
I beg to move, in page 17, line 3, to leave out Sub-section (6).
I will not repeat the arguments which have already been advanced in regard to this matter, but another small point arises on this Sub-section. It seems to differentiate unfairly between two kinds of case. The first is the case of a man who, not being very prudent, perhaps, entered into the obligation of house ownership on the strength of a mortgage from a building society. He gets relief, but there is no relief for a man who, with his own money, built a house and subsequently entered into a mortgage. I hope that the Chancellor of the Exchequer will consider the point.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."974
§ Major Lloyd (Renfrew, Eastern)
So far as my recollection goes, nothing has been said about the position in which certain dwelling houses in Scotland find themselves because of the Rent Restriction Acts. I hope the Chancellor can say a word on this matter, which will satisfy me and many others in Scotland.
§ Sir K. Wood
I have received various representations on the particular matter to which my hon. and gallant Friend refers. We are giving consideration to it, and it will be dealt with when we come to the Scottish Clauses of the Bill.
§ Major Milner (Leeds, South-East)
This is an extremely important Clause, and we ought to have a word about the principle of it from the Chancellor of the Exchequer. We object to the Clause because it is full of inconsistencies and illogicalities, which are very difficult to follow. There are three principal points. One is that a mortgagee shall make a contribution, and the limits of one-half and three-quarters are very difficult to approve. There seems no pressing reason why those particular proportions should have been put in rather than any other. I still adhere to the suggestion I made that the mortgagee should contribute in accordance with the proportion which the amount advanced on the relevant date bears to the value of the property on the relevant date. That would do away with the jumps about which we have heard in the course of the debate.
The second inconsistency is the limit which was discussed by the hon. Member for the Abbey Division (Sir H. Webbe) a few moments ago. There again, it is extremely difficult to see why limits should be placed on the nature of the property which has to be considered contributory property. I should have thought that in all these matters the object of the Chancellor of the Exchequer would be to obtain the largest possible income from the fund, but all these limits are placed in the way. There is the case of small commercial property which may be just as important to the individuals concerned as other property, but which does not obtain any contribution from the mortgagee. It seems an illogical and inconsistent procedure. I can see no reason why, if I had a mortgage on my office, I should not be entitled to a contribution from the mortgagee, just as if I had a mortgage on my house. We all understood the overriding principle to be 975 that the burden should be shared, but the burden is not being shared, in that respect. The individual who happens to be the owner of a particular type of property is legislated against in these proposals. I gather that the Chancellor will do his best to include all classes of property in the Bill, but all mortgagees should contribute in proportion to the advance they have made. That seems logical, and any other proposal lands us in considerable difficulty.
I have some sympathy with what was said by the hon. Member for the Abbey Division. We are in a war, and many people in the country now have to draw on their capital if they happen to be in a line of business which obtains no benefit, or even suffers loss, by reason of the war. I see no logic in this contributory provision being limited to the case of the acquisition of property. I may have, for no particular reason of my own, acquired a property; why should I not be able to go to a building society or to some other institution and obtain an advance? That institution would know why I was asking for that advance and that they would have to make a contribution. Provided they knew that, they could make some provision by way of additional interest, and some portion of the additional burden would be borne by the mortgagor. The whole Clause is very illogical, and I hope that the Chancellor of the Exchequer will see his way to alter it. I hope it will be altered, at any rate in respect to the half and the three-quarters, which I gather may now be the case. The nature of the contributory properties should be altered. I should like them not to be limited to residential properties but to be extended to commercial properties as well. There is also the question whether it is right to limit contributions to cases where the mortgage has been taken up merely to acquire property, or whether a person is not entitled to obtain a contribution from the mortgagee. I hope these considerations will be borne in mind by the Chancellor before the Report stage.
§ Mr. Woodburn (Stirling and Clackmannan, Eastern)
I would like to tell the Chancellor that a great many of my hon. Friends and I are still not satisfied with the position of the owner-occupier, and I hope that before this Bill becomes 976 law something will have been done to safeguard that particular interest. Most of the discussion has been concerned with the unfairness as between the mortgagee and the mortgagor, but there is also the unfairness as between one mortgagee and another mortgagee, because one has to pay and the other has not to pay. I would suggest respectfully to the Chancellor that he should take into consideration the suggestion which I made at the end of the Debate on the last Sitting Day, which would put all mortgagees on the same basis of fairness so far as concerns the contributions to the State for this purpose. The Chancellor could levy upon them, according to the mortgage and independent of the annual value of the property, a sum according to the capital borrowed. I recommended one shilling for every £10 borrowed. Assuming one had a £1,000 house, then there would be a £50 assessment. I recognise that that may be excessive. It could be a smaller sum than one shilling for every £10 borrowed. Every person deducting from the mortgage would be able to do it without entering into any mathematical calculation. There would be no complaint between mortgagees. There would be a pro rata basis to a large extent, so far as the mortgagor is concerned, and it would eliminate a great number of the difficulties which are bound to accrue to the Chancellor when this Bill becomes law.
§ Mr. Benson (Chesterfield)
When this Bill was first introduced my voice was that of one crying in the wilderness. Every other hon. Member praised the Bill and I singled out for comment this one question dealing with the mortgagee and mortgagor. Now I have changed my point of view. I am not now at all interested in whether the mortgagee is made a contributor or not. In fact, on the whole, I think that I would rather he was not made a contributor for this reason, that if he does not contribute he is in nothing like the same strong moral position as he would be if he did contribute. I am far more concerned with what the position will be after the war as between the mortgagee and the mortgagor who has suffered. At the present moment the mortgagee is being protected without making any contribution. The mortgagor is making all the contributions.
§ Sir K. Wood
My hon. Friend has made an independent contribution as he so often does. I make no comment upon the moral side of the matter. If I may say so respectfully all my hon. Friends have quite rightly urged these points to me. They have not wasted time, because this is an important Clause. But I must stand by the general principles which I have enunciated to the Committee. It is quite true that the Treasury and the Chancellor are naturally interested in getting all the contributions they can, and my only observation is that the Committee may be assured that it has only been the most formidable obstacles and objections which have made me put that consideration on one side. However, in the light of the Debate on the last Sitting day, I will consider certain points which were raised by my hon. Friends in all quarters of the Committee, for instance, points with regard to the question of amounts in this Clause. I am also impressed by the criticisms about the March, 1939, aspect of this matter. Therefore, within the limitations which I have mentioned, I will consider those points.
§ Mr. Silkin
I hope that the Chancellor will not limit himself to the particular matters which he has mentioned. The point which the hon. Member for the Abbey Division of Westminster (Sir H. Webbe) has mentioned is an important one. All I ask is that the Chancellor will bear that point in mind.
§ Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.