CLAUSE 9.—(Time when payments may be made.) (Hansard, 30 January 1941)

§ Sir H. Webbe
I beg to move, in page 8, line 13, to leave out "or after."
In regard to the Amendment I have just moved, it seems to me that in the case where a cost-of-works payment is in practice to be made, and where works are in progress, that payment should be made when those works have been completed and that there should be no delay thereafter. The removal of the words "or after" make the Clause read that payment should be made on completion of the works. I had also put my name to an Amendment to leave out from "commission," to "be," line 11, because I thought it was desirable that anyone who had suffered damage by the destruction of property should know within a 763 reasonable time whether he was to receive a cost-of-works payment or a value payment, but in view of what the Chancellor said yesterday, namely, that the factors on which under Clause 5 a determination as to whether a value payment will fall to be made or not must be ascertained in relation to post-war costs and value, I can see that any such condition as is proposed in the Amendment would be impossible and I therefore do not feel like taking the responsibility of moving it. That is the ordinarily-understood phrase in commerce. It does not mean that the payment must be made the instant the works are completed. It means that on completion of the works payment shall be due, and that it shall be made at a reasonable time thereafter.

§ Sir K. Wood
I do not think there is any difference between us as to our intentions. I can give the assurance that, as long as present conditions in regard to the supply of materials continue, it is the intention that the payment should be made as soon as possible after the completion of the works. If and when the conditions as regards the supplies of materials change, it may be necessary for the Commission to exercise their own control over the carrying out of works. I will examine the matter again in the light of what my hon. Friend has said.

§ Mr. Benson
Does that apply also to temporary works?

§ Sir K. Wood
Yes, certainly.

§ Mr. Silkin
I feel that there should be no doubt whatever that when a person has embarked on work, relying on being paid by the Commission, he should be paid. Any doubt about the supply of materials and so on, should be settled before the work is commenced.

§ Sir K. Wood
I think that is quite reasonable. The idea of this wording was to give the Commission a reasonable time to see whether everything that should have been done had been done; but I will re-examine the matter in the light of what my hon. Friend has said.

§ Major Milner
While the right hon. Gentleman has been very reasonable, perhaps the matter is more serious than he realises. I am informed that every Government Department which has to do with the requisitioning or taking over of 764 land—and indeed, many other Departments which are concerned with contracts and supplies and so on—is very much behind. There are large sums owing by the Treasury to-day. The difficulty is to find means of enforcement without recourse to the courts or other such extreme measures. I believe that contracts in some cases are being financed by the banks rather than by the Treasury. I can quite believe that that is not intended by the Government, but there is no doubt that claims are being held up. For instance, I am told by those who should know that the Air Ministry is much behind with its payments, and that the machinery is blocked to a very great extent. Therefore, it would be helpful if those words were taken out. They seem quite superfluous.
The right hon. Gentleman says that he desires to give a reasonable opportunity to check the works, and so on. I speak in the presence of the Attorney-General and the Solicitor-General, but I should have thought that a provision to pay on completion of the works would have been implied in the ordinary way that payment should be made in a reasonable time after the completion of the works; but in that case there would be a limit to the period allowed. They would, presumably, if the Treasury were extremely slow, take some action in the courts or elsewhere to compel payment. If it is permissive to pay after completion of works, that may be six months, one year, two years, or, for anything I know, 10 years. Therefore, I hope that the right hon. Gentleman will look closely into the matter and ensure, if possible, that payment is made on completion of works, or within a reasonable time thereafter.

§ Sir K. Wood
I will look into the matter. It is not possible for me to make a decision now, but I do not think that there should be any difference of opinion.

§ Sir H. Williams
I agree that any assurance which the Chancellor of the Exchequer might now give us would make it look as though this semi-socialist institution lacks decision. I was delighted to hear it said in effect that governments are slow and dilatory in these matters. Capitalists do not pay because they do not want to pay, and a Government does not pay because it is so incompetent that it cannot make up its mind to pay, or 765 how much it owes. It is as well that this should be said occasionally because the delays are incredible.

§ Mr. Woodburn
I understand it is the case that in regard to buildings it is sometimes advisable to hold a portion of the payment back until it can be seen whether a building will stand up after it has been put up, and I do not think that we ought to deprive the State of the same powers to check the construction of a building by a private contractor.

§ Sir H. Webbe
In view of the statement of the Chancellor of the Exchequer that he has in mind to do what is desirable, I beg to ask leave to withdraw the Amendment.

§ Mr. Spens
I beg to move in page 8, line 19, to leave out Sub-section (2).
The reason I suggest that this Subsection should be left out is on account of the last words in the Sub-section, the Commission may direct that the right to the payment shall be forfeited. I suggest to the Committee that some dilatoriness or inability to complete the work in respect of which a claim has to be met is no ground whatever for the drastic provision of forfeiting the whole right of the claimant. It will lead to trouble as to who is responsible and so forth, and surely the safeguard that the money is payable after the work is finished is the best possible safeguard that anyone could have, and I suggest that the Sub-section should be omitted.

§ Sir K. Wood
I agree that perhaps this does go too far. We might consider an Amendment on the lines of the measure of the cost occasioned by the delay or something of that sort. Something on those lines would perhaps meet the case. I will consider the Amendment on Report in the light of my statement and of what my hon. and learned Friend has said.

§ Mr. Spens
Will my right hon. Friend allow the Sub-section to come out in the meantime?

§ Sir H. Williams
Do I take it from the Chancellor of the Exchequer that the statement will apply to the terms of my Amendment "by reason of the fault or the default of the claimant"?

§ Sir K. Wood
I will consider that.

§ Sir H. Webbe
I have two Amendments on the Paper closely related to this point. They are in page 8, line 23, after "Commission" insert: if all payments have been made in respect of works already completed (including any temporary works) and in page 8, line 30, at the end to insert: unless the failure to complete was caused or contributed to by the non-receipt of payment in respect of works already completed or in progress or in any other circumstances beyond the control of the persons concerned in securing the execution of the works. These ask that in no case should there be any forfeiture if default is due to the failure on the part of the Treasury to pay compensation and so put a claimant in funds to carry on his work. If the Chancellor will look at that point it will save my formally moving these Amendments.

§ Sir K. Wood
Certainly.

§ Mr. Silkin
I have an Amendment in page 8, line 25, to leave out "or other the person" and insert "or persons" which seeks to ensure that all persons interested shall be notified.

§ Sir H. Williams
I think my Amendment raises the same point. It is in page 8, line 30, at the end to insert "unless there is any other proprietary interest in the hereditament."

§ Mr. E. Evans
I am so much concerned about the health of the Chancellor that I suggest he should withdraw the Subsection.

§ Sir K. Wood
I think hon. Members may trust me.

§ Sir H. Williams
I beg to move in page 8, line 31, to leave out "two" and insert "four."
It will be observed that the rate of interest proposed where payment is deferred is 2½ per cent. I can see what is in the mind of the Chancellor and his advisers. When they put in 2½ per cent. to come out of the Treasury they did not want to suggest that it was worth more than 2½ per cent. because the Chancellor has to raise a great deal of money. What is the general rate at which people borrow money on mortgage? It is 4, 5 or 5½ per cent. according to the circumstances. Here we have a question which raises the very difficult position where 767 payment cannot be made at once. The owner of a house may have a two-thirds interest in his house covered by mortgage, on which he is paying 4½ or 5 per cent., and the result is that on paper he will be seriously out of pocket. I want to suggest that this very difficult problem can only be solved if we realise that the kind of rate of interest applicable to the form of capital we are dealing with should be not 2½ per cent. but something in the neighbourhood of 4½ per cent. I believe this would solve the Chancellor's problem far more satisfactorily than in any other way and I do not think the difference between 2½ per cent. and 4½ per cent. will imperil the scheme.

§ Mr. Pethick-Lawrence (Edinburgh, East)
The Amendment moved by the hon. Gentleman is one which, in our opinion, raises a point of considerable importance, because under this Clause we are threatened with a position which would affect a considerable number of people who have a mortgage on their property at a higher rate of interest than 2½ per cent and who, if their house is destroyed, will be in considerable difficulties through being called upon to pay their mortgage interest while not receiving anything from the Government at the time. And when they do receive something, it is to be at 2½ per cent., which will obviously be lower than the rate which they will have to pay That obviously raises very serious questions. I have thought myself of several ways in which the position might be remedied, apart from that mentioned in the Amendment; it might be done by persuading the mortgagee to take a lower rate of interest, or by postponing the whole matter until later on. It cannot be allowed to remain exactly where it is, because the Courts Emergency Provisions did not seem to meet the position It is one of the repercussions of the Bill in the field of mortgage which correspond with the repercussions in the field of landlord and tenant of which the Attorney-General was speaking just now. It therefore seems to me that we need some statement from the Government as to their intentions in regard to this matter, which is one which will affect very large numbers of people all over the country It is very important and these repercussions will be most 768 serious. I invite the Chancellor to tell us a little more of what the Government are contemplating in this regard.

§ Mr. Spens
May I add a word in support of what has been said by my hon. Friend opposite? The reason why I have my next Amendment on the Paper, suggesting that the cost-of-works payments should bear interest as well, is in order to try and deal with this great difficulty of mortgagors who have to go on paying interest yet who have not even 2½ per cent. accumulating to help them. I hope the Chancellor will bear that in mind as well as the points which have already been mentioned.

§ Sir K. Wood
This matter, as has been said, is an important one. So far as the Amendment on the Paper is concerned, I would say that the reason we in fact chose the rate of 2½ per cent. is that we regard the matter in the light of a Government responsibility towards the people who will ultimately receive the money, and it is proposed to pay a rate of interest conforming more or less to what the State pays on its other borrowings. My hon. Friend the Member for South Croydon (Sir H. Williams), with the ingenuity which characterises him, says that this is a good way of endeavouring to meet the position of the mortgagor under this Bill, who might find himself with his house in ashes but his liability under the mortgage still remaining.
I very much doubt whether this is in fact the best way of meeting this position because unless you look at the circumstances of the man concerned as well, you may find a case of a mortgagor probably much better off, and much more easily able to meet the burden, than the mortgagee who is entitled to the interest. There are very many cases of trust estates, as I know, for I used to advise people myself to make investments by way of mortgage on property, telling them, "Here is a safe security—better than, say, stocks and shares or trustee securities." There are undoubtedly large numbers of estates which have lent money in that way, and whose beneficiaries are to-day looking solely to the interest that they are receiving in that way to maintain them. You cannot dispose of this matter by saying, "Well, the unfortunate mortgagor has to pay this money, what 769 is to happen about it?" You cannot use the words "unfortunate mortgagor," as against the mortgagee, until you know more about them. The mortgagor may be suffering the misfortune of having his property bombed and lost, but he may be better off in many other ways than many of us who are here to-day. He may have resources. Compare his position with that of, say, the beneficiaries of the trust. Let us take the case of the widow—because the widow is so often mentioned in connection with the Treasury, and how they are imposing upon her—who depends entirely upon the interest of the mortgage in which the trustees have invested for her.
When you think of the matter you are driven to the conclusion that, in order to deal justly, you must have some sort of machinery, not in this Bill, but in another Bill. If the matter is sufficiently pressed the Government can decide to bring in another Bill, which will deal with this matter very much on the lines of the other provisions. It seems to me that any machinery which may be devised must take account of such a case. But it is clear that when the Government introduced this Bill, as the Prime Minister said, we sought to deal only with actual physical damage caused by the war. My answer to my hon. Friend is that, at any rate, so far as this proposal is concerned, this is obviously not a practical way of dealing with it. One must have much more regard for the circumstances of the individual. Secondly, any cases of this sort would have to be dealt with on the lines of the legislation about which the Attorney-General has already spoken.

§ Mr. Pethick-Lawrence
There is only one point in the right hon. Gentleman's speech which has rather alarmed me. He suggested that there might be another Bill if the matter was thought to be sufficiently important. I hope that that does not mean that the Government, when they have got this Bill through, are going to say that the matter is not terribly important, and that they are going to do no more about it. I feel that there will be points of this kind arising, and I hope that it is seriously the intention to tackle the problem at some early future time, otherwise I am afraid the situation will be very unsatisfactory.

§ Sir K. Wood
I am only now concerned with my own Bill, and I do not intend any disrespect. It is also fair to say that in a very large number of cases, as I know from my own personal knowledge, people are, in fact, adjusting themselves to the position. I have noticed it in connection with the building societies. I will convey what the right hon. Gentleman has said to the Attorney-General, who has had all this matter under review, and who is also dealing with a certain number of matters. I know that he has been considering this matter, and I will convey to him what has been said.

§ The Chairman
The right hon. Gentleman said just now that he is only concerned with this Bill, and this gives me an opportunity of saying that a certain amount of what has been said before has been rather out of Order, and I think that hon. Members should realise in future the very narrow limits of this Bill. I am afraid that when the Chair gets more accustomed to it, it will be getting more strict with regard to other considerations.

§ Sir H. Williams
I am not altogether unconvinced by what the Chancellor of the Exchequer has said, but I realise the complexity of the problem and do not want to delay the progress of the Bill. Therefore, I intend to ask for leave to withdraw the Amendment. Would the Chancellor consider whether it is not desirable to report Progress at this stage and ask leave to sit again? I do not think that it is quite fair, in regard to all the circumstances, that we should proceed any further with this most complex Bill at the moment.

§ Sir K. Wood
May we have Clause 9, and then I will move to report Progress.

§ Mr. Woodburn
I beg to move, in page 9, line 8, to leave out "five hundred," and insert "one thousand."
This will not alter any decision which the Chancellor of the Exchequer may make, but it will extend the power of the Chancellor of the Exchequer in respect of any decision he might want to make. I certainly think that £500 is too small an amount to cover some of the contingencies which might arise under this Clause. Any number of families might find their hereditament damaged and have to seek 771 housing accommodation, and £500 to-day or in the future will certainly not be enough to produce even the smallest type of house. Therefore, I think that up to £1,000 should be covered by this Clause under the powers of the Chancellor of the Exchequer as far as making a grant is concerned. It is a matter for the Chancellor of the Exchequer to agree to this extra power, or to restrict himself, as the Clause does. In my opinion £1,000 will fit the Bill far better than the £500 which is specified.

§ Sir K. Wood
I want the hon. Gentleman to remember this in connection with a proposal of this character. Any advance that we make to anybody who is a beneficiary under the Bill has its consequences, and if, for instance, you make an advance to somebody on account—in a large number of cases advances will be made for rent—it means that the person to whom the advance is made cannot get it later on. This is particularly so in the case of a man to whom money is advanced by way of rent. Here you may not be doing him a service, because if he can continue without an undue amount of assistance he will ultimately get a sum of compensation which has not been reduced too much on account of any advance he may have previously received. There may be a number of cases where sums advanced are of too considerable a character and where the individual may regret it and say, "I wish I had pulled in a bit more so that later on I should have been able to purchase a new house," or something of that kind. That was the reason why we fixed the sum of £500. The hon. Gentleman suggested £1,000; perhaps we may go between the two figures, but if we make the amount too large the Commission may be unduly pressed. However, I will consult with the hon. Gentleman between now and the Report stage to see if we can come to some arrangement.

§ Mr. Silkin
This also applies to the securing of premises to carry on trade or business, and that, I submit, is a more difficult case. Normally, £500 to secure premises ought to be adequate but for 772 carrying on a business there may be a stronger case. Perhaps the Chancellor may consider the two cases separately?

§ Sir K. Wood
Yes, Sir, I will certainly do that.

§ Mr. Woodburn
I was interested in the Chancellor's reasoning, but I imagine that what he says would be taken into account by the Commission before advancing anything at all, and that the only question was that of the power to have in reserve. I think in both cases the Commission might think it just to extend beyond £500. It may be far more convenient for a person to buy a house for £550 at the moment, and it may be convenient for the Commission to have the matter settled in that way. Yet under the Clause as it now stands they are barred from taking that very easy way out. However, in view of the Chancellor's decision to come to some arrangement, I beg to ask leave to withdraw the Amendment.