First Schedule.—(MANNER OF INVESTMENT.) (Hansard, 7 July 1961)

§ Mr. Mitchison
I beg to move, in page 10, line 27, after "territory" to insert: which at the time of investment is". This is a short point, but not without importance. The First Schedule consists of three Parts giving lists of investments. We are concerned here with the narrower-range investments requiring advice, which comprise Part II. Line 27 is part of paragraph 4, which runs as follows: 1952 In fixed-interest securities issued in the United Kingdom by the government of any overseas territory within the Commonwealth or by any public or local authority within such a territory, being securities registered in the United Kingdom. There follow references to the Overseas Service Act, 1958. I have looked up that Act and I do not think that it is material to the point which I am raising. It includes, among other things, bodies which have a quasi-sovereign character in that they operate independently in a number of countries, and cases of that sort.
Let us suppose that an overseas territory leaves the Commonwealth. Is a trustee entitled under this paragraph to invest in the securites because they were issued in the United Kingdom by the Government of that overseas territory when it was within the Commonwealth, or is the test that it should be issued by the Government of the overseas territory which, at the time of investment, is within the Commonwealth? That is the short point. The principal case which one has in mind is obviously that of South Africa, but it is a general point and I put is accordingly.
To obviate any criticism, I would say that as far as I can judge—and the Government will correct me if I am wrong nothing would prevent a trustee, to take that as an instance, who has South African stock in his hands from retaining it. This is a question of further investment. The question is whether further investment could be made on the strength of South Africa having formerly belonged to the Commonwealth and securities having been issued when she belonged to the Commonwealth. I imagine that there can be no question of any securities now issued by South Africa being within the Schedule.

§ Mr. H. A. Marquand (Middlesbrough, East)
I support the Amendment moved by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), partly because of a discussion in Committee on the Republic of South Africa (Temporary Provisions) Bill. During that Committee stage, my right hon. Friend the Member for West Bromwich (Mr. Dugdale) moved an Amendment to ensure that after South Africa had left the Commonwealth it would no longer 1953 be possible for her to issue on the British market stocks which would enjoy trustee status.
In putting forward that Amendment, we had in mind two considerations, the first being our duty to protect the beneficiaries of trusts in this country from any imprudent investment which their trustees might make. We certainly think that in the present state of things in South Africa investment in new stocks issued by the Government of that country would be a very doubtful and, certainly, an improvident investment for trustees to undertake, not to speak of any other person.
It is well known that in South Africa a small minority is ruling a vast majority which is bitterly opposed to it. It is well known that the Minister of Defence there has told the public that the armed forces of that country are to be used in future mainly for internal purposes. The South African Government have called up large numbers of troops in the expectation of the possibility of serious civil disturbance. I do not want now to attempt to make a speech about South Africa, but in view of that well-known dangerous situation in South Africa we wanted to leave beyond peradventure the possibility of trustee status being accorded to stocks issued in future by the Government of South Africa.
The second consideration was that the Secretary of State for Commonwealth Relations had himself said, in opening the debate on the Republic of South Africa (Temporary Provisions) Bill, that it was most undesirable that countries which left the Commonwealth should continue to enjoy advantages which they obtained only by membership of the Commonwealth.
In so far as it might be an advantage to the Government of South Africa to float in this country a loan whose stocks would have trustee status, it would be an advantage enjoyed only by Commonwealth Governments. Therefore it would be wrong, in the words of the Secretary of State himself, if South Africa were to gain any such advantage.
During our discussion, we were led to understand by the Joint Under-Secretary of State for Commonwealth Relations that the Government themselves might put down an Amendment to the Bill. The hon. Gentleman said 1954 that if the Bill which we are considering today was not passed before 31st May: … the Government will consider introducing an Amendment which will bring the Trustee Investments Bill under the umbrella of this Bill."—[OFFICIAL REPORT, 3rd May, 1961; Vol. 639, c. 1432.] We took that to mean that the Government might be introducing an Amendment to this Bill. When we found that they were not doing so, we put down our Amendment.
It may be—we hope so—that the Government have not put down an Amendment to the Bill because they are quite satisfied that its provisions are already such that there is no danger of any new issue of South African stock getting trustee status. If we get an assurance of that kind, naturally we will be only too ready to withdraw the Amendment.

§ Mr. A. Fenner Brockway (Eton and Slough)
It will be within the recollection of many hon. Members that when the debate took place in Committee on the Amendment moved by my right hon. Friend the Member for West Bromwich (Mr. Dugdale), it was urged from both sides that that Amendment was untimely on the Republic of South Africa (Temporary Provisions) Bill. It was urged from the back benches on both sides and by the Minister in replying that the subject could be better dealt with under the Bill which is now before us.
As my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand) has said, on two occasions the Secretary of State for Commonwealth Relations indicated that the Government would consider introducing an Amendment to the Bill to deal with the point which is now under discussion.
The Government have not done that, and I think we are, therefore, entitled to ask for art explanation from the Government and to ask whether the trusteeship investments in the Union of South Africa will not be permitted in future.
I would emphasise the two points which have been made by the right hon. Member for Middlesbrough, East. Anyone who is aware of the conditions in the Union of South Africa today knows that investments there are in a very uncertain position, and that, although the Republic has been established, although the Union of South Africa has withdrawn 1955 from the Commonwealth, the Government are there by a minority, against the will of the great majority of the people, and that inevitably, in the course of history, the time will come when the majority of the people will seek redress of that situation. In conditions like those in the Union of South Africa it seems to me very wrong indeed that we should be giving these facilities for investments and giving the Government the authority for them which is in the Bill.
The second reason why one feels that one should speak in favour of this Amendment and ask for some clarification by the Government of the position is this. The Union of South Africa has withdrawn from the Commonwealth. I shall use only a sentence in case I may be out of order, but I hope the day will come when the majority of the people in the Union of South Africa will be so enfranchised that they will return to the Commonwealth. In the meanwhile, I suggest, it would be wrong, not only from the point of view of our own Government but from the point of view of our bona fides with the Governments of the other members of the Commonwealth, if we were now to say that the withdrawal of the Union of South Africa from the Commonwealth means that facilities allowed to the members of the Commonwealth shall also be permitted to the Union of South Africa.
The Secretary of State for Commonwealth Relations said in very clear terms that in this new situation, the Union Government having withdrawn, it should be made clear that they did not continue to enjoy the facilities and privileges of membership of the Commonwealth. If they do continue to enjoy those facilities, why then, withdrawal from the Commonwealth is formal and farcical.
We are urging the consideration of this Amendment because we take the view that, the Union Government having withdrawn from the Commonwealth, they should not continue to enjoy the advantages of Commonwealth membership.

§ Sir H. Lucas-Tooth
This Amendment is in general terms and I want to ask a general question about it. I take it that if any security falling within any part of this Schedule for any reason is dis- 1956 qualified from being included within that part the trustees will be able to continue to hold it, there will be no obligation on them to treat it as if it had changed, but in the particular case with which we are now dealing the possibility would arise that the security ceased to be such as could be regarded as narrower-range investment. I would ask my hon. Friend whether, in the event of any security ceasing to be narrower-range investment, it could continue to be held by the trustees as narrower-range investment—till such time as they sold it, of course, when they would have to reinvest in the narrower-range.

§ Mr. G. M. Thomson (Dundee, East)
I also should like to ask the Government why they have not carried out the undertaking which they gave in Committee on the South Africa (Temporary Provisions) Bill. It is true that the Government did not finally commit themselves to introducing an Amendment, but the Minister who then spoke for the Government did so in sufficiently definite terms to reassure us that it was the Government's intention to do this if it were found necessary. But even if the Government were to accept this Amendment, would that by itself cover the position? I understood from the Minister's statement on the South Africa Bill that unless an Amendment were moved to this Bill in terms rather different from those of the Amendment on the Order Paper this would not cover the situation.
The South Africa Act, as it now is, freezes the legal relationships between this country and the Republic of South Africa for a period of up to twelve months. We understood that this would mean, in terms of trusteeship investment arrangements, that the conditions applying to trusteeship investments between South Africa and this country as they existed on 31st May would continue to exist for twelve months. It is precisely this point that my hon. and right hon. Friends felt to be exceedingly unsatisfactory.
My hon. Friend the Member for Eton and Slough (Mr. Brockway) has put in clear terms why we thought this was so from the political point of view of developments in South Africa, but in this Bill we are concerned particularly to safeguard the rights of beneficiaries of 1957 trusteeship arrangements in this country. I cannot see how the Government can seriously argue that it is desirable during the months ahead, whatever future arrangements are made with South Africa, that trustees should be in a position to invest in South African stock and that that stock should be allowed to enjoy trusteeship privileges.
Clearly, the political situation in South Africa is so unsettled that new South African issues cannot have the security which one is entitled to expect in stocks on this list. The position of present investors in South African stock is particularly difficult. I would not wish anything done to harm the rights of beneficiaries from those stocks at present, but if the South African Government were to make new issues in the months that lie ahead there should be no question of their being regarded here as trustee stocks.

§ Mr. Barber
I think that it would be convenient to the House if I intervened in the debate now. I believe that the hon. Member for Dundee, East (Mr. G. M. Thomson) has misunderstood the present position. It would be convenient, first, to make some general observations on the questions put to me by the hon. and learned Member for Kettering (Mr. Mitchison) and then deal with the special position of South Africa, though I think that when I have answered the general questions the position of South Africa will be probably be clear.
One can best consider the general position by asking and answering three questions. First, what is the position in the case of a territory in the Commonwealth at the time of the issue of the security and also at the time of the making of the investment by the trustee? In that case, obviously, the security is an authorised investment under the First Schedule to the Bill. Secondly, let us consider the question of a territory in the Commonwealth at the time of issue of the security, but not at the time of the making of the investment. In that case, the investment would not be an authorised investment as a new investment.
Thirdly, if one considers the case of a territory outside the Commonwealth at the time of the issue and at the time of the investment, then, obviously, the security would not be authorised. It has 1958 been rightly said in the debate that despite the fact that an investment may become unauthorised because of a territory leaving the Commonwealth it can, nevertheless, be retained by the trustees under Section 4 of the Trustee Act, 1925.
I was also asked whether an investment under Schedule 1, Part II, would be a narrower-range investment on its ceasing to be an authorised investment because the Government or territory concerned had left the Commonwealth, and whether, in that eventuality, the security could still continue to be held in the narrower range as a narrower-range investment. The answer is that it could not so be held. It would either have to be included in the wider range of investment, because although unauthorised it would still be retained under Section 4 of the 1925 Act, or there would have to be reinvestment.

Mr. Glenvil Hall (Colne Valley)
Would it be correct to say that it could even be acquired under the wider range, also, at any later date?

§ Mr. Barber
That depends entirely upon whether it comes within the terms of the Schedule.

Mr. Glenvil Hall
Whether it comes within the range?

§ Mr. Barber
It depends on whether it comes within the provisions of the Schedule which set out the wider range of investments that could be made.

§ Mr. Mitchison
Would the Economic Secretary indicate any provision in the wider-range list—I do not think that there is one—which could possibly include these investments?

§ Mr. Barber
I think that the hon. and learned Gentleman is quite right. I ought to make clear that I was talking about securities which had ceased to be authorised investments but which could, nevertheless, be retained and I was saying that on their retention as unauthorised investments they could no longer be retained as narrower-range investments, but could still be retained by virtue of Section 4 of the 1925 Act because there is there special provision made for the retention of unauthorised investments.
I should like to say a brief word about South African stocks, because several hon. Members have asked about 1959 them. When the Bill becomes law, South African Government stock will cease to be eligible for investment by trustees whose powers are governed by United Kingdom legislation. This is so because paragraph (4) of Part II of the First Schedule confines investment in overseas stocks to certain stocks of those territories which are within the Commonwealth and, therefore, it would have been necessary to make special provision for South African stocks if trustees were to be continued to be allowed to make new investments in them. Although we have always felt that it would be extremely difficult to continue trustee status indefinitely, nevertheless we considered whether it would be appropriate to apply to these stocks the standstill arrangements which apply to legislation passed before 31st May last, and that is why hon. Members have suggested that we should give consideration to a possibility of amendment of this Bill.
We recognised from the outset that as the Bill would be making an important change in English law, there was a distinction between this and other legislation which is merely being, as it were, preserved during the standstill period. After giving the matter very careful consideration, we came to the conclusion that we should now remove the doubts which have arisen about the position of South African stocks under trustee legislation. We did not feel that we would be justified in continuing to ignore the fact that those stocks were no longer Commonwealth stocks. I emphasise once again, because it is very important that it should be known, that although South African stocks will cease to be eligible for investment by trustees, those trustees who already hold stocks may retain them by virtue of Section 4 of the Trustee Act, 1925.

§ Mr. Diamond
To deal not with the South African aspect, but with the general question, this is a matter which we have to clear up. It now emerges that, on ceasing to be a trustee investment under the new definition, that is to say, on ceasing to belong to the narrower range and not fitting into the wider range, and, in the case of a trust, where the division has been made under the provisions of the Bill, an investment, which was a perfectly proper trustee in- 1960 vestment, has no place allocated to it, notwithstanding that the trustees are not required to dispose of it, because it was a trustee investment at the time it was acquired. I do not see that it would be a special powers investment. It is clearly asserted and accepted that it is not a narrower-range investment. I cannot see where it would fit into the wider-range investment.
That being the case, there is sufficient ground for asking what the humble accountant does about it. The law on the matter is that the trustee can keep such an investment, but where does the accountant show it? This is not a purely technical question, because the whole basis of the Bill is to divide between narrower-range, wider-range and special power investments.

§ The Solicitor-General
Clause 2 (2) says: Property belonging to the narrower-range part of a trust fund shall not by virtue of the foregoing section be invested except in narrower-range investments, and any property invested in any other manner which is or becomes comprised in that part of the trust fund"— which is the case which the hon. Member is postulating— shall either be transferred to the wider-range pant of the fund…or be reinvested in narrower-range investments as soon as may be. It is covered by those two limbs. It is either transferred to the wider-range part of the fund, or it is reinvested in narrower-range investments.

§ Mr. A. J. Irvine
Does that mean that when the transfer the right hon. and learned Gentleman has described takes place there will be a wider range of investment which does not meet the definition in Part III of the First Schedule? Is that the effect?

§ The Solicitor-General
Yes, that is the effect. It is covered by Section 4 of the Trustee Act, 1925, which says: A trustee shall not be liable for breach of trust by reason only of his continuing to hold an investment which has ceased to be an investment authorised by the trust instrument or by the general law. In effect, that is caught up in line 28, on page 2.

§ Mr. Diamond
Is the right hon. and learned Gentleman not under an obligation to alter Part III of the First Schedule 1961 so as to introduce a new category, being property not already covered and coming out of Part II.

§ Mr. Deputy-Speaker
I think that the hon. Member for Eton and Slough (Mr. Brockway) has already spoken once.

§ Mr. Brockway
I intended to put a question before the Economic Secretary resumed his seat. I apologise if I was a little slow. My question is whether the terms of the Bill will come into operation as soon as the Bill receives the Royal Assent, or will be held up for one year under the Republic of South Africa (Temporary Provisions) Bill.

§ Mr. Barber
This Bill will receive the Royal Assent after the standstill Bill, and so will come into effect, for all the purposes which we have been discussing on this Amendment, straight away.

§ Mr. Mitchison
The Government have not answered one small question. Are they accepting this Amendment? Before they come to a hasty conclusion about it, I suggest that this is a case where no harm could be done and where there is some ambiguity in the paragraph as it stands. We have not the usual recourse to another place, because this Bill has already been through there, but I hope that the Government will take it from me that I have no malevolent intentions, or intention to do anything but to clarify the position. I do not know what their answer is, but I trust that they will accept the Amendment.

§ Mr. Barber
I must advise the Committee not to accept the Amendment. From one point of view it might be thought not to do much harm, but it would mean, I understand, that if the words. which at the time of investment is were inserted, securities of a country which left the Commonwealth would continue to be authorised securities if they were retained, whereas at the present time the position is that if the securities cease to be authorised they may still be retained by the trustee under Section 4 of the 1925 Act.
As the position is at the moment, the trustee is in no doubt about his position. These securities are no longer authorised 1962 securities, but they may be retained, although the trustee is precluded from making new investments in those securities because they are unauthorised. The position is clear and I cannot advise the House to accept the Amendment.

§ Mr. Mitchison
I speak again by leave of the House. This is a small matter. The Government's view of this Amendment is quite wrong, and I hope that the Solicitor-General and the Economic Secretary will look at it quickly and to good purpose. These are investments, and the question is, what is the position when one makes the investments? What this Amendment would do would be to make it clear that, when one makes the investments, the overseas territory must be within the Commonwealth if it is to come under this Schedule. If we do not put in this Amendment there is ambiguity.
From the paragraph we are talking about— In fixed-interest securities issued in the United Kingdom by the government of any overseas territory within the Commonwealth…"— I take it that a stock that was issued by South Africa ten years ago, on one reading of those words comes within this provision and, on another reading, does not. I said that in moving the Amendment, and I hope that the Government will clear the matter up, otherwise what they said about the construction of the Schedule will, unfortunately, carry no weight in a court of law. I suggest that it should be clarified.

§ Mr. Barber
I have taken advice and I think that the hon. and learned Member will see that what I have said was correct. I am satisfied that there is no ambiguity in the provisions of the Bill as they stand and, therefore, I ask him not to press the Amendment.

§ Mr. Diamond
I beg to move, in page 11, to leave out lines 39 to 42.

§ Mr. Deputy-Speaker
I think that it would be convenient to discuss also the Amendment in the name of the hon. Member for Gloucester (Mr. Diamond) and those of his hon. Friends—page 12, line 13, at end insert: 2. The securities mentioned in paragraphs 1 to 6 and 8 to 10 of Part II and in paragraph 1 of Part III of this Schedule do not include 1963 long-dated or irredeemable securities, that is to say fixed interest securities, debentures, guaranteed or preference stock or shares, where the holder is not entitled to repayment of the principal within twenty-five years from the date of investment. 3. The loans mentioned in paragraphs 9 and 13 and the mortgages mentioned in paragraph 13 a Part II of this Schedule do not include long-dated loans or mortgages, that is to say loans or mortgages, where the holder is not entitled to repayments of the principal within ten years from the date of investment. 4. Nothing in the two foregoing paragraphs of this Schedule shall preclude the retention by a trustee of long-dated or irredeemable securities, loans or mortgages held by him at the time of the passing of this Act.

§ Mr. Diamond
That would be convenient, Mr. Deputy-Speaker. I shall, in view of the time, deal with these matters as shortly as may be because, of course, we have done everything that we could to facilitate the quick adoption of the Bill. I only draw the attention of the House to the meaning of the Amendments and give one or two reasons which impelled us to put them down.
The Schedule enables trustees to invest in different kinds of investments—the narrower range and the wider range—and in the case of the narrower range, certain of them require advice. The first Amendment omits perpetual rent-charges charged on land in England and Wales and Northern Ireland and investments of that kind. The second Amendment deals with the problem of long-term or irredeemable securities. Paragraph (2) of the second Amendment deals with long-dated or irredeemable securities which are defined as fixed-interest securities and so on, which are not entitled to repayment within twenty-five years. The next paragraph deals with loans which are not repayable within ten years. Paragraph (4), which is very important, makes it absolutely clear that, although these Amendments are proposed, nothing is to alter the existing powers of trustees with regard to the long-dated or irredeemable securities.
There is very great dissatisfaction and a deep sense of injustice felt in the country at large about a number of irredeemable stocks, particularly gilt-edged, and more particularly 3½ per cent. War Loan. There is very considerable feeling that the Government are not facing up to their responsibilities there. Although that is an aspect of this matter, 1964 what I particularly draw attention to is the fact that so long as the Government carry on with their present attitude of refusing to face their responsibilities as an honourable borrower, trustees must be protected, and the only way of protecting trustees, therefore, is to exclude from these permitted investments that kind of investment.
After all, these investments are the new look or the modern look on safe investments. The equities—the "blue chips," as I prefer to call them—are included under Part III because they are safe investments as far as one can go. All investments under the earlier Part are safe investments in the Government's view. But what we are saying is that it is right to have a full look at it, not only to add things which are safe investments, such as "blue chips," but to take away things which are no longer safe investments and have shown themselves not to be safe.
The hon. Member for Walsall (Sir H. d'Avigdor-Goldsmid) drew attention at an earlier stage in our discussions to the interesting position of War Loan, which is stated to be repayable in 1952 or after. Everybody who holds it hopes, of course, that the "after" will be very soon after. But, as the hon. Gentleman quite rightly says, when the stock was issued the attraction of it was that it was certainly not repayable before 1952. It was deliberately bought on the basis that it was a long-term investment. People then wanted to get out of short-dated gilts and into long-dated gilts, and they did as the hon. Gentleman has said. They have lost a fortune as a result of it.
This adds to the strength of our Amendment. If those people had been permitted to do so, they would have saved themselves millions of pounds, all sorts of trustees would have saved themselves enormous headaches, and all sorts of beneficiaries who find themselves in a hopeless position today would have been much better off than they are now. It is, of course, beyond reasonable human knowledge at such a point in time to take a fore-look into the future. But we now know. Indeed, we now know that it is just no longer safe to regard these long-dated securities as appropriate securities for investment by a trustee.
1965 I bitterly regret that the Government are not facing their responsibilities in this way. It does not give any hon. Member on either side of the House any pleasure whatever to record the fact that at the moment War Loan stands at about 53, has been falling considerably and is likely to continue to fall.
It gives hon. Members no pleasure to record that yesterday sterling reached its lowest point since 1957. The Government could deal with this either by accepting the Amendment or by putting a date—certainly a date far ahead—on these securities. People would then know that, sooner or later, the money would be repayable.

§ Mr. Deputy-Speaker
Order. I do not think that the question of the date of the loan comes into the Amendment.

§ Mr. Diamond
I am guided by you, Mr. Deputy-Speaker, but perhaps I might draw your attention to the second line of the Amendment, which refers to long-dated or irredeemable securities.

§ Mr. Deputy-Speaker
That is presupposing subsequent legislation.

§ Mr. Diamond
I understand your point fully, Mr. Deputy-Speaker, and of course. I accept it.
I am saying that as an alternative method of dealing with this the Government should not have irredeemable securities, and then the problem of excluding them would not arise.
So long as the Government insist on having irredeemable securities, so long as they insist on borrowing at 3½ per cent. when any honourable borrower would borrow at the market rate of 6½ per cent., we have to protect trustees, and the only way we can do that is by excluding from the lists of otherwise allegedly safe investments these kinds of investment.

§ Mr. Hale
With respect to my hon. Friend, in his able speech he seemed to gloss over the Amendment to omit paragraph 14 of Part II which refers to investment in perpetual rent charges. I do not understand his objection to that. I would be grateful if he would explain in some detail what is a long-term mortgage of a freehold property in England and Wales.

§ Mr. Diamond
I was coming to that point. I have a note about giving notice to redeem in six months, but perhaps I might first cover the ground with regard to the major category, that is, long-dated or irredeemable securities.
The only further point on this aspect is that the Government had an opportunity, but refused it, to accept an Amendment under which trustees would have their attention drawn to this. As they are not allowing trustees to have their attention drawn to it, it is only safe that we should exclude this category of investment from the scope of trustees, otherwise they will find themselves in these difficulties.
In answer to my hon. Friend, having made the point about the long-term and irredeemable securities, we naturally deal with all matters of a similar character. The investments referred to in paragraph 14 are of a similar character, and so are loans. It may be said that ten years is too short a period, or too long a period. One does not want to be too specific about this, but it illustrates our anxiety about long-term irredeemable securities. We cannot foresee the future, and, therefore, we must protect trustees and their beneficiaries by giving them power to reconsider and reinvest from time to time. My limited experience of mortgages is that in every mortgage there is a right to redeem in three months or six months.

§ Mr. Hale
This is a serious difficulty. I appreciate my hon. Friend's point. I am not criticising the purity of his intentions when he talks about protecting trustees. I suggest that the suicide rate among trustees will go up considerably from now onwards. A mortgage is always redeemable, for an indefinite period.

§ Mr. Diamond
No.

§ Mr. Hale
Invariably—subject to notice. I would draw my hon. Friend's attention to the observations made by a learned judge in the High Court fairly recently, that no one has ever made—

§ Mr. Deputy-Speaker
I hope that the hon. Member will not make a speech. I thought that he was rising to make an intervention.

§ Mr. Hale
In that case, I will defer my remarks, Mr. Deputy-Speaker. I thought that it would be more convenient to deal with the point while my hon. Friend was speaking, but I would prefer to defer my remarks.

§ Mr. Diamond
I am grateful to my hon. Friend for agreeing to make his comments in his own speech. If he does that he will get a much more informed answer. I have made my point why these investments should be excluded.

§ Mr. Barber
I hope that the House and the hon. Member for Oldham, West (Mr. Hale) will not think me discourteous if I intervene now. I do not wish to cut the hon. Member out, but I rise now because it may not have been apparent to him—because he was not with us in Committee—that the Amendments we are now discussing, with the exception of paragraph 4 of the second Amendment, are virtually identical with Amendments moved by the hon. and learned Member for Kettering (Mr. Mitchison) in Committee. Although I would be the last to curtail adequate discussion, I hope, therefore, that I may be allowed to deal with this point briefly.
The effect of the Amendment would be that the list of authorised investments in the Schedule would not include perpetual charges on land or long-dated or irredeemable securities, as defined in the Amendment. I cannot believe that it would be right, in this Bill, to reduce the powers of investment which are at present given by the 1921 and 1925 Acts. That would be the effect of these Amendments. They would cut down the powers of investment which trustees have had for more than thirty-five years. It is not possible to say that in all circumstances irredeemable or long-dated securities, or charges on land, are unsuitable investments for trustees. I ask the House to bear in mind that Clause 5 provides that a trustee shall have regard to the suitability to the trust of particular investments. There are also provisions obliging him to obtain advice.
Above all, I thought that I ought to intervene at this stage to make the point, which, I believe, is overwhelming in this case, that it would be wrong for us to cut down the powers in this Bill, the main purpose of which is to extend the powers of trustees. I hope that with that short explanation the House will 1968 be able to reach a decision. Perhaps the Amendment will not be pressed. I do not think that it would be helpful to the House to go into the matter in greater detail.

§ Mr. Hale
I am much obliged for that statement, which anticipated some of the comments that I was hoping to make. We are discussing the very difficult problem of trustees. I have never posed as a Stock Exchange tipster, or one who has any special knowledge of the matter, but I venture to oppose my ignorance to the knowledge of my hon. Friend the Member for Gloucester (Mr. Diamond) and say that at the moment, if I were investing, long-dated securities would be the ones that I would find attractive. I find it difficult to support an argument to exclude an investment from the terms of trusteeship, after thirty years, when it can be bought on the most favourable terms that have ever been available to investors.
I understand and sympathise with the desire of my hon. Friend, who has raised an important question in relation to investments, and has given us an opportunity for a useful discussion, but I ask him to say why paragraph 14 has been selected for a special demolition party, in the form of an Amendment. I would think that a perpetual rent charge, which is rarely obtainable and is not one of the normal types of commercial investment, is a particularly attractive investment.
I should have thought that charges on land were particularly secure. With regard to paragraph 13 of the Schedule, I should have thought that an investment on first mortgage in land in England and Wales—of course, not on the basis of lending 100 per cent—because I believe that land is standing very high now and urban land wickedly high, was as safe an investment as one could get. It would provide today about a 6½ per cent. return.
I do not think that my hon. Friend applied his mind to the curious difficulties of the British mortgage, which is so vague that it really would require a very long series of explanatory Clauses to cover the point which he has in mind. The redemption of the mortgage is subject to the right of the mortgagee to exercise his right of redemption. It is not an absolute right, 1969 that is, part of the original demise by way of mortgage. It is an optional right which he can exercise at any time, and it has, of course, been subject to certain statutory limitations in connection with small property, and so on.

§ Mr. Mitchison
The mortgagor, I think my hon. Friend means.

§ Mr. Hale
My hon. and learned Friend has been kind enough to make a correction which is wholly inaccurate. It is quite, true, of course, that the mortgagor redeems, but it is equally true that the mortgagee gives notice that the mortgage has to be paid off. That is the point that I was dealing with. The mortgagor cannot give six months' notice to the mortgagee. He often wishes that he could.
The mortgagor can indicate to the mortgagee under the terms of the mortgage that he is prepared to pay it off, but the compulsory notice, the termination, the question that we are dealing with under this Amendment, is how long the thing is for—in other words, whether it is an indeterminate arrangement, or whether it can be determined by notice. The only person who could determine it by notice is the mortgagee if he wanted his money back. In some cases, he recalls the money by giving six months' notice.
In a Clause of this kind, which does not have regard to the words I have quoted from the High Court on the rare fantasia of the British mortgage system, I should have thought that this Amendment might eliminate, in the words in which it is drawn, almost every mortgage of a freehold in Britain. They are indeterminate. It would need the opinion of counsel to say whether, in the circumstances, they apply to every lease. That is one of the problems. In any event, I venture to say that to suggest to trustees at this moment that they shall not be allowed to invest in Consols—that is the meaning of the Amendment—my hon. Friend the Member for Leicester, North-West (Sir B. Janner) looks puzzled.

§ Sir B. Janner
I am not puzzled.

§ Mr. Hale
As I was saying, to suggest that they shall not be allowed to invest under this part of the Schedule in consuls or 3½ per cent. War Loan or in Daltons, is, on the whole, to try to 1970 eliminate from the gilt-edged investment market so large a portion of that available market as to create its own anomalies and to produce its own rather specialised and legal intentions. I hope, therefore, that my hon. Friend will not press the Amendment to a Division.

§ Mr. Speaker
Is it desired that the Amendment in page 12, line 13, should be put?