HL Deb 24 June 1904 vol 136 cc1104-6

My Lords, I rise to ask His Majesty's Government, with reference to Land Improvement Loans made to landlords and tenants by the Commissioners of Public Works in Ireland—(1) What percentage of such loans has been repaid (a) in cases of loans to landlords, (b) in cases of loans to tenants, and what percentage of such loans in each case is deemed to be irrecoverable; (2) why the rate of interest on such loans is in excess of the rate at which money can be borrowed by the Government; and (3) to what purposes is the profit thereby made by the Government applied. It has been pointed out to me that my first Question is liable to be misunderstood and might be taken to refer to current loans, the work of preparing statistics in regard to which would entail much labour in the Department. I only mean it to apply to the cases of loans which have been closed. My second and third Questions refer to the rate of interest on such loans, and the purposes to which the profit thereby made by the Government is applied.

The rate of interest is, in round figures, 3½ per cent. That is the exact sum in the cases of loans repayable in twenty-five years. In the case of loans repayable in twenty-two and half years the exact rate is £3 8s. 3d. per cent. These loans are made by the Government for the purpose of encouraging the useful expenditure of money in permanent improvements of property in Ireland, but I am afraid the borrowers do not consider that they owe a deep debt of gratitude to the Government, for they have a shrewd suspicion that they have made a very good thing out of it. I have no doubt I shall be told that the expenses of administration are considerable, but I do not believe they are sufficient to swallow up the difference between the rate at which money can be borrowed and that which is charged on these loans; and if that is the case in the present day, when the state of the market is so depressed, what must have been the profit made in the palmy days before the Boer War, when money could be borrowed on so much more favourable terms? This was partly acknowledged it 1889, when the Government of the day grudgingly consented to reduce the rate of interest from 3½ to 3⅛ per cent., but this only took place in the case of loans which had been sanctioned before December 31st, 1881, and where all instalments had been paid up to date. It did not apply to any loans made since that date, and, consequently, in the vast majority of loans now outstanding the rate of interest is still 3½ per cent. I should be over-sanguine if I expressed a hope that all the profit which has been made on these loans should be applied towards the reduction of the capital still owing on them, but I believe the reply will show that, in the case of landlords at any rate, these loans have been well and punctually repaid. I have found a Treasury Minute dated 18th January, 1900—it is the latest I could get—which states that it was evident that the Local Loans Fund was no longer in a position to afford to lend to local authorities, allowing for expenses of management, at so low a rate as 3 per cent. per annum, and accordingly the Chancellor of the Exchequer recommended to the Board that the rate of interest prescribed for loans on the security of local rates should be, in the case of loans not exceeding thirty years, at the rate of 3¼ per cent. interest. I venture to hope that His Majesty's Government will see their way accordingly to reduce the rate of interest on instalments due in the future under these loans.


My Lords, my noble friend asks, in the first place, what percentage of these loans has been repaid in the case of landlords, and what percentage in the case of tenants. He has explained to your Lordships that he intends his observations only to apply to loans which have been concluded, and that he very reasonably and properly excludes those which are still current. I am glad to be able to reassure my noble friend. These loans, whether to landlords or tenants, have been repaid with extraordinary punctuality, and I think we may say that in the case of those loans which have been concluded the Government have been involved in practically no loss whatever by the transactions. The irrecoverable arrears, which have been written off as lost, only amount to .41 per cent., or less than half per cent., in the case of landlords, and .89 per cent, or less than 1 per cent., in the case of tenants. I think your Lordships will agree, considering the enormous number of these loans and the very small sums which are being dealt with, that that result is very favourable. My noble friend thinks the interest charged is too high. He has correctly stated the rate of interest at £3 8s. 3d. I am informed that tins is by no means too high a rate of interest when the expenses of collection, which of course are considerable in the case of loans of so small a character, are taken into consideration. I may inform my noble friend that the figure stands rather lower in the case of landlords and tenants than in the case of local authorities, to whom the total 3½ per cent, is charged. Then my noble friend asked: What do the Government do with the profit? Well, practically there is no profit. The very small sum which appears in the Returns as profit is swallowed up by expenses on capital account. It is not possible, as the noble Lord is probably aware, for the Government to borrow at 3 per cent. now, and the difference between what they borrow at and par absorbs whatever small profit there is to be made out of the e loans. I hope I have been able to reassure my noble friend.