HL Deb 08 December 1915 vol 20 cc543-6

LORD STRACHIE rose to ask whether the Treasury will revise their regulations in regard to the issue of Treasury bills so that they can be issued in less than multiples of £1,000; and why the Treasury do not make the issue of Government life annuities better known and more popular by giving a larger return on them.

The noble Lord said: My Lords, I desire to draw the attention of the representative of the Treasury, who I understand is my noble friend Lord Hylton, to the question whether it is not desirable that the Treasury should issue bills of a smaller sum than £1,000 or multiples of £1,000. We are constantly being told by the Chancellor of the Exchequer that it is of the utmost importance that more money should be obtained from the people of this country for carrying on the war, but there seems great poverty of enterprise on the part of the Treasury in making more popular the system by which the Government are able to borrow money. It must be obvious that for every one man who is able to take from his bank balance £1,000 or multiples of £1,000, there must be hundreds who would be able temporarily to lend to the Government £100; and the Treasury would probably get the smaller sums at a lower rate of interest than 5 per cent., and thereby save the country some of the enormous sums now paid on Treasury bills. I have been told that the only possible objection might come from bankers, but I have taken the opportunity of questioning a banker on the subject. He said that he had never heard the point raised and that he thought it probably was a Treasury objection, because the Treasury were very fond of saying there was a lion in the path when they did not favour any innovation. We all remember that when it was proposed to have a graduated Income Tax many years ago the Treasury said it was quite impossible, but when it was found to be necessary there was no difficulty in having a graduated Income Tax as well as a Super-Tax following it.

It is also very desirable that the National Debt Office should make better known the new scales—they have lately been revised —for Government life annuities. The new scales are very liberal indeed and would prove tempting to a large number of people, but the Government do not adopt the course which is followed by insurance com- panies of issuing attractive advertisements showing how a man can, with perfect safety, double his income by buying an annuitey. I suggest that it is desirable that the advantages of Government life annuities should be well advertised. It could be done in many ways. It could be done through some of the great approved societies, which are now used by the Government under the Workmen's Compensation Act, and in similar ways. The great advantage to the Government in regard to life annuities is that after an effluxion of time the annuity comes to an end and automatically the debt is reduced.

I took the opportunity the other day, as I intended raising this question, of giving my noble friend private notice that I also proposed to call attention to a curious speech that was made recently by Mr. McKenna in addressing representatives of trade unions, as I thought some explanation of it was required. In addressing the trade unionists Mr. McKenna is reported in The Times to have said— Men who before the war were earning perhaps £2 or £3 a week might be now earning twice or three times as much. He went on to say— We [the Government] ask that the wage-earners shall give us 50 per cent. of their excess earnings, and we will borrow it from them, pay them interest on the money, and pay them back after the war. It would be a good thing if working-men would do that; but I must say that the Government's proposal in regard to the wage-earners is in sharp contrast with the treatment of the excess profits of capitalists. Mr. McKenna proceeded— If 50 per cent. of increased earnings had been saved… it would have been possible, perhaps, to consider further increases of wages. He went on to say— Those who demand higher wages must show themselves worthy of higher wages"; namely, by lending 50 per cent. of their increased earnings to the Government. It appears to me that this is a distinct incitement to trade unionists working for the Government to ask for a further increase, though, as Mr. McKenna himself said, their wages have been increased from £2 or £3 a week to £6 or £9 a week. That seems a very vicious principle, and I shall be glad if we can be favoured with some explanation.


My Lords, I will answer in the first place the Question which my noble friend has placed on the Paper. The first part of it relates to the advisability of issuing Treasury bills in smaller denominations than£1,000. This matter has been carefully considered by the Treasury on several occasions since the adoption in April last of the system of selling Treasury bills over the counter at fixed rates of discount, but in the opinion of the Treasury it is distinctly inadvisable to adopt the course suggested. In considering a proposal of this kind regard must be had not merely to the immediate problem of raising the necessary funds for carrying on the Public Service, but also to the effect which the proposal would be likely to have upon the complicated and delicate mechanism of the Money Market. From the point of view of general financial policy it is felt that, on the whole, it is not desirable that there should be in existence any considerable amount of floating debt held in small denominations. Moreover, after full consideration it is held that Treasury bills are not a suitable form of investment either for temporary or for permanent balances of small amount. There are, as your Lordships are well aware, ample opportunities for small investors at the present moment to buy War Loan or other securities of a less temporary character than Treasury bills. Therefore there is no prospect at the present time, at all events, of the Treasury reconsidering this question and issuing Treasury bills in lower denominations than £1,000. The whole question of catering for the small investor is now receiving further consideration at the hands of the Treasury, and it is probable that a decision in the matter may be arrived at in a comparatively short space of time.

I come to the second part of the noble Lord's Question, with regard to Government life annuities. I am authorised to state that new tables for the granting of life annuities by the National Debt Commissioners and the Post Office were brought into use on October 15 last, and show an appreciable increase in the amount of annuity granted in respect of each £100 of purchase money. These tables are computed at a rate of interest on a basis of 3¾ per cent. as compared with the rate of 3 per cent. on which the superseded tables were calculated. The Post Office annuities are advertised in the various Post Office publications that have been issued for many years past, but I will certainly bring to the attention of the Treasury the suggestion of my noble friend as to whether it might not be a good thing to advertise on some wider scale the advantages of these annuities.

As to the question of which my noble friend gave me private notice regarding the speech which was delivered by the Chancellor or the Exchequer to a meeting of trade unionists a few days ago, I am authorised by the right hon. gentleman to say that he can only refer the noble Lord to the words of his speech, the meaning of which the Chancellor of the Exchequer holds was perfectly plain.