WAR LOAN (SUPPLEMENTAL PROVISIONS) BILL. (Hansard, 22 December 1915)

§ LORD HYLTON

My Lords, this Bill which I ask your Lordships to be good enough to read a second time this afternoon makes the necessary statutory provision for the setting up of a Post Office Stock Register to include the names of the subscribers to the Four-and-a-Half Per Cent. War Loan who invested moneys through the Post office. Under the Savings Banks Act of the year 1880 facilities were provided for investments by persons who were already Savings Bank depositors in Government Stock through the machinery of the Savings Bank Investment Account, but a large number of the subscribers to the Four-and-a-Halt Per Cent. War Loan were persons who were not depositors in the Savings Bank. It has therefore become desirable in the first place to make a Register of that Loan, independently of 787 the Savings Bank Investment Account, in order to meet the requirements of small investors with as few formalities as is possible; in the second place, to provide facilities for the payment of the dividends as they accrue to those small investors; and, in the third place, to provide for transfers as between the new Post Office Register and the existing Register of the holders of the War Loan at the Banks of England and of Ireland. The new Post Office Register will be independent of the ordinary Savings Bank machinery, coming into contact with the latter only to the extent of giving facilities, where a stockholder is also a Savings Bank depositor, for the crediting of his dividend if he so desires to his account at the Savings Bank. The facilities at present granted to Savings Bank depositors to buy and sell Stock through the Investment Account will be under this Bill extended to their dealings in Stock held by them in the new Post Office Register. The whole Bill, except Clauses 5 and 7, deals with arrangements necessary to give effect to the scheme for investment in the Four-and-a-Half Per Cent. War Loan through the Post Office and the Trustee Savings Banks. Clauses 5 and 7 are intended to give the Treasury power to make such adaptation of the Savings Bank machinery as may be necessary for further schemes of drawing on the savings of the working classes for the purpose of future War Loans.

Your Lordships will perhaps expect me to say a few words in respect of the clauses. Clause 1 enables the Treasury to set up this Post Office Stock Register. If your Lordships look at subsection (2) paragraph (d), which is the most important matter dealt with in that subsection, you will see that there is power to impose limits on the holdings in the Post Office Register. That is necessary in order to prevent that Register becoming a mere alternative to the Bank of England Register. The main object of this Bill, as I have already attempted to point out to your Lordships, is to dispense with formalities for the small investor. But dispensing with formalities involves certain risks of fraud, and it is thought that this machinery is unsuitable where very large holdings are concerned. If your Lordships look at Clause 2 you will see that it provides for the issue through the Post Office of bearer bonds, and it has been already announced that £5 and £25 bonds will be issued; and from those Income Tax will be deducted 788 in respect of the interest on those bearer bonds. That provision is necessary for obvious reasons, because your Lordships will realise at once that it is impossible to say whether these bearer bonds are in the hands of persons who are beyond or below the limit of exemption for Income Tax.

In Clause 3 your Lordships will see that interest on any Stock inscribed in the Register not exceeding £200 is to be paid without deduction of Income Tax. There are certain provisos at the end of the clause. There is a reason for fixing that limit of £200, and it is this. In the first place, where the annual amount of the dividend payable on War Loan and on Consols and other Government Stocks paid from the Bank of England is less than £5 no deduction is made in respect of Income Tax. That is the case in respect of any Stocks inscribed at the Bank of England. In the second place, no Income Tax is deducted on Stocks held on the Savings Bank Investment Account. In the case of any individual his holdings on the Post Office Register may be additional to his investments in these Stocks, and for that reason it has been thought advisable to insert the limit of £200. Clause 4 provides for arbitration in cases where dispute may arise. Clause 5 is intended so as to enable the use of the machinery of the Savings Bank for any future scheme for borrowing from the working classes for war purposes.

Clause 7 is rather an important clause. As your Lordships are aware, at the present moment there are definite limits beyond which persons are not allowed to invest money in the Savings Banks. For many reasons at this moment it seems desirable that legislation should pass removing that limit. For one reason, everybody is aware that the high rate of wages generally obtaining all over the country has very greatly increased the saving capacity of the working classes. It was mentioned in this House the other night that building had practically ceased all over the country and that has removed a favourite method of investment of small sums by the working classes. It is thought that for these reasons it is very important at the present time to remove the limit that has hitherto existed with regard to the amount that could be invested in the Savings Banks.

Clause 8 is also a not unimportant clause. Up to the present I understand 789 that Government securities have been avoided by friendly and trade union societies for the reason that their property has to be invested in the names of individual trustees, and trustees, of course, change from time to time, although I believe in the case of friendly societies the trustees are in the habit of being reappointed year after year. But the Bank of England, as I dare say your Lordships are aware, does not recognise trust accounts merely standing in the name of a particular trust or particular society; they have to stand in the names of individuals. Clause 8 will alter the law in that respect. Clause 9 deals with the case of Scotland. Legislation has to take cognizance of the fact that there is no permanent Government Account, I think I am correct in saying, at the Bank of Scotland; but in that portion of the United Kingdom the Exchequer Account is kept at six different banks in annual rotation. Clause 9 is intended to meet that state of things.

In Clause 10 you will perceive that the limit of £10,000 imposed by Section 27 of the Trustee Savings Banks Act, 1863, on the amount for which the National Debt Commissioners may issue orders for payment on any one day on account of the same savings bank may be exceeded. In present circumstances the restriction of £10,000 has proved to be irksome, and as a matter of fact it has already on two occasions since the outbreak of the war been obliged to be exceeded. Therefore it has been thought wise to insert this provision in the Bill. In conclusion, perhaps it may interest your Lordships to know that the total amount taken up at the Post Office of the Four-and-a-Half Per Cent. Loan was £32,390,00, exclusive of £5,000,000 of scrip vouchers.