THE UNDER-SECRETARY OF STATE FOR WAR (THE EARL OF ONSLOW)
My Lords, this Bill is necessary in order to authorise the Treasury to guarantee the payment of principal and interest on any loan issued by the Irish Free State Government for land purchase purposes up to an amount of £30,000,000. The object of limiting it to £30,000,000 is that, it is estimated that the cost of land purchase will amount to that sum. It is divided in this way—£18,000,000 represents the amount to be devoted to tenanted land, and £12,000,000 to the purchase of untenanted land; and there are certain minor charges which will come out of the £12,000,000. I ought to observe that the question of raising cash either by the Free State Government or His Majesty's Government does not enter into this Bill. All the payments which are made under the Irish Free State Bill, and which are guaranteed under this Bill, will be in bonds.
Let me briefly explain the circumstances. In 1923 the Irish Free State Parliament passed an Act to deal with the question of land purchase, and the effect of that Act was this. The price which, under the Act, a landowner receives depends upon the annuity which the 160 tenant will pay after the land is vested in the Land Commission. The sum which is payable by the tenant is fixed at 65 per cent. of the gross lent of the holding. The standard price represents the capital value of 4¾ per cent. on the standard purchase annuity. A landowner will be paid in 4½ per cent. bonds, and the extra quarter per cent. represents the sinking fund.
It will be easier to explain it if I give an instance. Take a holding, the gross rental of which was fixed before 1911 at £100 a year. I might say that if the rental was fixed after 1911 then 70 per cent. is taken, but such cases are very few in number. If the rental has been fixed before 1911, then on a holding amounting to £100 a year £65 will be the standard purchase annuity—that is the amount of money paid by the tenant to the Land Commission. That amount, at 4¾ per cent., represents £1,368, but in addition to that, a bonus is paid by the Irish Free State Government of 10 per cent. on the £1,368—that is, roughly speaking, £137. Your Lordships will see therefore that the total which will be received is £1,505 on that particular holding—15.05 years' purchase—and the landowner will receive for that 4½ per cent. bonds. That is briefly the operation of the Act which was passed last year by the Irish Free State Parliament.
I need not explain that the provisions of this Act do not come into consideration under the present Bill. This Bill is simply to provide legislation to guarantee the capital and interest on these 4½ per cent. bonds, which, of course, will be an Irish Free State issue. This Bill has passed through the House of Commons, and your Lordships are being asked to pass it through all its stages during the present sitting. Standing Order No. XXXIX has been suspended for that purpose. It may be asked why so much expedition is required for the passage of this Bill into law. The reason is this. The Irish Free State Act is already in operation and lands are becoming vested in the Land Commission in Ireland. Before long, therefore, bonds will be allocated and those bonds may come on the market. It may be asked why allocation of the bonds cannot be delayed, and the answer is that after vesting has taken place, and before the bonds are allocated, the landlord will 161 only receive 4½ per cent. on his bonds, and he will still be responsible for the encumbrances on the estate, on which he may have to pay as much as 6 or 7 per cent. As soon as allocation has been made all these encumbrances will be paid off in bonds. That is one reason why the Bill is required to be passed quickly into law. I should add that if this Bill were not to pass before Christmas the guarantee could not come into force much before April next, because Clause 1, subsection (2), requires complementary legislation to be passed by the Irish Free State Parliament and that cannot be introduced until this Bill becomes law. It is, therefore, desirable that the Bill should be passed with as little delay as possible.
Let me just deal with the question of the security for the bonds. That, in the first place, will be the purchase annuities paid by the tenant. In the second place, if they fail, the security is provided by the Irish Free State Central Fund which corresponds with the Consolidated Fund in this country. Our guarantee under this Bill comes third. It will stand behind the two securities provided under the Irish Free State Act. Some surprise may be expressed at the long period, eighty years, that the guarantee is to run. The bonds will be redeemable by half-yearly drawings over a period of sixty-seven years—that is, thirteen years short of the eighty years' period for which the guarantee runs—and these additional thirteen years are necessary owing to the fact that there will be some years' delay in deciding upon the untenanted lands to be bought. The issue of the bonds will, therefore, extend over a period of eight years. In some of these cases of tenanted land, owing to the time required for redistributing that land, the purchase annuities will not begin to be payable for another five years, and the five years and eight years make up the difference of thirteen years.
All tenanted land will become vested in the Land Commission, and all untenanted land which is situate in congested districts will become vested in the Land Commission. So far as untenanted land in other parts of Ireland is concerned, untenanted land which is not situated in congested districts, only so much will be required to be vested in the land Commission as is necessary to relieve congestion. The price of tenanted land will be fixed 162 according to the principle I have mentioned, and with regard to untenanted land the price will be fixed by the Land Commission with provision for an appeal to the Judicial Commission.
The general object, indeed the sole object, of the Bill is that the British Government should stand behind the Irish Free State Government in order to prevent bonds falling to a less price than they are intended to be under the Irish Free State Act; that is, that the recipients of the bonds shall not find their security depreciated. British security is the same as we have received for our former loans for land purchase in Ireland and which, as your Lordships are aware, amount already to £131,000,000. I do not think that by the passage of this Bill we shall incur any capital expenditure or assume any real cash obligation. I beg to move.
§ Moved, That the Bill be now read 2a—(The Earl of Onslow.)
§ LORD ARNOLD
My Lords, this Bill I presume is, although the noble Earl has not said so, a Money Bill.
§ LORD ARNOLD
In any case I do not think it is a Bill which will receive much opposition in your Lordships' House The noble Earl has outlined broadly the circumstances, and the effect of the guarantee for this £30,000,000 will, I understand, enable the completion of Irish land purchase to be brought about. It is true that this proposal is a different one from any that has hitherto been made in the Imperial Parliament in connection with land purchase, because the previous issues of Irish land stock were made before the Irish Free State was constituted, and therefore they were, in effect, Government securities of the United Kingdom. Accordingly, this proposal is something new, because it means that the credit of the Irish Free State is going to be backed by the Imperial Exchequer. I do not think that this will be opposed because, apart from anything else, this Bill is the fulfilment, as I understand it, of a pledge which was given to the Irish Free State a year or two ago in connection with the settlement of financial arrangements arising out of the Treaty. 163 I rise only for the purpose of making one or two comments and asking one or two questions on points of detail.
It is true, as the noble Earl has said, that this measure does not involve any public issue in this country, and therefore it is not quite so formidable as might perhaps at first sight appear; and I entirely agree that the risk of loss is small. There are two securities to which the noble Earl has referred, the purchase annuities and the Central Fund of the Irish Free State, the latter corresponding, I believe, to our Consolidated Fund. Not only is there to be no public issue here, but I understand that there will be no public issue in the Irish Free State. This brings me to the first question that I should like to ask. I notice that the Secretary of State for the Colonies, when speaking on this measure in another place, adduced as one reason for urgency—I am not objecting to the urgency—that a large amount of these bonds had been issued and that they ought therefore to be allocated to their owners. I should like to know precisely what is happening. If the bonds have been issued but have not been allocated, what exactly is happening in the meantime? When were they issued?
§ LORD ARNOLD
That may be so. I have no doubt that there is some explanation, but, taking the literal words of the Secretary of State for the Colonies, they seem to call for some explanation, and if the noble Earl will be good enough to say something on that point I shall be glad. The second question which I should like to ask relates to subsection (4) of the first clause of the Bill, which lays down that—The Treasury shall lay before both Houses of Parliament a statement of any guarantee given under this Act, and an account of any sums issued out of the Consolidated Fund for the purpose of any such guarantee as soon as may be after any such guarantee is given or any sum is so issued.What exactly does that mean? What is the procedure going to be? The noble Earl has made it plain that the £30,000,000 is really made up of two sums, broadly speaking, £18,000,000 being for effecting the transfer in due course of tenanted lands and £12,000,000 relating 164 to untenanted lands. I presume that the transfer of the tenanted lands will, at any rate to a large extent, take place within a comparatively short space of time, but your Lordships will be aware that the procedure with regard to untenanted lands will be a prolonged one. What exactly is meant by this subsection? How often are these statements going to be laid before both Houses of Parliament, telling us how this matter is going on? Obviously, they cannot be laid every time some small issue is made, and I shall be interested to know at what stages it is proposed to inform the Imperial Parliament of the course of events under this guarantee.
Another question relates to what I may call the time limit of the Bill. In the first clause it is laid down that the securities are to be issued within a period of eight years from the passing of the Act. I do not at all quarrel with that period of eight years. I have already indicated that, so far as untenanted lands are concerned, a very considerable time will be required to put the process through, and the only doubt that I have in my mind is whether the period of eight years is sufficiently long. I should like to know exactly how it has been arrived at, because it would be extremely unfortunate if it were to prove that this is not to be the last Bill of this kind, but that later on, because the period of eight years was not sufficiently long, still another Bill had to be brought before the Imperial Parliament. If the period of eight years is ample—and I should imagine that it would be very much more than ample—for the transfer of tenanted lands, I should like to have some assurance that it really is fully sufficient as regards untenanted lands.
I have only one further point to make. I noticed that the Minister who introduced this Bill in another place said that the Government was merely asking Parliament to do that which it had often done before—namely, to back Dominion credit by Imperial credit, without any real risk of loss to the Exchequer. So far from the Imperial Government having often backed Dominion credit, as a matter of fact it has hardly ever done so. There is an impression in a great many minds that this has been done. A great many people, I think, suppose that Dominion and Colonial loans are backed by the Im- 165 perial guarantee. But they are not; it has very rarely been done. It is true that it was done, I think, in the case of Mauritius, and also, many years ago, in the case of the Transvaal, but it is a very rare occurrence indeed. I do not say this in order to suggest for one moment that the Dominion and Colonial loans are not good securities. I think they are excellent securities—in fact, they are so good that I think it makes very little difference whether they are guaranteed or not. Nevertheless, in order that the position may be rightly understood, I think it is desirable to point out that we are not being asked to do something which has often been done before, but something which, as I say, has very seldom been done before. But although we are being asked to do an exceptional thing, I entirely agree that in all the circumstances this is a proposal to which your Lordships should assent. I need not, I think, take up any more time, but I should appreciate it if some information could be given me upon the two or three points which I have raised.
§ LORD CARSON
My Lords, this is a Bill for which, so far as I am concerned, I am grateful to the Government. It would not be in order to discuss the Irish Free State Land Act which has been passed by the Free State Parliament, but I may make, in passing, the, one observation that it was a confiscatory measure—that is to say, it provided for the compulsory sale and purchase of land at an arbitrary price that was nothing at all like the market value of the land in question, and gave a very small composition for arrears of rent which the Free State Government have been unable or unwilling to allow to be collected. The consequence was that the landlord or landowner, as the case might be, having obtained under the Free State Act a very diminished sum for the land that he was compelled to part with, had to take it in Irish Bonds at four and a-half per cent., though I suppose that if they were put upon the market in the present state of Irish finances they would probably be worth £30 or £40.
I accordingly welcome this Bill because it puts the whole credit of this country behind the Irish Parliament. If that had not been done it would have been complete confiscation. The landowner is in 166 the position of having to pay for his mortgages five per cent., or six per cent., or whatever the percentage may be—many of them, if not all, long-existing mortgages which were entered into in the day6 of British rule in that country—and of course the wretched landowner would be obliged to give them their full pound of flesh in paying off, out of these Irish bonds, the debts which were due. This Bill, therefore, is a partial relief to the landowners in Ireland. It is, I think, the merest act of justice, considering that it was this country which put the landowners into the position in which they are of being absolutely at the mercy of those who desire to despoil them, and I think the least that this country can do is to say that, whatever bonds are given, this country will back them and see that they become what they virtually become, a British security.
My noble friend who introduced this Bill so clearly said there would be no liability—that the great probability was that there would be no liability upon this country or the taxpayers of this country. I do not take that view at all. I look forward to the day when the instalments will not be any longer paid as a matter of policy, and when this country will naturally and rightly be called upon to pay the interest upon these bonds. One would really think that the dealings of this country with regard to Irish land had never cost this country a shilling. In reality, on the so-called peaceful settlement of Ireland you gave a present to Ireland of £131,000,000 which was to have been paid, as these bonds are to be paid, out of the instalments paid by the tenants. When it came to a peaceful settlement £131,000,000 of the British taxpayers' money was, at a time like this, when your own farmers and landowners are hardly able to carry on, a more fleabite, and so by a mere stroke of the pen you gave up all interest on the money and said you would get it out of your own taxpayers. You said: "It is very little to pay for peace in Ireland, and so we will blot out the whole thing and pay the tax ourselves, and the instalments can go to the Free State or the other Government in Ireland."
Not only did you do that, but, this being a British security now, in order that you may do another good turn to the Free State, who have nothing whatever to do with these bonds, you send 167 the money over to the Bank of Ireland in order that they may distribute the dividends on this British stock, so as to enable the Free State Government to deduct their 5s. Income Tax in addition to the 4s. 6d. Income Tax deducted over here. I myself, I am glad to say, have only a very small sum in the guaranteed land stock, but I am charged each half year on my dividend 9s. 6d. in the £ Income Tax, although it has no more to do with the Free State than Consols have at the present moment, and I have no more to do with the Free State than has any other individual in this House. I think the case is clear for the passing of this Bill. I do not think that this country need in the slightest degree squirm about another £30,000,000, after giving £131,000,000. Why should there be any end to what this country should do to back up the finance of the Free State? It is the child of this country, and it is quite the natural thing to do. It is a welcome Bill because it will at any rate benefit a few owners of property, who have been perhaps more hardly dealt with than anybody else in Ireland.
That the Bill is a pressing one anybody who knows anything about Ireland is aware, because the land has practically been taken possession of and the rents are taken by the State. I am glad to say that I have only one rent in Ireland, and it is one out of which I do not live. It is a head rent, and ever since the Treaty I have not had a penny of it. I am told that the Irish Government receive it all, and I suppose that most owners of head rents are in the same position. There may be some hope that when this matter has been regularised somebody will get something—those, at all events, who have to live, or have hopes of living, out of what they get from land in Ireland. If this Bill is delayed then, of course, the mortgagees and others who have charges will be kept longer out of their money, and interest will accumulate until, naturally, there will be nothing left at all for the owners. Therefore, I warmly support the Bill, and I hope that we shall have other Bills brought in by this Government for the relief of those suffering from the policy of this country in Ireland.
THE EARL OFONSLOW
My Lords, I sun very grateful for the reception which you have been good enough to give to this Bill, and I wish to answer one or two 168 questions which were put to me by the two noble Lords who have spoken. It is true, as the noble Lord opposite observed, that this Bill is to enable the completion of land purchase in Ireland to be brought about. Then he asked whether there was any arrangement with the Free State, and I should like to quote the Memorandum explaining the Financial Resolution, which was laid upon the Table in another place and which I see is upon the Table of this House. The end of the second paragraph of that Memorandum says:—This undertaking was given in view of the obligations undertaken by previous Governments prior to the Treaty to facilitate the completion of land purchase in Ireland.That is the answer to the question of the noble Lord. I have also to say that it is perfectly true that this issue will not be a public issue in the Free State, but the landowners, those who part with their estates, will receive these bonds as the purchase money, and, of course, in time, and naturally and perhaps very shortly, these bonds will be on sale in the open market.
The noble Lord further asked me a question as to the issue of these bonds. I should like to explain exactly what has happened. About £150,000 has been placed to the credit of various estates—not of all the estates, but of the estates transferred to the Land Commission. This sum cannot be dealt with or allocated to the parties concerned until the bonds have been issued, but the owners may draw 4½ per cent. on the bonds, although they are not able to touch the capital. Then, as regards the question of the eight years, that matter has been threshed out between the authorities on both sides—the Treasury authorities here and the Free State authorities—and I can only say that it is considered that eight years would be a reasonable delay in which to obtain completion of the transfer of untenanted land. I understand that the transfer of tenanted land will be through in three years, but it is thought that the next five years should be given for the acquisition of untenanted land. That has been decided after consideration as to the reasonable length of time necessary. Of course, it may take longer to distribute it to the various new owners, but the actual acquisition ought to be completed in eight years.
169 As regards Clause 1 (4), about which the noble Lord, Lord Arnold, asked me, and which says thatThe Treasury shall lay before both Houses of Parliament a statement of any guarantee …and so forth, probably the guarantee will be given periodically to cover the issues required over reasonable periods. I believe that is what is contemplated. As regards the question of Dominion terms, those are embodied in Clause 1 (2) of the Bill, and I am told that those are the usual terms which are put into any British Bill guaranteeing a Dominion loan. I do not know whether there are many or few, but it is the usual practice, if the British Government guarantees a Dominion loan, to put in those conditions.
§ LORD ARNOLD
My point is that, as a matter of fact, it is rarely done. I believe that it has only been done about twice in the history of the country.
THE EARL OF ONSLOW
I am not going to contradict the noble Lord. No doubt he is quite right, he has studied the question; but I only want to point out that that is the usual practice. The noble and learned Lord, Lord Carson, asked me whether the mortgages would be paid off in bonds. As soon as the bonds are allocated they will be utilised for the payment, of mortgages, and thereby relieve the owners, who may have to pay heavy charges up to seven per cent. The whole thing will be cleared off by the bonds. The noble and learned Lord said he thought it was probable that a liability would occur. He did not agree with me when I said I thought we should be unlikely to be involved in financial liability in regard to this Bill. Of course, if we are involved in financial liability we shall have to meet it. But I should like to say, as has been said in another place by my right hon. friend, that at any rate we have the security of the solvency of the Irish Free State as a British Dominion. I should like to say also that the Irish National Loan, issued at 95, now stands at 92⅞. There is one last point which I should make, as regards the £131,000,000 already spent in land purchase. The purchase annuities in the Free State are being paid over, and will continue to be paid over, to us who made the original loan. I think those are all the points which have been raised. If there are any 170 others I should be glad to answer them, if possible. I am very grateful to your Lordships for the way in which you have been good enough to receive this Bill.
§ On Question, Bill read 2a: Committee negatived.
§ Then (Standing Order No. XXXIX having been suspended), Bill read 3a, and passed.