PUBLIC WORKS LOANS BILL. (Hansard, 23 July 1925)

§ THE EARL OF PLYMOUTH
My Lords, this is a Bill which comes up annually to your Lordships' House about this period of the Session. It is unnecessary for me now to trouble your Lordships with the details of it. I will only say that any point which any of your. Lordships wishes to have explained I will endeavour to explain. I beg to move.

§ LORD ARNOLD
My Lords—

§ THE MARQUESS OF SALISBURY
May I interrupt the noble Lord. If he desires to discuss the Bill we will not take it to-night. I am only studying the noble Lord's own convenience.

§ LORD ARNOLD
I am in the hands of the noble Marquess and the House. I only want to put one point. It is a very complicated point, and it might he wearisome to a larger House, and I can conceive that this might be a proper moment to put it. It would only take two minutes. If, however, the noble Marquess wishes me to adjourn the matter, I do not mind doing so.

§ THE MARQUESS OF SALISBURY
I must not dictate to the noble Lord. Tie will take his own course.

§ LORD ARNOLD
I will be as brief as I can, and it will not take long to put the point. It is a point that was raised in another place, and the position is one which should be brought into a more satisfactory state. The matter concerns the terms upon which the money which is advanced to the Public Works Loans Commissioners is raised. The position is not clear, and without direct official information it is impossible to know exactly what happens. It looks to me as if most of the money which is mentioned in this Bill is advanced by the National Debt Commissioners to the Public Works Loans Commissioners out of savings bank money and private savings bank money. If that is so, the particular point scarcely arises at present, but if it be the case that at some future period the money is advanced not out of those monies but from local Loans monies, a different position arises. The local Loans money has to be raised under Clause 8 of the Local Loans Act of 1887, which lays down that that money must be raised at a 3 per cent. rate of interest. In 1887 financial conditions were very different to what they are now, and the question does arise whether that particular clause, which has a very binding effect, ought not to be amended.
The point that I wish to put to the Government is whether before next year that matter will be considered by the Treasury. It is rather a long story if I were to go through the whole of it, and I will not do so in view of the lateness of the hour, but I do think the matter is one that should be considered in the interests of the local authorities who borrow this money. The effect of the clause, if it be the case that local Loans money is used for this purpose, may be to make the borrowing rather expensive. Local Loans are irredeemable, and, there- 401 fore, if money has to be advanced in fact upon present terms it might well happen that in future years, when money may have become cheaper, the various local authorities will find themselves saddled with a fairly high rate of interest. The rate at present is 4¾ per cent., and that rate of interest might be lightened as time goes on if this clause were amended so that money might be borrowed on terms which would admit of redemption at some future period, if it should be to the advantage of the ratepayers to redeem then. The position could be made to the advantage of the ratepayers in one way or another as time goes on if money becomes cheaper. The larger local authorities have such a redemptive clause in most of their Loans in these post-War days, and I should like the Government to consider before next year whether the time has not come, not only for these reasons but for others, to revise the clause in the Act of 1887. I am sure the noble Lord will put that point to the Treasury. It was put in another place, but I do not think the reply went as far as it might have done. If I am right in assuming that this could be done, it would work in the direction, as time goes on, of a relief of the rates of certain local authorities, which is something that we all desire to see.