IRISH LAND PURCHASE ANNUITIES.

HL Deb 13 December 1926 vol 65 cc1535-49

LORD DANESFORT

had the following Notice on the Paper:—To ask His Majesty's Government whether they will state the total capital moneys now outstanding and payable to the British Government for land purchase annuities in respect of lands situated in the Irish Free State, and the amount of the sums which should be collected annually by the Irish Free State in respect of such purchase annuities and paid over to the British Government; what are the actual amounts paid over to the British Government by the Irish Free State in respect of such purchase annuities in each of the last four years; whether they will give the dates and particulars of the Agreements between the British Government and the Irish Free State as to the collection and payments of such purchase annuities, and will lay such Agreements and, in particular, the Agreement of 12th February, 1923, on the Table of the House; and when a further statement of the financial position between the British Government and the Irish Free State Government will be issued in continuation of Command Paper No. 2482 of 1925; and to move for Papers.

The noble Lord said: My Lords, I beg to ask the Question which stands in my name on the Paper and to move for Papers. This Motion raises questions of great importance to the British taxpayer and my object is to elucidate the financial position as between the British Government on the one hand and the Irish Free State Government on the other. I hope that my noble friend Lord Clarendon, who, I understand, is to reply for the Government, will be able to give me some satisfactory assurance. The British Government have been, and still are, and rightly so, sedulous to discharge all their obligations and Debts, whether internal or to foreign Governments, and they have had their reward in the fact that our credit stands at the highest possible point. But while careful to pay their Debts the Government have not been so equally persistent or successful in obtaining the Debts due to them and in the matter of the Debts due from the Irish Free State the British Government have been extraordinarily generous need not, however, enlarge upon that topic at the moment.

As regards the land purchase annuities there seems to have been some little misapprehension both in this country and in the Irish Free State. As your Lordships are aware, the British Government, under a series of Land Acts passed before the establishment of the Free State, advanced very large sums of money in cash, considerably over £100,000,000, to enable the tenants of Irish land to purchase their holdings, the tenants on their part undertaking to repay capital and interest by a series of land purchase annuities extending over a large number of years. When the Free State Government came into existence they undertook to collect these land annuities on behalf of the British Government and to pay over the proceeds to the British Exchequer. Some of the Agreements affecting this matter have been published and laid before Parliament and some have not, and it is in reference to one or two of those that I desire to obtain Papers to-day.

So far as I know, the first Agreement made between the British Government and the Irish Free State which deals with this matter is a document headed: "Heads of Working Arrangements for Implementing the Treaty," the reference to which is Command Paper 1911 of 1923. That document is dated January 24, 1922; but for some reason which I have never yet heard explained that document was not laid before Parliament until about a year and a half later, in July of 1923. Article 42 of that Agreement provides that pending a definite arrangement for capitalisation the Irish Government is to be responsible for, amongst other things, the collection of land purchase annuities and the handing over of the proceeds to the British Exchequer.

The next document that bears upon this question is an Agreement between the British Government and the Free State Government dated February, 1923. This Agreement, which dealt with land purchase annuities and a large number of other exceedingly important financial matters, has never been published to this day. For nearly four years it has been kept, I will not say secret, but it has not been disclosed to either House of Parliament. Why that has been done I really do not know and I venture to suggest to your Lordships that the keeping back of a vitally important financial arrangement made between this country and the Free State is a matter that requires explanation. I should have thought that Parliament was entitled to have Papers relating to finance of that magnitude laid on the Table at once so that the public and members of Parliament may know what has been going on. It may be suggested—I think it is suggested—that this Agreement is superseded by a later one. I do not know whether that is so or not, but even if it be so I respectfully suggest to your Lordships that it does not take away the right of your Lordships' House to demand to see it, to see what arrangements were made in February, 1923, and to decide for ourselves whether those arrangements have been properly brought to an end or not. I hope that His Majesty's Government will, as a matter of propriety and constitutional right, see their way to lay this Paper on the Table. If my noble friend says that it would cause expenditure to the taxpayer to print and circulate it, may I suggest a simple and cheap way of getting over the difficulty, which has often been adopted in the other House and I see no reason why it should not be adopted here, and that is lay a copy of it in the library of both Houses? That would cost nothing at all and members who are interested in the matter could look at it themselves. But I do ask your Lordships to say that this is an important matter—the right of Parliament to see what is being done by their representatives on these large financial questions.

Although the Agreement itself has not been published, by courtesy of the Under-Secretary for the Dominions I have been recently furnished with an extract from the Agreement so far as it relates to Irish land purchase annuities and the extract states:— The Free State Government undertake to pay at agreed intervals to the appropriate fund the full amount of the annuities accruing due from time to time, making themselves responsible for the actual collection from the tenant purchasers. Your Lordships will note those words "to pay the full amount … due." The payments by the Free State in respect of these land purchase annuities were allowed to fall very considerably into arrear. That appears from a Paper which was published in 1925 headed "Further statement of the financial position between the British Government and the Government of the Irish Free State in 1924–1025." The reference to the Paper is Command Paper 2482 of 1925. It appears from that Paper that on April 1, 1925, the estimated amount outstanding as due from the Free State in respect of these land annuities was something over £1,000,000 and that sum was reduced by subsequent payments of £750,000 to about £260,000. It further appeared from that Paper that from the amount so repaid, the Free State Government claimed to deduct a sum for Income Tax in the Free State. They claimed to deduct that £260,000, or whatever it was, for income Tax, although, as I have already indicated, they had agreed in February, 1923, to pay the full amount over. I confess I do not know why that amount is claimed, but perhaps my noble friend will be able to tell us.

The documents that I have mentioned are the only Papers or Agreements on the subject of which, as far as I am concerned and I think the House is concerned, there was no cognisance until the time when my Motion was put on the Paper. Since my Motion was put on the Paper, in November of this year, a very important Agreement has been laid on the Table and published. It is headed "Heads of the ultimate financial settlement between the British Government and the Government of the Irish Free State." For reference I may tell your Lordships that it is Command Paper 2757 of 1926. Again, in regard to this sum, seven months or more overdue, the same practice seems to have been followed of keeping back from Parliament this Agreement affecting the financial relations between the two Governments. I confess I do not quite understand why this Agreement was not published before, but perhaps my noble friend will be able to explain that.

Clauses 1 and 2 of that Agreement deal with the question of land purchase annuities. The first clause reads thus:— The Government of the Irish Free State undertake to pay to the British Government at agreed intervals."— I suppose that would be half yearly intervals— the full amount of the annuities accruing due from time to time under the Irish Land Acts, 1891–1909, without any deduction whatsoever whether on account, of Income Tax or otherwise. I am glad that claim to deduct Irish Income Tax has been abandoned. The second clause says:— The Government of the Irish Free State agree to pay to the British Government prior to March 31, 1926, the sum of approximately £550,000, being the amount hitherto withheld by them in respect of Income Tax on annuities payable under the abovementioned Acts. Perhaps my noble friend will be able to tell us whether that £550,000, which was agreed to be paid prior to March 31, 1926, has been paid. I hope it has.

I will not read my Questions on the Paper because they are rather long and my noble friend knows what I am asking for, but there are one or two supplemental Questions that I propose to ask of which I have given my noble friend notice. They arise under this Agreement of March 26 from which I have just been reading. The first Question arises under Clause 6, which says this:— Subject to the provisions of this Agreement the British Government undertake to make no further claim— this is a somewhat important concession so far as I can gather— in respect of any portion of the value of property taken over by the Irish Free State belonging to British Government Departments whose administration and Powers were. … excluded from transfer to the Irish Free State Government. How much that concession amounts to I should be glad to know because, by the Agreement of January 24, 1922, to which I have already referred, the Free State undertook to pay their proper proportion of the military and police establishments or other property handed over to the Free State Government, and the value of that property, as estimated in the Paper of 1925 to which I have referred, is over £5,500,000. I should be glad if my noble friend would tell me what proportion of that £5,500,000 the Free State Government ought to have paid under the Agreement of January, 1922. In other words, what was the proportion of this very large amount of property which they contracted in that month to pay to the British Government? My noble friend will perhaps also be able to tell your Lordships why the claim of the British Government to this payment, amounting undoubtedly to a large sum—it may ran into millions for aught I know—was abandoned and why we are not going to ask for this payment?

There are only two other short points with which I will trouble your Lordships. One is under Clause 7 of this Agreement, which runs: The Irish Free State Government agree to pay to the British Government the sum of £275,000 in full and final discharge of all claims made to the Compensation (Ireland) Commission in respect of damage done prior to July 11, 1921, to property belonging to any of the British Government Departments. … That is a considerable sum of money and I should be glad to be assured by my noble friend that that money has been paid. The last point to which I will refer is in Clause 8. Clause 8 runs thus:— The British Government waive all claims against the Government of the Irish Free State for the refund of any portion of the sums paid by them under Section 1 of the Irish Railways (Settlement of Claims) Act, 1921. I venture respectfully to ask what was the amount of the claims by the British Government which were so waived, and why was it found necessary to waive them? These are the facts which are before me and I thought it right to bring them before your Lordships' House so that we may know how we stand with regard to the Irish Free State. I urge the Government not to keep back any longer the Agreement of 12th February, 1923. It would be an evil precedent if an Agreement affecting enormous sums of money between us and any other Government—the Free State Government or any other—were kept from Parliament for nearly four years with no indication given as to its points and if we were then told at the end of these four years: "Oh, it is unnecessary to publish such an Agreement because it is now superseded." I beg to move.

THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR DOMINION AFFAIRS (THE EARL OF CLARENDON)

My Lords, as your Lordships will observe, my noble friend's Question as printed on the Paper is somewhat lengthy. I think it would be for the convenience of your Lordships' House if I divided that Question into compartments and dealt in my reply with those compartments one by one. I do not wish to detain your Lordships at unnecessary length in answering my noble friend's Question, but as I think there is a certain amount of misconception in regard to this whole question of Irish land purchase annuities it would be well, I think, this afternoon if I endeavour in the reply I have to make on behalf of His Majesty's Government to clear the air as much as possible.

In the first part of my noble friend's Question he asks whether I will state the total capital moneys now outstanding and payable to the British Government for land purchase annuities in respect of land situated in the Irish Free State. In that precise form the Question undoubtedly does disclose a certain amount of misconception because the obvious inference which one must draw from those words is that there is a capital sum owing by the Free State Government to the British Government. This, however, is not the case. In Clause 1 of the "Heads of the ultimate financial settlement," which is now upon the Table of your Lordships' House and is Command Paper No. 2757, it is shown clearly what is payable by the Irish Government to the British Government.

I will quote from that clause. It says— … the full amount of the annuities accruing and due from time to time under the Irish Land Acts, 1891–1009. The approximate total amount of capital advances on which the annuities are based is a sum of £90,554,000. But against this sum must be set approximately a sum of £7,330,000, which represents the value of the proportion of the securities held by the National Debt Commissioners which may be deemed to correspond with the amount outstanding in the Irish Free State. The approximate annual amount of the annuities which are now payable in regard to these advances is £2,996,000. The general scheme embodied in legislation consequent upon the Articles of Agreement of December, 1921, was that the government of the area which ultimately became the Free State was handed over to the Provisional Government and by them in turn to the Irish Free State as a going concern with all its assets and liabilities as upon a given date. In accordance with this principle the Irish Free State became entitled to collect all arrears of taxes which had accrued at the date of transfer, notwithstanding the fact that they were for a period prior to that date. Similarly the Provisional Government and subsequently the Free State Government itself became liable for all Debts owing by the transferred Government Departments within their area.

It is quite clear, and it was admitted by the Irish representatives, that these annuities were not in the ordinary sense of the word assets of the Government of the area, inasmuch as they were simply repayment of capital and interest on loans to tenants. It was agreed therefore that when these sums were collected the practice should be continued of paying them to the British Government. Your Lordships will find the Agreement in paragraph 42 of the "Heads of Working Arrangements for Implementing the Treaty," to which my noble friend has referred, which were drawn up in January, 1922, and have been laid upon the Table of your Lordships' House as a Command Paper No. 1911. Statutory force is given to these arrangements under Article 4 of the Provisional Government (Transfer of Functions) Order, 1922, Statutory Rules and Orders, 1922, No. 315.

But there is another point which I should like to mention before I pass from the first part of my noble friend's Question with regard to the collection and payment of these annuities. Inasmuch as these annuities were devoted to the payment of interest on Irish land stock and to the service of the Sinking Funds set up under the various Acts it was essential that the full amount should be available for the National Debt Commissioners whether these sums had or had not been paid. For this purpose a guarantee fund was established into which any annual deficiency was paid. When the Irish Free State took over the collection of the annuities they undertook and agreed to continue that practice—namely, to pay to the British Government the full amount of these annuities whether or not, they had actually received the annuities themselves.

Now I come to the second part of my noble friend's Question, in which he asks what are the actual amounts paid over to the British Government by the Irish Free State in respect of such purchase annuities in each of the last four years. As I have already stated, the sum of £2,996,000 is the approximate total for the current year, but the actual amount varies, being liable to an increase on account of further capital advances made for the completion of pending purchase agreements under the Acts of 1903 and 1909, and to a decrease on account of decadal revisions under the Act of 1891 and on account of the redemptions of annuities by annuitants. The actual amount that is payable by the Irish Free State to the British Government is assessed by the National Debt Commissioners and their decision is communicated to the Irish Free State Government.

Coming to the actual amounts that have been paid over by the Free State Government to the British Government, these are the figures: For the year ending March 31, 1923, the sum of £2,712,200 has been paid over; for the year ending March 31, 1924, a sum of £2,181,600; for the year ending March 31, 1925, a sum amounting to £2,663,600; and for the year ending March 31, 1926, a sum of £3,995,900. Your Lordships will have noticed that there is a certain discrepancy between the figures that I have just given. The reason is that until quite recently there was a dispute, or rather a difference of opinion, as to whether the Irish Free State were entitled to deduct Income Tax from these annuities. This difference of opinion has, however, been settled. It was settled in March of this year, and your Lordships will find that settlement set out in Command Paper No. 2757, which gives the "Heads of the ultimate financial settlement" between the two Governments. By Article 1 of that settlement the Free State undertake to pay to the British Government the full amount of these annuities without any deduction whatsoever; and by Article 2 they agree to pay the whole balance of the arrears that have been withheld in respect of Income Tax. All these arrears have now been paid, and they account for the excess over the average of the amount paid in 1926, just as the withheld Income Tax accounts for the deficiency in previous years. The total amount has been paid down to March 31 of this year, and I should like to inform your Lordships that this total amount coincides with the total amount that has been notified by the National Debt Commissioners for the whole of that period taken together.

I now pass to the third part of my noble friend's Question, in which he asks whether we will give the dates and particulars of the Agreements between the British Government and the Irish Free State as to the collection and payment of these purchase annuities. I have already referred to the heads of working arrangements for implementing the Treaty, but with your Lordships' permission I should like to read Clause 42 of that Agreement. It runs as follows:— That, pending a definite arrangement for capitalisation, the Irish Government be responsible for the recovery of payments due in respect of local loans and the collection of land purchase annuities, and for paying over the proceeds to the British Exchequer. … That Agreement laid down a principle, but it had no statutory effect.

The statutory provisions are, however, contained in Article 4 of the Provisional Government (Transfer of Functions) Order, to which also I have previously referred. Let me just read to your Lordships the words of that article:— All sums collected by the Provisional Government after the day of transfer on account of purchase annuities payable in respect of land situated in Southern Ireland, including any existing arrears thereof, shall be paid into their Exchequer. Subject to any arrangements which may be made under this Order there shall from time to time be paid out of the Exchequer of the Provisional Government into the Irish hand Purchase Fund or Account, or other appropriate fund or account, such sums as may after the day of transfer be required to discharge the liabilities of those funds or accounts in respect of interest on stock or advances issued or made in connection with land purchase in Southern Ireland and to meet the corresponding sinking fund charges. Any question which may arise as to the sums to be so paid out of the said Exchequer or as to the times at which payments are to be made shall be determined by agreement between the Provisional Government and the British Government. By this Order, as your Lordships will observe, provision was made for the settlement of any question that might arise between the two Governments. Such an Agreement has now been made and appears in Paragraphs 1, 2 and 3 of the "Heads of the ultimate financial settlement" between the two Governments. I do not know that I need quote those paragraphs, because my noble friend Lord Danesfort, in asking this Question, has already dealt with the first two.

I come now to what I believe will be the only point of difference between my noble friend and myself—to the penultimate paragraph of his Question, in which he asks us to lay upon the Table the Agreement of February, 1923. First of all, let me say with regard to that Agreement that it was a purely provisional and temporary one, dealing, amongst other things, with the collection of annuities in the Irish Free State and the payment thereof to the British Government for the credit of the appropriate fund. May I tell my noble friend that this Agreement of February, 1923, contains nothing that is not fully consistent with the general principles laid down in the "Heads of Working Arrangements," with the Transfer of Functions Order or with the final arrangements embodied in the Agreement of March last. Therefore now that the final Agreement has been made between the two Governments this document of February, 1923, has been superseded. If it will help my noble friend at all, I would like to give him my personal assurance that I have been through these two documents only this morning in the Dominions Office, and I can assure him that what I have said in regard to them is absolutely true. With regard to the last, part of the Question, where my noble friend asks when a further statement of the financial position between the British Government and the Irish Free State Government will be issued in continuation of Command Paper No. 2482 of 1925, I would inform him that this Paper is in course of preparation. We anticipate that it will be ready very shortly, and will in a short space of time be presented to Parliament I apologise for keeping your Lordships for so long, but I have to deal with the three supplementary Questions which my noble friend has addressed to me. I come now to those Questions, and first of all I should like to thank my noble friend for his courtesy in having given me private notice that he was going to raise them. The first is this: What was the amount of the claim against the Free State which is waived by paragraph 6 of the Agreement of March 19, 1926? I am sorry to have to tell my noble friend that I fear it is impossible for me to answer that Question. As, in the case of the claim to a contribution to the Public Debt of the United Kingdom, under Article 5 of the Articles of Agreement, there was also a counter-claim against the Irish Free State to be taken into account, so here the claim of the British Government was to the value of certain Government property after admitting the claim of the Free State Government to a certain proportion, not precisely defined, of the whole. The claim is based on paragraphs 18 to 22 of the "Heads of working arrangements," which provided, first of all, that the barracks and establishments necessary for police administration in normal times should be transferred to the Irish Government; secondly, that in regard to military and police establishments and their equipment not covered by the above provision, the proportion of the actual buildings or their value which should be recognised as the property of the Irish Free State should be arranged in the ultimate financial settlement; and, lastly, that surplus moveables should be disposed of through the medium of the Disposals Board, unless for any reason the Free State Government should desire to secure them at a valuation.

It would be necessary, therefore, in order to arrive at any net value of the British claim, to determine between the two Governments what were the police, establishments and barracks, and so forth, necessary in normal times. The whole of these would have to be transferred in any case, as of right, and the British Government would therefore have to waive any claim as to any share in the value thereof. Secondly, it would be necessary to determine the value of the remaining police establishments and equipment, likewise to determine the value of the remaining military establishments and equipment, and, finally, it would have been necessary for the two Governments to agree on some principle of apportionment as to the value of these establishments and equipment. The "Heads of working arrangements" themselves do not lay down any precise basis of apportionment in regard to this second class of property. Numerous other considerations have to be taken into account. For instance, some of the property was held upon tenures involving obligations on the part of the lessee, other property had been destroyed and compensation therefore is included in the sum of £275,000 mentioned in paragraph 7 of the statement of financial settlement between the two Governments. All these things would have had to be taken into account, and therefore although the figure of £5,668,000 was inserted in Part II of the statement of the financial position between the two Governments, it must be regarded as a rough valuation only of the whole of the property which was left behind, without any deduction whatsoever in respect of the items I have just enumerated.

Now I come to the second supplementary Question which my noble friend asked me. He asked whether the sum of £550,000 mentioned in paragraph 2 of the Agreement, and the sum of £275,000 mentioned in paragraph 7 of the ultimate financial Agreement, have been paid. The answer to the Question as to the first of those two sums, namely £550,000, is in the affirmative. That sum was paid by the Irish Free State on March 31 last. With regard to the second sum, that has not been paid yet, but credit has been given for it in the outstanding account which exists between the two Governments. In the Second Reading debate which took place in this House on December 9 last, on the Ireland (Confirmation of Agreement) Bill, my noble friend the Secretary of State for India, Lord Birkenhead, stated, in dealing with the financial provisions of the Agreement, which was confirmed by that Bill, that whereas Ireland had agreed to pay Great Britain the sum of £150,000 in cash, and had also agreed to pay her the sum of £250,000 a year for a period of sixty years, Great Britain owed Ireland the sum of £900,000, and that it was agreed that that sum of £900,000 should be set off in part payment of the sums that Ireland had agreed to pay.

This arrangement is further referred to in the Supplementary Estimate for Compensation (Ireland), Unclassified Services. Vote 4, which was presented to Parliament in March of this year. Both the payment by Ireland under the December Agreement, and the £900,000 owing by the British Government to Ireland, were payments arising out of compensation for damage to property, and inasmuch as the £275,000 also arose in the same way, it was thought only right and proper that it should be brought into the account in the same manner. No cash, as I have already informed my noble friend, has passed in regard to this, but the date on which cash will be payable by Ireland under the December Agreement has, to this extent, been brought forward.

Now I come to the third supplementary Question which my noble friend has asked me. He asks what was the amount of the claims which were waived by Article 8 of the Agreement. The amount is £1,500,000. This is one half of the total of £3,000,000 which was payable to the Irish Railways under the Irish Railways (Settlement of Claims) Act, 1921, Section 1. The other half had been paid previous to the change of government in Ireland itself. The ground upon which that claim was brought into the settlement was that it was open to argument as to whether, as a matter of law, there was a liability upon the Irish Free State Government, and whether the liability was transferred under the enactments setting up the new Government. The contention of the British Government was that this liability was so transferred. The contention of the Irish Government was that, the liability having arisen out of the interference by the British Government with the Irish railways under the powers that they could exercise under the Defence of the Realm Act for the purposes of the War, this liability was not connected with any function transferred to the Irish Government.

They further contended that, as matter of equity, they never contemplated that this remnant of the War, unaccompanied as it was by any corresponding asset of government, would be transferred, any more than that they should be called upon to pay disability pensions or other obligations to ex-Service men, all of which obligations were purposely and expressly withheld from the transfer under Article 9 of the Order in Council of April 1, 1922. And when the second moiety, that is to say, the second £1,500,000, became due under the Act, on January 15, 1923, it was very doubtful whether the Irish railways themselves would not have had a claim under a Petition of Right to the British Government for a payment of this sum if it had not actually been paid when it became due. The British Government accordingly paid this sum without prejudice to their claim that the payment should be treated as part of the Public Debt of the United Kingdom for the purposes of Article 5 of the Articles of Agreement, and the repeal of Article 5 in toto has formally deprived the British Government of any claim to any right of repayment hereafter.

I think I have covered all the ground that my noble friend has explored, and answered all the Questions which he has put to me. I hope that he will consider that in the main the reply that I have been able to give him this afternoon is satisfactory. In regard to the 1923 Agreement, I hope the arguments I have used in refusing publication of this will have been of such a nature as to have convinced him that the publication is unnecessary.

LORD DANESFORT

My Lords, I thank the noble Earl very much for his careful and clear statement of these financial matters—a statement which, on the whole, appears to me satisfactory, subject to this, that I am really very greatly disappointed to find that in Article 7 and Article 8 of this last Agreement we have given up the claim to very large sums of money—in the case of Article 7 to a portion of £5,500,000, the precise amount of which my noble friend cannot give me, and, in the case of Article 8, to £500,000—on grounds which, at any rate to me, were not at all convincing, and which, so far as I remember, were not referred to when we were discussing the repeal of Article 5 in December last. In view of what my noble friend has said as to the contents of the Agreement of February, 1923, and of his personal assurance—which, of course, I absolutely accept—that the Agreement contains nothing which is not entirely consistent with the Agreements which have been placed before Parliament, I shall not press for the publication of that Agreement of February, 1923. But I do hope that in future, whenever important financial Agreements are made between the Irish Free State and this Government, or between any other Government and this Government, they will not be kept back from Parliament for four years, hidden away from every one who is interested in these matters; but that what I conceive to be the constitutional right of Parliament to know all the financial matters in which the Government are engaged will be strictly observed. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.