HL Deb 22 November 1927 vol 69 cc143-52

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF KINTORE in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3:

Registration.

(2) Upon application being made in accordance with the provisions of this Act for the registration of any fund, the registrar shall, if he is satisfied that the fund is qualified for registration, register the fund and the rules thereof, and shall enter in the register the names and addresses of the trustees.

(6) Such fees shall be payable in respect of the registration of funds, amendments of rules and changes of address, and in respect of the issue of certificates under this Act as may be prescribed by regulations made by the Treasury.

THE LORD CHANCELLOR (VISCOUNT CAVE) moved, in subsection (2), after "in the register the," to insert "address of the fund and the." The noble and learned Viscount said: This is a drafting Amendment. Indeed I may say that all my Amendments are either pure drafting or slight improvements in form, and I need not trouble the House with a speech in respect of each of them.

Amendment moved— Page 2, line 23, at end, insert ("address of the fund and the").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Amendment moved— Page 3, line 22, after the first ("of") insert ("name or").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 agreed to.

Clause 5:

Accounts and reports of registered funds.

5.—(1) The trustees of every registered fund shall, once in every year, cause to be prepared a statement of accounts and balance sheet of the fund which shall be audited by an auditor, and shall, at least once in every five years, cause an investi- gation and report to be made by an actuary as to the financial condition of the fund.

(2) A copy of every statement of accounts, balance sheet and report prepared under this section signed by the auditor or actuary, as the case may be, and by the secretary of the fund, shall be sent to the registrar within six months after the close of the period to which it relates.

THE LORD CHANCELLOR moved, in subsection (2), to substitute "twelve months" for "six months." The noble and learned Viscount said: The object of this Amendment is merely to increase the period allowed.

Amendment moved— Page 4, line 7, leave out ("six") and insert ("twelve").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clauses 6 to 8 agreed to.

Clause 9:

Validation of trust funds for the reduction of National Debt.

9.—(1) Where by any instrument directions are given for any property being held upon trust and the income thereof being wholly accumulated (subject only to payment thereout of any costs, charges and expenses of the trustees and any remuneration to which they may be entitled) for any period limited by the instrument, and for the property and accumulations being transferred upon the expiration of that period to the National Debt Commissioners to be applied by them in reduction of the National Debt, then, unless within three months after the instrument takes effect the Treasury disclaim the interest of the National Debt Commissioners under the said directions, notwithstanding any Act or rule of law to the contrary, the directions shall be valid and effective and no person shall be entitled to require the transfer of any part of the property, income or accumulations before the expiration of the period limited by the instrument.

(2) It shall be the duty of the trustees of any such trust as aforesaid to render to the National Debt Commissioners such accounts and information relating to the trust as may reasonably be required by the Commissioners.

LORD DANESFORT moved, at the beginning of subsection (1), to insert "Subject as hereinafter provided.?

The noble Lord said: The object of my Amendment is to introduce at the end of subsection (1) of this clause a proviso, which is down on the Paper in my name, and perhaps it would be for the convenience of the House, in order to appreciate the purpose of my present Amendment, if I state very shortly the nature of the proviso, which it appears to me desirable to insert at the end of the subsection. The object of Clause 9 is in itself a most laudable one. It is to enable some generous-minded person or persons to direct that a sum of money should be accumulated in the hands of trustees for a considerable period of time, longer than is allowed under the present law, and at the end of that period to have that money, and its accumulations, applied in the reduction of the National Debt.

As the clause is drawn I venture to think that it is open to some rather serious objections. Under it this generous-minded person, whom, for short, I will call the donor, is allowed to direct that the accumulation can go on for an indefinite period of years. No limit is placed on the number of years, and the period of accumulation directed by the donor might be so unduly long as to be dangerous or objectionable, and yet the only way, as the Bill is drawn, by which that undue accumulation could be terminated, is for the Treasury to step in and disclaim, perhaps altogether, the entire benefit of the trust, to the great detriment of the public Exchequer. As the Bill stands unlimited accumulation might be dangerous or objectionable. I have had some calculations made, and I find that if a sum of £1,000 is accumulated at 5 per cent, for one hundred years it would amount to £131,500. If accumulated for two hundred years it would amount to £17,292,500. The same calculation shows that if the amount originally set aside be £10,000 the amount of the fund at the end of one hundred years would be £1,315,000 and at the end of two hundred years £172,925,000. These are large sums, and I think it is fairly obvious that to permit the accumulation of such vast sums of money in the hands of trustees might be dangerous to the money market. It might be that considerable speculation by the trustees would disorganise the market, either by reducing the normal prices of securities or increasing them. That is, I think, a danger.

Further than that, and perhaps even more important, it appears to me very undesirable to allow this donor to postpone the reduction of the National Debt to a very remote period. I do not suppose any one of your Lordships would care to prophesy what may be the position of affairs in this country, financially, socially or politically, a hundred years hence. Possibly by some method the National Debt may have been wiped out altogether. Be that as it may, what we should prefer is that the National Debt should be reduced, or wiped out, within a more or less limited time which we could contemplate with satisfaction. And yet by the Bill as it stands the donor might postpone that operation for an indefinite period. It is evident, I think, that the Bill should be amended and the Lord Chancellor seems to take that view, because he has put Amendments on the Paper which, while they probably get over some of the objections which I have urged, would create other objections to which I may refer later. My Amendments are intended to meet in the simplest way the objections which I have indicated and the substance of them is this. The donor would be permitted to direct accumulation of the funds for fifty years, but as that might be too short a time, especially if the fund is a relatively small one, the Treasury would be empowered to extend the period of accumulation for such period as it thought fit if—and only if—so authorised by the instrument creating the trust. The result would be that while you give the donor a reasonably wide discretion as to the period of accumulation, you get over the objection to which I have adverted.

May I state why I have ventured to submit that my Amendment is better perhaps than those which the Lord Chancellor has put on the Paper? I think the Lord Chancellor's Amendments would be unduly restrictive of the benevolent intentions of the donor and might in fact entirely discourage these donors from carrying out their benevolent intentions at all and from setting aside any money for the purpose of reducing the National Debt. The result is that if the period for accumulation is thought, by the Treasury to be unduly long, the Treasury would disclaim the gift altogether, unless indeed the donor by the trust instrument empowered the Treasury to curtail the period. I venture to think it highly probable that the donor would do nothing of the kind. He might be willing to set aside a sum of money if he knew it was going to accumulate for a certain number of years and thereby produce a substantial reduction of the National Debt, but he might be very much disinclined to leave it to the Treasury to curtail that period of accumulation unduly. You might have a rapacious or an embarrassed Chancellor of the Exchequer wanting to get a sum of money immediately for the reduction of Debt and to make an unpopular Budget more popular, and he might therefore shorten the period of accumulation to any extent he chose.

THE LORD CHANCELLOR

I am not proposing that.

LORD DANESFORT

Well, I am supposing he might do it or give the Treasury power to do it. Perhaps I misapprehended the Lord Chancellor, but I understood his idea was that if the testator gave the Treasury power to shorten the period of accumulation then the Treasury might exercise that power, because under the clause and the Lord Chancellor's Amendment it would be a condition that the testator should give the Treasury power to shorten the period for accumulation of the income, and the Treasury might act upon that. If it is proposed that the Treasury should shorten the period of accumulation laid down by the testator without the authority of the testator or donor, then I think the position is even more serious. That I see, however, the Lord Chancellor disclaims also. Well, I am very glad to know it. If the Treasury were enabled unduly to curtail the period of accumulation then I think the donor might very well say: "I will not give my money at all; I will not exercise my benevolence"; and the National Exchequer would lose the benefit of his intentions.

Amendment moved— Page 5, line 35, at the beginning of subsection (1) insert ("Subject as hereinafter provided").—(Lord Danesfort.)

THE LORD CHANCELLOR

I am afraid my noble friend has misunderstood the purpose of an Amendment which is down in my name. When we come to that Amendment I shall be able to satisfy him that I have not the least idea of enabling the Treasury to alter the provisions of a deed of this kind by curtailing, of its own will, the period of accumulation. But I had better deal, I think, with his Amendment. I quite understand the purpose of my noble friend. His Amendments, taken together, are designed to impose a limit on the period for which a fund may be directed to be accumulated for the redemption of the National Debt, and he proposes a limit of fifty years, subject to extension by the Treasury. The question whether such a limit is desirable has been very carefully considered by the Treasury, and they take the view that, upon the whole, a provision enabling the Treasury to disclaim the interest of the National Debt Commissioners in any settlement of this kind provides a more effective and more desirable safeguard.

Your Lordships will of course bear in mind that the funds with which Clause 9 proposes to deal are funds under purely voluntary settlements, settlements made by some public-spirited donors as free gifts to the nation. We think it would be not only ungracious, but impolitic, to put statutory difficulties in the way of the intentions of any one who may desire to benefit the nation in that way. It is very unlikely that any one with such an intention would not be careful to have his settlement drawn in such a way that the best possible public advantage would result from his gift. Indeed, I suppose that in most cases he would undoubtedly consult the Treasury as to the terms in which the gift should be made. But it would be a pity, I think, to put in his way an artificial barrier of this kind. A man might very easily say: "My scheme is an accumulation for sixty years. I am limited by your Statute to fifty years, and I will not make the gift." It seems far better to us to let the matter be free to that extent, subject to this condition, that if it should happen that the settlement is drawn in such a way as to be a disadvantage to the nation, then the Treasury would be able to say: "We cannot accept a gift on those terms." Of course, I am speaking with knowledge of what is the kind of thing which is proposed, and I assure the House that in our view the best course would be to leave the Bill as it is. I hope my noble friend will not press his Amendment.

LORD DANESFORT

I have listened very carefully to the Lord Chancellor and I notice that he said it would be ungracious to put a statutory limitation on the period of accumulation which the donor desires. I would venture to suggest that it would be far more ungracious on the part of the Treasury, when a man had made provision for reducing the National Debt by a general gift to be accumulated during a period, that the Treasury should say: "We do not want your gift and we will not have it," as the Lord Chancellor suggests they would do. Not only would such a course be ungracious, but it would appear to me to be disastrous to the finances of the nation. It would mean that the National Exchequer would not benefit by the intended benevolence of the donor in question. However, as the Lord Chancellor has considered this provision, I will not put your Lordships to the trouble of a Division and will ask leave therefore to withdraw the Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR

I formally move the next Amendment (in subsection 1) on the Paper.

Amendment moved— Page 5, line 40, leave out ("limited by") I and insert ("to be determined under the provisions of").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved, in subsection (1), to leave out "upon" and insert "at or before." The noble and learned Viscount said: This is little more than a formal Amendment; but in view of what my noble friend has said I desire to explain that the, Amendment is not intended to enable the Treasury to alter in any way the date of termination of the deed. It is only intended to allow the donor to fix the date. It is possible that he may wish to provide that the funds shall be accumulated for a certain term of years but that after part of that time has expired, possibly after part of the fund has been accumulated, a transfer of that part of the fund shall be made.

Amendment moved— Page 6, line 1, leave out ("upon") and insert ("at or before").—(The Lord Chancellor.)

LORD DANESFORT

With great diffidence, this proposal seems to me to be open to precisely the same objection as that I urged a moment ago—namely, that the testator would have to give the Treasury power and say: "I desire it to accumulate for fifty years but you, the Treasury, may direct that the period shall be shorter." The clause provides that:— the directions shall be valid and effective and no person shall be entitled to require the transfer of any part of the property, income or accumulations before the expiration of the period limited by the instrument. In other words the donor would in effect say: "I desire fifty years, but I give the Treasury power by this instrument to distribute the accumulation before the expiration of that time." With the greatest regret I cannot see it in any other light; because unless the donor directs that the distribution of the fund shall be made by the Treasury before the end of the time the Treasury cannot do it. My suggestion is that donors might be unwilling to give such powers to the Treasury. However, if my noble friend, the Lord Chancellor, is satisfied with this Amendment, I have no more to say.

THE LORD CHANCELLOR

My noble friend quite misunderstands the Amendment. The proposal is to give the donor power to say: "My trustees may transfer the fund either at the end of the time or before the end of the time"—not that the Treasury shall have power to do that.

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My remaining Amendments to this clause are consequential. I beg to move them.

Amendments moved—

Page 6, lines 3 and 4, leave out ("within three months after the instrument takes effect")

Page 6, line 4, after ("Treasury") insert ("within three months after they receive notice of the taking effect of the instrument")

Page 6, line 10, leave out ("before the expiration of the period limited by") and insert ("otherwise than in accordance with the provisions of").—(The Lord Chancellor.)

On Question, Amendments agreed to.

Clause 9, as amended, agreed to.

Clause 10 agreed to.

Clause 11:

Short title.

11. This Act may be cited as the Superannuation and other Trust Funds (Validation) Act, 1927.

THE LORD CHANCELLOR moved to insert as a new subsection: (2) Section nine of this Act shall extend to Northern Ireland, but save as aforesaid this Act shall not extend to Northern Ireland.

The noble and learned Viscount said: This subsection has been agreed to with the Government of Northern Ireland and I beg to move it.

Amendment moved— Page 6, line 25, at end insert the said new subsection.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Schedule [Requirements as to Rules of Registered Funds:]

THE LORD CHANCELLOR

I beg to move.

Amendments moved—

Page 7, line 28, leave out ("rates of contribution") and insert ("contributions").

Page 8, line 1, leave out from ("amended") to the end of line 3.

Page 8, line 6, leave out line 6.

Page 8, line 7, leave out ("transmission") and insert ("supply on demand").

Page 8, line 10, leave out from ("established") to the second ("of") in line 11.

Page 8, line 12, leave out from the second ("of") to the end of line 14 and insert ("the latest statement of accounts, balance sheet and report prepared in accordance with the requirements of this Act").—(The Lord Chancellor.)

On Question, Amendments agreed to.

Schedule, as amended, agreed to.