§ 5.58 p.m.
§ LORD BARNBYhad the following Notice on the Paper: To call attention to the anxiety which exists as to the position of owners of and persons interested in houses and buildings in the event of the destruction thereof or damage thereto as a consequence of hostile attack and the desirability of a statement being made by His Majesty's Government which will relieve this anxiety and which would also have the effect of removing the existing uncertainty with regard to the matter which is causing inconvenience and delay in connection with the construction of buildings and with building development; and to move for Papers.
§ The noble Lord said: My Lords, the Motion in my name is put down as a result of clear evidence of the very widespread interest in this question, and the anxiety of property owners with regard to what their situation might be in the event of damage in war. It is regrettable that so much of the time of this House should be taken up in the discussion of matters which are so closely associated with war, but it seems clear from the statement which we have just heard from the noble Earl, in reply to the debate which has just concluded, that the subject is indeed one which has already received very wide examination by the Government. It cannot be denied that whatever may be the difficulties in these matters the circumstances in various directions have compelled consideration of them, and indeed the very precautions of which the Government have given evidence in the 246 various Bills that have been produced and the statements that have been made do envisage that widespread damage is a possibility which cannot be left out of account. The debates on the Civil Defence Bill brought into relief the situation that would be created with regard to various classes of property owners in the event of a conflict. These problems are at the present moment the subject of a Bill which deals with ships and stocks of merchandise and stocks in warehouses—war risks of a limited character. Up till now it has been asserted that the problem to which I have drawn attention is so complex, and presents such difficulties, that it must be held in suspense. It appears to be a matter, from the point of view of the Government, of delicate adjustment between the complexity of the problem, the dislike of commitments which a solution would involve, and the dislocation and disquiet which result in the country with regard to property because of the disinclination to tackle this question.
§ The authoritative statement on this subject up to date may be regarded as the statement of the Chancellor of the Exchequer, made in another place in January of this year. In that statement the Chancellor admitted that such loss ought not to be treated as merely the concern of those who directly suffer, but must be regarded as falling upon the community as a whole. He therefore admitted the principle of collective responsibility. He said this proposal had been exhaustively examined, and then in a succeeding sentence he used two words which do not appear to me to have been well chosen. He said the insuperable difficulty is that no possible basis for an actuarial calculation exists. It seems wrong to have used the word "insuperable;" the Chancellor of the Exchequer might well have said "bewildering," for the country has within recent times seen that solutions have had to be found for questions which up till then appeared insuperable. Again, the fact that "no possible basis" exists does not prevent certain precedents being established, and so perhaps the word "precedent" would have been more appropriate than the word "basis." He did say in that statement that a plan had been worked out for an emergency, and that the reconstruction of essential property would be included where necessary. 247 That statement, together with the additional replies to various questions asked at the same time, stands up till now as representing the authoritative position of the Government.
§ Attention should be drawn to the fact that in that statement the Chancellor of the Exchequer referred to a Report which was then shortly to be issued and has since been issued—in February this year—a formal Report to the Lord Chancellor which deals with the responsibility for the repair of property damaged by hostilities. That covered a very wide field, and has doubtless presented the picture of what would be involved. But I want to draw attention to some misconceptions which exist with regard to these questions, and they are rather widespread. It is too often believed that this is a matter which affects in the main the wealthy owners of property. Such is far from being the case. It is obvious that there is an overwhelming number of small householders in the country who are affected, and there are large companies concerned solely with the ownership of property, which have a multitude of small shareholders in various classes of the community. Evidently, then, the ownership of this property is indeed widespread. I would add, too, that very many of those companies are concerned solely in the investment of funds as a permanent lock-up for savings, which further emphasizes the fact that this question touches a very large number of small holders.
§ The next point which arises is the disorganisation which is being produced in the building trade. Uncertainty is causing a reluctance to embark on any new enterprise, and it is quite possible that the figures which would usually be the yardstick of measurement at the present moment mask the actual situation, because Government building in a multitude of directions readily absorbs those energies of the nation which are usually directed to the building trade, so that unemployment and a general hold-up would not appear at the moment. It is unnecessary to remind your Lordships that in the building trade all kinds of ancillary considerations are brought in, like the employment of architects and the preparations of plans for buildings, to say nothing of the multitudinous activities 248 associated therewith. The present uncertainty is causing a real stagnation in the property market. That is not unnatural. You can readily picture the ill-effects of a cumulative movement of this kind. There is a reluctance to put money into mortgages, and there is the disinclination of people to commit themselves by way of leases or the purchase of property. Your Lordships, who are so familiar with these problems, do not need to be reminded of the widespread eddies of a movement of this kind. But I think it would be appropriate to remind you of the large amount of money which is going into houses. Under the Small Dwellings Acquisition Acts and the Housing Acts there have been up to date since January 1, 1919, a total of over 200,000 advances amounting in all to over £101,000,000. It should also be recollected that the mortgage assets of building societies are given as amounting to over £636,000,000, whilst the total number of borrowers may be in the neighbourhood of 1,400,000. That serves to illustrate the widespread responsibility which can itself carry anxiety with it to those concerned.
§ It is suggested by the statements which have been made that the problem is so complex that there is no basis for assessing the liability which the country might assume in giving any undertaking as to what repayment would be made out of public funds to compensate owners of property. Presumably the situation does not differ very much from the kind of problem that was presented in the United States recently with regard to Social Services. The United States is essentially a democratic republican country, but it was far behind this country in its Social Services. Such legislation had been traditionally regarded as unnecessary, and had been resisted by employers of labour as an undesirable burden on industry. Your Lordships can picture what was required of the Federal Government in introducing a scheme of insurance at the height of the depression to a Continent of 130,000,000 people. The difficulties of the absence of precedent were there overcome, and this might well give a suggestion of something that would be an encouragement to the consideration of this problem here.
§ I ask your Lordships' indulgence in reminding you that the last general conflagration produced examples where the State had to assume very widespread 249 responsibility. In the case of shipping, for example, there is a clear precedent in the general charge put on by shipping out of which a pool was formed to pay compensation. We all realise that the restoration of property destroyed on a big scale in Northern Europe was effected at the cost of some public funds, and, anyhow, compensation was paid. On the question of collective responsibility, what about the vast expenditure that is being sanctioned now to carry out all these A.R.P. plans and provisions? We have again the example of the extension of Government insurance to overseas trade—admittedly, in the Bill, an uncharted sea; but it involves the responsibility that the State will collectively assume novel obligations because of the unusual character of the circumstances in which we find ourselves.
§ I humbly presume to remind your Lordships of how in the past we have had clear evidence that orthodoxy has been wrong. We must remember that going back to the gold standard in 1925 certainly hamstrung a large number of our industries and was a great misfortune, while going off gold in 1931, committing the country to vast borrowings in order to try to keep us on gold before we were finally drawn off, showed the bankruptcy of orthodox finance in assessing a new set of problems. Everyone is certain to-day that the deflation of the early thirties was a great misfortune and was entirely wrong. It produced uneasiness and social disturbance, and that was because of the reluctance on the part of the State to take certain responsibilities. I put these things forward because it seemed right there should be some answer in advance to the suggestion that provision for compensation cannot be made because there is no precedent and because the possible burden on the State is unbearable. It is for that reason that I am disinclined readily to accept the assurance that this or that is impossible.
§ It may well be that the sentiment of the country would hasten the Government to take some steps which would have been better taken before. As an instance of the unfortunate result of absence of effective examination of a problem, take in recent times the instalment system of finance which affected a vast number of people with small incomes throughout the country. Hurried legislation was put 250 through both Houses without a proper examination of that problem, as a reluctant reply to a very widespread demand in the country. It is for that reason that I suggest there is a proper reason for setting up a joint Committee of both Houses of Parliament or some other body which would make a full and up-to-date examination of the problem of how and in what way compensation should be forthcoming from public funds to the owners of the property destroyed in the event of war.
§ May I just recapitulate the two main lines on which I base this appeal? There is, first, the uncertainty which exists in the country with regard to the value of property, and all the disquieting effect that has on the vast financial machinery in this country which is concerned directly with the ownership of property or indirectly with the results of the fluctuating values of property; and, secondly, the dislocation which may well result, from tardiness in handling this problem, in the building trades as a whole and in new enterprise on which they depend. Lastly there must be in this country millions of small householders whose ownership of their houses represents their life savings, and one can readily imagine the uneasiness which must exist in their minds as to what will be their situation in the event of their property being suddenly destroyed. It is on those grounds that I say there is a widespread interest in this question in the country, and in spite of the assurances which we have had hitherto that the problem is most complex, I make this repeated appeal to the Government that they may yet consider it worth while to establish some body which would give the matter further consideration.
§ 6.21 p.m.
My Lords, in a word or two I want to say that the Labour Party have been giving a great deal of study to this matter, especially my honourable friends in another place, who are very interested in it. I think we would agree with everything the noble Lord has said except his remedy of setting up a Committee, which would only mean delay and give the Government one more excuse to procrastinate. I understand that a heavy attack is being made this very day on the Government in another place on their War Risks Insurance Bill, 251 and that the Government are going to fall back on this well-tried plan of a Committee. All I can say is that I do hope the noble Earl, if we will allow me to say so, can tell us that this Committee will act very quickly, and that when they have reported their decision will be implemented quickly. In the meantime the situation is going to be like this. The War Risks Insurance Bill, which has not reached your Lordships' House, does insure ships, cargoes and goods in storage, but apparently people whose houses are damaged in war are to wait till after the war before they get anything at all.
As the noble Lord, Lord Barnby, has said, the position of householders is causing great anxiety and uncertainty, and we think that the Government should introduce a scheme at once and begin collecting premiums on a voluntary basis. I, with most of your Lordships, have house property in a vulnerable area, and I cannot get any insurance for it against war risks. Those risks cannot be underwritten at all, and it is obviously a matter for the Government. The State will have to pay for the damage eventually, therefore why not start at once getting in your premiums? I believe most property owners will be only too delighted to begin paying an extra premium in order to get cover for their property. Later on the Government can go in for a compulsory system, but we certainly do want something now. I think the noble Lord is to be commended for raising the matter in this House. The only trouble is that he has chosen to do it to-day when the matter is under discussion in another place. However I wish him luck, except in the matter of a Committee, which will only be a delaying tactic.
§ 6.24 p.m.
§ THE EARL OF MUNSTER
My Lords, the only reply I have to give is to read a statement given in another place by the President of the Board of Trade upon the Second Reading of the War Risks Insurance Bill. Perhaps, with your Lordships permission, I might read it to the House. In these matters the Government have been advised by a Committee, which was set up some time ago, which consulted confidentially outside interests with special experience, and the suggestion was exhaustively examined that in respect of fixed property the Government might 252 introduce an insurance scheme, collecting premiums from owners and undertaking to pay in full for any subsequent damage whatever might be its extent. As has already been pointed out by my right honourable friend the Chancellor of the Exchequer, in a statement he made in another place on January 31 last, the insuperable difficulty to a scheme of this kind is that no possible basis for an actuarial calculation exists, and the conclusion is inevitable that a scheme which would commit the community to so vague and indeterminate a liability is one to which no Government could pledge public funds. There is, however, another possibility which has been under consideration—namely, that some scheme might be devised for collecting premiums for the purpose of producing a compensation fund which would be drawn upon to the extent to which it was available. As to this I have a word to say in a moment.
Let me first, however, point out that it is quite inaccurate to represent the Government's attitude to compensation for fixed property as a mere non possumus. On the contrary, the announcement already made lays down these propositions which the Government have already accepted: (1) The general principle which ought to be applied is that loss or injury ought not to be treated as merely the concern of those who directly suffer it, but must be regarded as falling upon the community as a whole and consequently as constituting a proper subject for compensation. In other words, the loss ought not to be left to lie where it happens to fall. (2) It has always been recognised and was expressly stated that emergency reconstruction of essential property, including where necessary housing accommodation, would have to be undertaken with Government assistance as soon as possible after the destruction of such property occurred. Otherwise, how is a factory which has been hit to resume essential activities and how are people whose houses may be destroyed or damaged to be rehoused? While, therefore, it is quite impossible to contemplate the immediate reconstruction of everything, it has always been recognised, and stated, that necessary repairs to essential property which has been damaged must be undertaken with Government help, as far as possible, during hostilities. (3) Moreover, a register of damage done to every kind of property must be promptly made 253 when the damage occurs and it has been announced that this is being arranged for through the Valuation Office of the Inland Revenue. And at the end of the war, the resources of the State must be made available, on the highest scale compatible with the then circumstances of the country, on the general lines that there would at any rate be a payment in full up to a certain limit of loss, and thereafter if claims could not be met in full there would be graded assistance.
There remains, however, the suggestion that these provisions might be supplemented by a scheme under which contributions would be collected on the one hand and the proceeds would be distributed when loss occurred on the other. There are very great difficulties in such a proposal but the Government have already come to the conclusion that it should be further examined. The Government cannot promise to provide unlimited amounts out of public funds for compensation, and the final adjustment must wait for the end of any future conflict. But we should be very willing to see a practical scheme evolved, if that is possible, in the nature of mutual provision by which property owners make a contribution to a common fund and from these resources secure that some interim compensation can be provided. Accordingly, my right honourable friend the Chancellor of the Exchequer has asked the Financial Secretary to the Treasury to convene, on behalf of the Government, a conference of four or five gentlemen of acknowledged standing and to ask them to examine the practicability of evolving any scheme for mutual provision against risk of war damage to fixed property in private ownership, excluding ships, cargoes and commodities already covered by the Government's insurance scheme.
The Government must maintain the view that no scheme could be acceptable which would promise to provide unlimited amounts out of public funds for compensation, and the object of the further inquiry is to examine any suggestions that can be made consistently with this essential condition. If a practicable scheme could be evolved, it would not necessarily be rejected merely because it involved 254 some Government contribution of reasonable and ascertainable dimensions. Steps are being taken to constitute and convene this conference at once, and the conference will be asked to advise whether participation in any scheme which they find it practicable to recommend should be compulsory upon all property owners or whether it should be voluntary. The conference will have power to call into consultation such persons as they may think are able to assist them in their deliberations. The day by day proceedings of the conference will have to be confidential, and indeed some of the matters with which the members of the conference will have to deal are necessarily secret, but when the time comes the Government will be glad to consider how far the conclusions can be published. It is hoped to announce very shortly the names of those who are being asked to assist in the matter.
§ 6.29 p.m.
§ LORD BARNBY
My Lords, I would first of all like to express my thanks to the noble Lord, Lord Strabolgi, for associating himself with the matters which lie behind my Motion. I should also like to thank the noble Earl very much for the statement he has made. Your Lordships will understand that a long statement covering so wide a field will require to be studied in some detail, but it conveys the impression that the Government recognise the need for immediate further consideration of the whole problem which I raised and, further, that certain aspects of the problem have already been recognised. I thank the noble Earl for his statement and I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.