§ 3.5 p.m.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they are now prepared to accept purchases of premium bonds in the names of trustees.]
§ THE MARQUESS OF LANSDOWNEMy Lords, the Government are prepared to accept purchases of premium bonds from any individual over sixteen, but such bonds must be registered only in the name of the individual purchaser. Moreover, premium bonds are generally unsuitable for investments for most trusts since they produce no income, the prizes being 290 regarded as an accretion of capital. Noble Lords will also remember that there is a strict limit on individual holdings, that the bonds are not transferable and that they must be encashed on the death of the registered holder. My right honourable friend the Prime Minister, as Chancellor of the Exchequer, went into the question in considerable detail in the debate on the Finance Bill on June 18, 1956, and he then explained that he thought it unlikely that trustees would purchase these bonds, as this could be done only in the case where there was a single trustee and no beneficiary was entitled to enjoy the income of the trust fund.
LORD HAWKEMy Lords, while thanking my noble friend for his long list of difficulties, of some of which we were aware, I would ask whether he would convey to his right honourable friend the Chancellor of the Exchequer the view that this has proved to be the most successful method of borrowing new money from the people of this country. And would he look further into the question of allowing the purchase by trustees, particularly in view of the fact that he already allows purchases by parents on behalf of children?
§ THE MARQUESS OF LANSDOWNEMy Lords, I can assure the noble Lord that my right honourable friend is aware of what he has said, but I will see that the noble Lord's suggestions are passed on.
VISCOUNT ELIBANKMy Lords, I am not quite sure from the reply of the noble Marquess whether there is any statutory objection to the adoption of the suggestion contained in the noble Lord's Question.
§ THE MARQUESS OF LANSDOWNENo, my Lords, these bonds do rate as Government securities, and they are therefore an authorised trustee investment. But for the reasons which I explained to your Lordships, they are usually unsuitable as trustee investments.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, might I ask the noble Marquess whether it is not wholly undesirable that a widespread practice should arise in which trustees, necessarily having to secure a regular income for the beneficiaries under the 291 trust, should be led into a gamble on income for any part of the stock covered by the trust deed? I hope that nothing very revolutionary will be approved by the Government in that respect.
§ THE MARQUESS OF LANSDOWNEI think, my Lords, with all due respect, that the noble Viscount the Leader of the Opposition perhaps has not quite followed my explanation. These bonds do not in fact produce what is described as an income—I can see that the noble Viscount appreciates that. The prize is considered to be an accretion of capital, as I explained, and therefore any trust in which the beneficiary of that trust should get an income cannot buy these premium bonds.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, I am very much obliged. I hope that that principle will be steadily followed.
§ LORD DERWENTMy Lords, is my noble friend saying that the trustees are not to be the judge of whether they are suitable investments?
§ THE MARQUESS OF LANSDOWNENo; I think the trustees must surely be the judges of whether they are a suitable investment; but if the trust deed is so drawn that the beneficiary has to receive income from the investment of the trust, then these premium bonds are not suitable and should not be purchased.
LORD HAWKEMy Lords, perhaps my noble friend would suggest that they should be allowed to buy them where the trust deed is suitable.