HL Deb 02 December 1964 vol 261 cc1091-3

2.50 p.m.

LORD CONESFORD

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows

To ask Her Majesty's Government whether they are inviting the public to buy 5 per cent. National Development Bonds repayable after 5 years at £102 per £100 invested; and whether the 2 per cent. bonus will be paid tax free or free of income tax only.]

THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)

My Lords, under the present tax laws the bonus of £2 per cent. payable on the maturity of 5 per cent. National Development Bonds is treated as a capital bonus and is tax-free. My right honourable friend the Chancellor of the Exchequer is considering the question of making a preliminary statement on some aspects of the proposed capital gains tax. He has taken note of the views that have been expressed on this matter, and I must ask the noble Lord to be so good as to await the outcome of the Chancellor's consideration.

LORD CONESFORD

My Lords, I thank the noble Lord for his Answer. Is he aware that these Bonds are being advertised in a pictorial advertisement showing a husband and wife discussing the matter, and one saying to the other: "Look, 5 per cent. and 2 per cent. tax-free bonus."? Does the Minister agree that it is most desirable that the lender should know precisely what is going to be repaid, and that there should be no misunderstanding on the nature of the bargain?

LORD RHODES

My Lords, I am aware of a number of pictorial advertisements, but I must say that many of them are inaccurate. May I say that the point to which the noble Lord has drawn attention in his Question is an important one and will certainly be considered very carefully indeed.

LORD CONESFORD

My Lords, may I just supplement that by making it quite clear that, in my opinion, there is nothing whatever improper in this advertisement, which is issued by the National Savings Committee, a body for which all noble Lords in every quarter of the House entertain the greatest respect. I am grateful to the noble Lord for promising an early statement, which I think he will agree, in view of the facts to which I have drawn his attention, is highly desirable.

LORD RHODES

My Lords, may I say in reply to this most important Question, and following up what the noble Lord had to say about the National Savings Committee, that the earliest announcement by the National Savings Committee on this matter when first these bonds were issued in April of this year was that the National Development Bond gave a 2 per cent. tax-free bonus after five years; but a footnote explained the meaning of this statement as "free from United Kingdom income tax".

LORD CONESFORD

My Lords, I am grateful for that reply. I think that there is another part of the advertisement to which I have referred which does say, "free of United Kingdom income tax". I believe even that is not completely accurate, because I think the full terms should be "Income tax and surtax", but that perhaps can he ascertained. However, does not the noble Lord agree that many people seeing the words "5 per cent. and 2 per cent. tax-free bonus" will look no further and imagine that that is meant?

LORD RHODES

My Lords, I am sure that the noble Lord, who is most adroit in these matters, will agree that he cannot expect me to anticipate the statement that my right honourable friend is likely to make.

LORD AIREDALE

My Lords, are Her Majesty's Government proposing to make a statement in time to be of assistance to the holders of £9 million worth of 31 per cent. Defence Bonds who have been offered by the Government conversion rates into there National Development Bonds? The conversion offer expires on Friday week. Are these people going to be told what the nature of the Government's bargain with them really is, or are they going to have to grope about in the dark, trying to make up their minds whether or not to accept the conversion offer?

LORD RHODES

My Lords, that, again, is a most important point, but I would again ask the noble Lord to be patient on this question of timing.

LORD AIREDALE

My Lords, it is no good being patient until after Friday week on this matter, is it?

BARONESS HORSBRUGH

My Lords, may I ask the noble Lord whether ever before taxes have been announced six months prior to any description or details of them being given?

LORD RHODES

My Lords, what I can say is this: that the views of noble Lords have been expressed so strongly that I am sure they have been heard at the other end of the corridor in another place; and all I can say is that, if by mischance, they have not, I will see that they are.