HL Deb 07 March 1966 vol 273 cc905-10

3.3 p.m.

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

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

On Question, Motion agreed to.

House in Committee accordingly.


Clauses 1 to 9 agreed to.


>Provisions Applicable to Loans Mentioned in Section 7(2)

1. An agreement between the Commissioners and the authority shall be sufficient to effect the loan and shall, notwithstanding anything in any enactment, be included among the means by which the authority may raise money; and—

2.—(1) Where the loan is effected by agreement, the agreement shall not be chargeable with stamp duty, but—

(b) the Commissioners may recover from any other party to the agreement the amount for which they are required tinder this paragraph to account to the Commissioners of Inland Revenue in respect of the loan

EARL FERRERS moved, in paragraph 2(1)(b), to leave out "may" and insert "shall". The noble Earl said: On the Second Reading of this Bill, I expressed one or two doubts and reservations about the effect the Bill would have on trustee savings banks. The noble Lord, Lord Snow, when he replied, told me that he could reassure me on 90 per cent. of my doubts and worries, and this he was good enough to do. There was one doubt that I felt he did not fully meet, and it is for this reason that I have put down this Amendment.

As it appears at the moment, a trustee savings bank can give mortgages to local authorities and also invest the money by purchasing dated Government securities and dated corporation securities. Where a mortgage is obtained, the local authority, who is the borrower, pays the stamp duty. It is suggested in the Bill that loans by the Post Office Savings Bank shall be of a nature exactly similar to those of the trustee savings banks. This was one point emphasised by the noble Lord, Lord Snow. He said that they would have the same "fistful" that the trustee savings banks were allowed to have. Where this is so, there is no complaint, but in the method of borrowing this money there is the possibility of doubt.

At the moment, where a local authority lends money, it pays stamp duty, but in this Bill it is suggested that, instead of a mortgage, there should be an agreement, and where there is an agreement, no stamp duty will be payable. Instead, the National Debt Commissioners, who will be running Post Office Savings Bank affairs, will pay over to the Commissioners of Inland Revenue the aggregate of the sums which would have been payable in stamp duty. In effect, we have the same state of affairs. Money is lent, but instead of the local authorities paying stamp duty on individual transactions, the equivalent amount will be paid by the Post Office Savings Bank.

But paragraph 2 of the Schedule then says that the National Debt Commissioners "may" recover from the other party—in other words, the local authority—the amount that was paid over by them to the Commissioners of Inland Revenue. I wonder if the noble Lord would be good enough to tell me why the word "may" is put in the Bill and not the word "shall". Presumably, if the Commissioners may recover the money, they also may not—and if they do not recover the money, the Post Office Savings Bank will be standing in a substantial advantage over the trustee savings banks, for the reason that, clearly, local authorities will prefer to lend their money to a body when they do not have to pay stamp duty, or its equivalent, rather than lend to a body where they will be responsible for the stamp duty.

The noble Lord, Lord Snow, described this as a purely technical matter and I have no doubt that that is the intention. But I cannot help thinking that the Parliamentary draftsmen, who are not stupid people, would not put in the word "may", if "shall" had been the more appropriate word to use. I should like to know from the noble Lord, Lord Champion, who I understand is going to answer, that there is no intention that the Post Office Savings Bank will stand at an advantage over the trustee savings banks. I beg to move.

Amendment moved— Page 6, line 34, leave out (" may ") and insert (" shall ").—(Earl Ferrers.)


In the absence of my noble friend Lord Snow, it falls to me to answer the noble Earl, Lord Ferrers. May I begin by thanking him for the clear way in which he put the Amendment and the doubts which exist in the minds of those banks who think that from now on the Post Office Savings Bank will to some extent be in competition with them. This is an important matter. Clearly, if it were the case that relief was being given from stamp duty under the word "may", this might cause competition with the trustee savings banks to be severe—it almost might prohibit them from getting satisfactory business. So I can well appreciate the point the noble Earl has made.

I must admit that I was not happy about the word "may" when I began to look at this. Although one has so often heard discussions in Parliament about uses of the words "may" and "shall", it seemed to me, when I looked at it first, particularly, that the word "shall" should have been used in paragraph 2(1)(b) of this Schedule, because, as I understand it—and I have looked up the dictionary—the word "may" does imply the possibility with contingency; but the word "shall", which the noble Earl would like to use, declares what is to take place. In some ways, I should have thought it much more satisfactory if the word "shall" had gone into the Bill. I am not a Parliamentary draftsman, and the ways of Parliamentary draftsmen, I have discovered, are rather different from the ordinary mind, which mine happens to be.

But my job here to-day is to assure the noble Earl that paragraph 2(1)(b) of the Schedule creates an obligation upon the other party to the agreement—that is to say, the agreement with the Commissioners—namely, the local authority, to pay the Commissioners the amount which would have been chargeable by way of stamp duty if the loan had been secured by a formal mortgage deed instead of an agreement under the Bill. At this point, I can specifically give the noble Earl the asurance which I am sure he wants, that the word "may" is not included here in order to give the Commissioners power to do something which they ought not to do in competition with the Trustee Savings Bank. I can give him a categorical assurance that this will not take place.

The second point that I have to make—and I do not regard this as such a powerful argument—is that paragraph 2 follows a precedent set by Section 3 of the Public Works (Loans) Act 1965, under which the Public Works Commissioners are recovering stamp duty from local authorities. This is working quite satisfactorily. There is no doubt at all that it follows absolutely the appropriate section of that 1965 Act.

The next point I have to make is that the Amendment is unnecessary, because the National Debt Commissioners already have ample powers under the Bill to recover duty, and their clear intention is to use those powers. Then, I must make the point that the Amendment, in any case, is technically unacceptable, in view of the words "from any other party" in line 34. But I do not want to rest on technicalities here. What I want to do is to assure the noble Earl that this follows precedent; that it is not being put in to imply possibility with contingency (the words that I used just now), but is put in in the normal way of drafting. And I can tell the noble Earl that the Commissioners—and I am sure he knows or has some idea who the Commissioners are; they are a very reputable body—are in agreement with the assurance that I have given him. I hope, in view of what I have said, and the fact that we both, I am sure, want this Bill to go on the Statute Book, that the noble Earl will find it possible to withdraw the Amendment.


I am grateful to the noble Lord, Lord Champion, for explaining the position so clearly. Indeed, if I may say so, he has jumped into the position of the noble Lord, Lord Snow, with remarkable alacrity. It was Lord Snow's clarification of all the previous points that I raised that resulted in only one Amendment being on the Marshalled List. The noble Lord has given me the assurance which was the object of my putting down this Amendment. However, I am bound to say that it leaves me still a trifle confused, because he has not really said why the word "may" is so essential, other than the fact that it follows precedent. I should have thought that, if it is the clear intention of the National Debt Commissioners to get this money hack from the local authorities, there should be an obligation to put it in the Bill; in other words, it should state that they "shall" collect the money from the local authorities. I am not really clear—and perhaps the noble Lord would care to have another shot at it—why the word "may" should be used, because, as he says, it almost puts a caveat into the Bill that on some occasions this shall not be done. I do not know whether the noble Lord could give me any further explanation on that.


The noble Earl has asked me if I could give any further explanation of it. The answer to that is that I would if I could, but I cannot. I have gone just about as far as I can in reply to the noble Earl. But I think the assurance he is seeking is really the one that matters in this connection, and I hope that Parliamentary draftsmen in the future, when they are faced with putting in "may" or "shall", will read what the noble Earl has said, and what I myself have said, in this connection.


I could not ask for a more lucid explanation. I am grateful to the noble Lord. I will rest content on the assurance that he has given me, and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule agreed to.

House resumed: Bill reported without amendment; Report received.

Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of March 2), Bill read 3a, and passed.