§ Mr. Arbuthnot
asked the Chancellor of the Exchequer if he will make a statement on proposals for amending the Trustee List.
§ Mr. H. Brooke
The Government have given careful consideration to the suggestion of the Committee on the Law and Practice relating to Charitable Trusts (the Nathan Committee) that the range of investment authorised for trustees of all kinds should be extended. In particular, the Committee suggested that the range should comprise (subject to certain safeguards) the debentures and stocks and shares (including equity stock and shares) of financial, industrial and commercial companies quoted on the London Stock Exchange. The Committee also suggested that trustees should be permitted to invest in authorised securities standing at a premium.
In the opinion of the Government the proposal for a general extension of the range of investment to include equity stocks and shares is open to serious objection. The very considerations which in some circumstances would lead to the enhancement of the trust funds might in other circumstances lead to considerable losses and the Government have to recognise the possibility that the inclusion within the Trustee List of securities hitherto excluded might be regarded by the general public as conveying a measure of official guarantee of their suitability for investment.
The object of the Trustee List is to ensure the safety of the trust funds in cases where, for example, the settlor has not thought fit to give a wider power of investment. Its purpose is not to offer wider opportunities to trustees to exercise the skill in investment which the management of investment in equity securities continually requires. The List also affords a protection for trustees who have to balance the interests of tenants for life against those of remaindermen.
Furthermore, trustees of existing trusts can already obtain extended powers of investment either by agreement with the beneficiaries (in certain cases) or by 165W leave of the High Court. The Government's conclusion is that any general extension of the powers of investment of trustees would not be desirable.
As is outlined in a Command Paper on "Government Policy on Charitable Trusts in England and Wales "—which is being published today—the Government have it in mind to take powers to simplify the procedure by which trustees of charitable trusts can obtain wider powers of investment (on application to the Ministry of Education and the Charity Commissioners). They have given careful thought to the feasibility of introducing some similar new procedure in the case of non-charitable trusts but have reluctantly reached the conclusion that this would be impracticable. In the case of non-charitable trusts there are commonly divergent interests, the pattern of which is very varied, and considerations of a nature with which only the Courts can properly deal often arise. Such difficulties are generally not involved in the case of charitable trusts, which are virtually all perpetuities.
On the other hand, there are some minor amendments to the Trustee List which the Government propose to make. First—as the Nathan Committee suggested—the removal of the anomalous restrictions on investment in certain stocks standing at a premium. Secondly—and this is at present the subject of discussion with the representatives of local authorities—the removal of some anomalies regarding local authority stocks and mortgages. Thirdly—the inclusion of sterling securities of the International Bank for Reconstruction and Development. The Government propose at a convenient opportunity to introduce legislation to carry these proposals into effect.