Clause 41. — (Power of Trustees to invest in mortgages of the Board.)

Private Business. – in the House of Commons on 16th November 1920.

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"Section 1 of the Trustee Act, 1893 (which specifies the securities in which Trust funds may be invested), shall have effect us though there were included therein mortgages by the Board of their revenue and of the moneys receivable by them from the four Corporations granted after the passing of this Act."

Lords Amendment: Leave out the Clause.

Photo of Sir Samuel Roberts Sir Samuel Roberts , Sheffield Ecclesall

I beg to move, "That this House doth disagree with the Lords in the said Amendment."

Before I venture to put my case before the House, I should like to express my disappointment that I have to do it. I have all through my Parliamentary career done my best to support the Treasury in their finance, and I think my right hon. Friends the Chancellor of the Exchequer and the Secretary to the Treasury are acquainted with that fact. I may mention in particular that during the War I happened to be the chairman of a Sub-Committee of the Expenditure Committee appointed to deal with the Treasury, and I might perhaps remind my right hon. Friend, who was not Chancellor of the Exchequer at the time—the Leader of the House was then Chancellor of the Exchequer—that there were very delicate negotiations with the Bank of England as to the terms of their remuneration. I had a good deal to do with that, and it ended in a very generous and patriotic offer by the Bank to forego all profit. Having said that, I think the House will see that I move this Motion to disagree with the Lords Amendment with very great reluctance, because I understand my right hon. Friends intend to back up that Amendment. It is an Amendment where the House of Lords struck out Clause 41 of this Bill, and the simple point raised is this: Are the mortgages of the Derwent Valley Water Board hereafter to be regarded as trustee securities?

I must very shortly state the history of this Board. In the year 1899 the cities of Sheffield, Nottingham, Derby, and Leicester went to Parliament to secure the upper waters of the rivers Ashop and Derwent for their water supply. These Bills came before the late Sir John Brunner and a Committee upstairs, and under his influence very largely the Bills were withdrawn, and the present Water Board was established as a Joint Board representing all the four large corporations and also the County of Derby. Each of the four corporations has representatives on the Board, and the County of Derby has one representative. The sole object was to construct reservoirs to supply water in bulk to these large corporations. The Board have no power to collect revenue for water. Their simple duty was to construct the reservoirs and to apportion the water according to certain percentages, with which I need not trouble the House, and supply the water to the inhabitants of these four large towns. They were authorised by the Bill of 1899 to raise a capital of £6,346,000, either by mortgages, debentures, or stock, and it so happened that the Board decided that they would raise all the money by mortgages, short-dated mortgages, of three, five, and seven years, at varying rates of interest, but I must tell the House at once that this security was considered a gilt-edged, first-class security, and at the present moment the Board have outstanding in these short-dated mortgages more than £3,500,000. I must here refer to a certain Section of the Act which incorporated the Board, which is Section 111 of the Derwent Valley Water Act, 1899, and in our view this Section is most important with regard to this question. I will read it to the House: For the purposes of the investment of trust funds the Board shall be deemed to be a corporation of a municipal borough having according to the returns ot the last census prior to the date of investment a population exceeding 50,000 and the Trustee Act of 1893"— which Act I may say in passing gives a long list of trustee securities— shall apply as if the Board were referred to in Sub-section (m) of Section 1 of that Art. That means that any investments made by the Board in stock issued by them rank as trustee investments. It places the Board on an equal footing with the corporations as far as investments are concerned. What happened next? A Bill was introduced last year to give power to the Board to make certain alterations in the construction of reservoirs. It was found that economies could be made if those alterations were carried out, and that is the object of the present Bill. The question of trustees did not come in at all. What happened? The Housing Act became law after this Bill was deposited, and the effect of that Housing Act is this: the Government being naturally very anxious to get money for houses, passed a section which authorises local authorities to raise money on housing bonds, which were declared to be trustee securities. Any local authority, even the smallest urban or district council, could issue housing bonds which would be trustee securities. This Water Board saw the four corporations which constituted it placed in a better position because those bodies could issue all their mortgages as trustee securities, whether for housing or otherwise. Therefore the Derwent Water Board applied to the proper authorities in this House and the House of Lords to be put in the same position in order to bring them up to the status in which the Act of 1899 had put them. They consulted the Chairman of Ways and Means of this House and the Lord Chairman of Committees of another place; and introduced a Clause to provide that their mortgages also should be trustee securities. The Bill came before a Committee of this House, and the Clause was passed, but in the House of Lords Clause 41 was, on a Division, deleted. We have got an alternative Clause which will exonerate the Treasury from fearing that this may be taken as a precedent. We are not asking for any extension of the trustee law, but we do ask that this House should abide by the Parliamentary contract which in 1899 placed this Board on the same basis as the four corporations. Would it not be unreasonable that the four corporations should be able to issue all their mortgages as trustee securities, while the constituted body, which is backed up by the rates of those four corporations, should be unable to do so. In my opinion, the matter is not arguable. If the Treasury will not agree to Clause 41 being restored, we have an alternative Clause as follows: The reference in Section one hundred and eleven (as to investment of trust funds) of the Denvent Valley Water Act, 1899, to such corporations as are therein mentioned shall be construed as a reference to or as including any such corporation as aforesaid being a local authority authorised to issue local bonds under the Housing (Additional Powers) Act, 1919, and Section nine of the last-mentioned Act shall extend and apply to the Board accordingly. I feel suiv that that will meet the point. I understand one of the objections to Clause 41 is that no alteration must be made in the law of trustee securities by a Private Bill. I do not wish to lay too much stress on the Private Bill, but what I do want to lay stress on is the Parliamentary bargain made in 1899, which placed this large Board on the same footing as the constituent corporations. As the Chancellor of the Exchequer knows, money will flow into the best securities. For instance, Treasury Bills are the finest investments in the world. They give a return of 6½ per cent, and the investment is absolutely secure. If we do not put this Clause in, this Board will have to pay a higher rate of interest, not- being a trustee security, and if they have to do that it will mean that the four corporations will have to pay more money. The higher rate of interest will attract money from the four constituent corporations themselves and also money which the right hon. Gentleman wants for the Treasury, and therefore, in the interest of the Treasury, I ask him to accept this Amendment. There are precedents in two private Bills which created trustee securities. I have the two here before me. They are the Staines Reservoir Act, 1898, and the Southampton Harbour Board Act, 1903. In these cases debenture stock and redeemable stock were both made trustee securities.

I have tried to put the case fairly, but before I sit down I want to make an urgent appeal to the right hon. Gentleman below me on the Treasury Bench to leave this question to the House to decide. It is not a question of policy. It is a question of economic law. It will not help the Government, nor will it help the Treasury, and if they will be so good as to agree to my request I shall be glad; it is not an extraordinary request to leave this question to the judgment of the House. The House is quite capable of taking care of itself, and after the experience of the Housing Act, which I may remind the House, allows every corporation, local authority, urban or district council of the very lowest type to make their mortgages for all purposes trustee securities, it would be a shame and a scandal to fail to treat the securities of this large and important Board as well as one of those securities which have not been built upon so sure a foundation.

Photo of Mr Albert Atkey Mr Albert Atkey , Nottingham Central

I beg to second the Motion.

Unlike my hon. Friend I cannot claim either a long acquaintance with the House or any intimate knowledge of the wisdom of the Treasury on previous occasions, but I desire to put forward certain views, first as a Member of this House, and secondly as a member of the Derwent Valley Water Hoard. Speaking in the first capacity, I welcome the opportunity that this Debate offers not merely to consider this particular case upon its merits, but as enabling a wider publicity to be given to the real situation in regard to the conduct and control of this House of Commons. In this as in many other cases the House and its authority has been entirely subordinated, as I wish to show, by the bureaucratic officials who disguise themselves under the name of the Treasury.

I do not propose to follow the lines taken by my hon. Friend. The House will be well-advised to consider the situation from quite another angle. The question I propose to put to the Chancellor of the Exchequer and the. House is the simple question: What is the object of the Trustee Act, 1893, the benefits of which are to be denied the Derwent Valley Water Board? I suggest the correct reply to that question is that the trustee has to get security for the beneficiaries of the trust, and that the object, and the only object, of the House or the Chancellor of the Exchequer, or any other person whose authority has to be obtained, is to see that the Trustee Act is faithfully applied. The case which has been put to the House by the Mover of this Amendment I feel certain will convince the House, so far as the security offered by the Board is concerned, that it fully justifies every possible encouragement by the Treasury as a trustee security. The House will be curious to know why this Clause has been deleted in the House of Lords and by whom: who are the real people who object to this Clause?

The only authority we have been privileged to hear on this subject is undoubtodly one whose word ought to go a long way in matters of this kind; that is the Lord Chancellor. He is the only one who has really given any expression to the views alleged to be held by the Government in this matter. I would, therefore, like to draw the attention of the House to one or two statements and reasons given in another place by the Lord Chancellor in support of the action taken by his peers. The Lord Chancellor admits, in the first instance, that his excuse for addressing their Lordships is: that I rest under a special responsibility to this House in the matter of trustee securities. For the Lord Chancellor, I believe, is supposed to be the guardian of trustees in taking good care that they shall apply their investments in the right direction. Now during the whole of his speech the Lord Chancellor only appears to be concerned in acting on behalf of the Government in securing money from the people, and not in protecting those who have it to invest. He says, in the first place: I believe it to be absolutely without precedent for a Private Bill Committee to alter the general law. Members of this House have had information circulated to them which gives definite information where, that has taken place. So it would appear that so high an authority as the Lord Chancellor himself does not really know what is being done, and is entirely wrong in suggesting that this would be without precedent. Then he regards it as a revolutionary proposal; and it seems very strange that the Lord Chancellor is not aware that these revolutionary proposals have already been made and have been incorporated in Acts of Parliament. The Lord Chancellor goes on to say: The only public authorities who are entitled, under the law of this country, to express opinions to a Parliamentary Committee on the question of trustee securities are the Lord Chancellor and the Treasury. It seems, however, that the Lord Chancellor admits that Parliamentary Committees are entitled to have some advice, either from himself or the Treasury. A little later in the same speech he says: It is not convenient or usual for Government Departments to attend before these Private Bill Committees. How are Members of the House to be able to form opinions, and to register judgments on facts placed before them, if the only two authorities competent to express an opinion on matters like this find it inconvient to attend such Committees? But as a matter of fact it is not true, because I have had personal experience of these Private Committees, and many Departments of the State, having views to represent, have sent their representatives to these Committees, and have laid before them their views upon the subject for the consideration of these Committees. The Treasury apparently is a law unto itself, and not only declines to appear before these Committees, but when it does take action of any sort takes action of the most drastic character, which admits apparently of no argument or opposition. The Lord Chancellor also makes a further statement. He says: If the case I have attempted to present to your Lordships had been argued before the House of Commons Committee or the Lords Committee I cannot doubt but that they would have reached a different conclusion. All the Treasury have to say has already been laid before the Committee of both Houses. It is difficult to imagine what the Lord Chancellor had in mind when he said that if this information had been before those Committees they would have come to a different conclusion. Those are the only objections with which this House has been made acquainted. I ask who is really supposed to have objected to this particular Clause. We have been told that in the House of Lords ths Government Whips were put on for this Motion, but who is the Government? The Government is made up mostly of the Ministers who adorn the Front Bench, and I want to know how many of them have offered any opinion at all upon this question. Even the Chancellor of the Exchequer himself has failed up to now to give the House any expression of opinion and, as a matter of fact, the whole objection really comes from the officials of the Treasury. This leads us to the conclusion that the House of Commons in the long run, and in this particular instance, has not the power to determine legislation according to the views of those who are sent here to represent the constituencies, because their legislation is being dominated and shaped by the views of officials.

I wish to emphasise the point which has been made, that there were ample opportunities for any objections, that is, any reasonable objections, on the part of the Treasury to be laid either before this House or before the Committee that considered this Bill, but on no occasion were any such representations made. I hope that this House will offer an opportunity for hon. Members to express their unbiassed judgment on the merits of the case which has been so ably presented by my hon. Friend (Sir S. Roberts), and if the Chancellor of the Exchequer will answer to the appeal which has been made to him to withdraw the Whips and let the House express its independent judgment, I have very little doubt as to what the result will be. May I say one or two words in my capacity as a member of the Derwent Valley Water Board? The work of that Board for many years past has been of the most onerous character. Its duty has been to supply water to four very large cities, and, if I may state what its business is in somewhat technical language, it is to construct dams. These may be described as ob- structions. The dams of the Derwent Valley Water Board stop the flow of the stream. There are other kinds of dams which intercept the free flow of traffic, and I could have shown the Minister of Transport how he has perpetuated dams of another character at Nottingham. These dams are described according to their construction. Those of the Derwent Valley Water Board are made of concrete walls of very heavy structure, which are technically described as the dam walls.

The responsibility lying upon the Derwent Valley Water Board is one which cannot be evaded. A supply of water must be given to those towns, and I cannot understand why the Chancellor of the Exchequer is disposed to do anything otherwise than to assist this Board in its work. Housing is very important, but I think hon. Members will agree that the supply of water is a first necessity and consideration to which this House should give attention. What would be the effect if the Chancellor of the Exchequer and the Government persist in their attitude for the deletion of this Clause? It certainly will not damage the Derwent Valley Water Board in the eyes of the people of this country, because the mere fact that the Treasury have declined to give this security to this Board will not alter the fact that the security is there and is good, and that it is one which will command the money.

It may, however, have the result of raising the rate of interest on the part, not only of the Board and its own particular constituent authority, but it may be taken for granted that if the cities of Sheffield, Nottingham, Leicester, and Derby as municipal authorities have, in competition with the Board, to raise their rates of interest, the same will apply to Liverpool, Manchester, and Glasgow, and all the other large municipalities throughout the kingdom. I urge upon the Chancellor of the Exchequer the wisdom of agreeing to this Clause being reinserted. Finally, I would ask him what is the object sought by the Trustee Act? I assert that its object is not to bolster up Government securities. That act is merely for the purpose of protecting those who have money to invest, and no denial can be given to the statement made that the securities of the Derwent Valley Water Board are, and will always remain, under existing conditions, a gilt-edged security.

Photo of Mr Joseph Green Mr Joseph Green , Leicester West

I desire to say a word or two in support of what has been said, and on behalf of One of the, great towns interested in this measure. There is very little to be added after the exhaustive statements which have been made by my two hon. Friends. Imagine the absurdity of the position which will obtain if we are not allowed to have this Clause in our Bill. Whereas any stock issued by the Corporation of Derby, Leicester, Nottingham, or Sheffield will be looked upon as a gilt-edged security, that issued by the Derwent Valley Water Board, which has the security of all four Corporations behind it, is not to be regarded in the same way. That is absolutely absurd. I want to point out that this Water Board differs from all others in the fact that it does not sell water. It does not deal with the consumer, but it supplies water to the Corporation. I believe it is in the mind of the Treasury that this case might be treated as a precedent. I understand that there is no other water board in the country on the same footing as this, and if we have our way over this there is no fear of it being treated as a precedent.

I should like to insist, with my two hon. Friends, upon this point. The Lord Chancellor, in another place, stated that there was no authority for putting in a private Bill any alteration as to trustee securities. There was the case of the Staines Reservoirs in 1898, and the Southampton Harbour Act in 1903, under which in private Acts it was provided that their securities were to be regarded as trustee securities, and therefore that objection falls to the ground, beause it is not true to say that it is without precedent for a Private Bill Committee to alter the general law on the question of trustee securities. I only wish to add one other word. The Treasury is no doubt, quite rightly, anxious to preserve the security of Government securities under his control; but I would venture to point out we have not only to think of Treasury securities, but we must also think of the beneficiaries whose trustees have to invest money. When we have a first-class security—and it is admitted by the Treasury that there is no better security in the country than these mortgages or stock of the Derwent Valley Water Board—it is unfair to trustees that they should be unable to invest in it. I venture to add my word for what it is worth to the appeal of my hon. Friend that the Government will not put on their Whips on this occasion, and that the House may be allowed to give an unbiased opinion. I am sure if it is we shall have no difficulty in securing our Bill.

9.0 P.M.

Photo of Mr Harry Samuel Mr Harry Samuel , Lambeth Norwood

The House might like to know on what the decision of the Committee was founded when they authorised this particular Clause becoming part and parcel of this Bill. We had certain duties to perform. They were performed, perhaps, under some little difficulty because those great Departments which rule us will not condescend to come to earth, like ordinary mortals, and give Members of Private Bill Committees the reasons why they oppose tain Clauses. That may be to the benefit of the legislation of this country or it may not. I cannot say. But having taken the very strong action which they have taken in another place in overthrowing a decision of both Houses, it is only right to say that if they had given us the benefit of their views why this Clause should not be allowed to become law, it would have saved a considerable amount of trouble. A Committee upstairs has certain serious duties to perform. When they come to certain things which may be used as investments by the public, and when it is sought to make those investments Trustee Securities, I think the first duty of a Committee is to see that if they sanction those securities as trustee securities, then both trustees and investors are absolutely safeguarded in regard to the quality of the investment. My Committee went carefully into this matter and came to the conclusion, firstly, that under the Act of 1899 authority had been given to the Derwent Valley Water Board to issue stock as trustee securities. Here I should say the promoters of the Bill acted with the greatest fairness. They told the Committee that the Treasury were opposed to the insertion of this Clause. They did everything they could to put quite fairly before the Committee all that could be said, and therefore they must be exonerated from any charge of attempting to get the Clause through by a side wind. What was the duty of the Committee? It was first to act in the spirit of the Trustee Securities Act, 1893. If we pass this Clause—the Trustees Security Clause—then trustees and investors will be absolutely safeguarded, and will have full and ample security for their investment. I would like to ask the representatives of the Government whether, in the action they are taking to-night, they are animated by a sense of duty under the Act of 1893 to trustees and investors, or whether they are safeguarding their own investments. May I venture very humbly to say that if they are seeking merely to safeguard their own investments they are entirely misreading their duty. If the Government issue securities for the investments of the British public, then the mere fact that they are Government securities should be a sufficient safeguard, and no action should be necessary from the Treasury Bench to safeguard them. It was our duty to see that trustees and investors were safeguarded. We came to the conclusion that they were amply safeguarded, and we also came to the conclusion that it was a contract between this House and the Derwent Valley Water Board that all stock issued under the ægis of the Board should be a trustee security. It was put to us that they were issuing, not stock, but mortgages. My remark upon that as Chairman of the Committee, was that, a fortiori, the stock issued was a security and that a mortgage was an infinitely better security. Therefore, we had no hesitation in including mortgages with stock issue as preference securities. The next point we had to consider was whether the joint aegis of the four great corporations made the security a better security than if it were issued by one corporation only. We came to the conclusion, absolutely unanimously, that the issue by these four groat corporations was of far greater value as a trustee security than an issue by one corporation alone. We therefore decided that there was no doubt whatever that this would be a safe investment for trustees and investors. These were the only motives which a Committee upstairs had to consider in dealing with a question of this kind. I do not desire in any way to associate myself with the interests of either party concerned in this question, but I do desire to say that my Committee came to their decision after due consideration, and after giving due weight to considerations of every kind.

Photo of Sir Henry Betterton Sir Henry Betterton , Rushcliffe

I hope that the Chancellor of the Exchequer, when he replies, will not adopt the attitude adopted by the Government in the House of Lords and refuse to reinsert this Clause. If he, does, I am sure that his action will be regarded as a grievous discrimination against the interests of the Board, and, as such, will be widely resented, because the effect of such discrimination must be to raise the rates of the four corporations. I think that such action will not in any way benefit the public interest or serve the interests of which the right hon. Gentleman is the particular guardian. After the exhaustive statements which have already been made, I need not remind the House of what was said in the speeches with reference to this Bill, but I should like to anticipate some of the arguments which the right hon. Gentleman may adduce; and my anticipation will, of course, be guided by the fact that arguments were adduced in another place, with which he may or may not agree, but all of which, so far as I have examined them, cannot be supported. In another place the Noble Lord upon the Woolsack said that it was entirely without precedent for a Private Bill to alter the general law on the question of trustee securities. He went on to refer to his great experience at the Bar in such matters, and then he said that he regarded the proposal as "a revolutionary proposal, destructive of the authority and jurisdiction of this House." If this proposal were really revolutionary, and were really destructive of the authority either of this or of the other House, I should be the last to support it. We have only, however, to look at the Act under which this Water Board was constituted to find a complete precedent for what the House is asked to do to-night, and it is, therefore, preposterous to say that we are asking for anything which is either without precedent or revolutionary. As has been stated by the hon. Member for Sheffield (Sir S. Roberts), Section 111 of that Act specially enacts that: For the purposes of the investment of Trust funds the Board shall be deemed to be a Corporation of a municipal borough having according to the returns of the last census prior to the date of investment a population exceeding 50,000, and the Trustee Act, 1893. shall apply as if the Board were referred to in Sub-section (m) of Section 1 of that Act. That is, if anything could be, an alteration, by a private Act, of the general law as laid down in the Trustee Act of 1893, and it is a precise precedent, although the Lord Chancellor said that there was no precedent. When, therefore, the Lord Chancellor said that these proposals were revolutionary and without precedent, he was not only misinformed himself, but, being misinformed himself, he misled the House, and the House gave its vote and registered its conclusion because it had been misinformed as to what was the law. The general law is clear enough. So far as it is relevant to this purpose, it is laid down in a short Sub-section of the Trustee Act of 1893, which says that a trustee may invest in nominal or inscribed stock issued by the corporation of any municipal borough having, according to the returns of the last census prior to the date of investment, a population exceeding 50,000. Therefore, the private Act of 1899, under which this Board was incorporated, not merely altered the general law—which the Lord Chancellor said had never been done—but it did something more. That Act of 1899 was a direct recognition of the principle that this Board being, in effect, a committee of the four corporations, was entitled to the same financial privileges as those corporations themselves. What are those privileges? One was bestowed upon them by this House in the Housing (Additional Powers) Act of 1919. By that Act a bond secured upon the rates issued by any local authority with the consent of the Minister was made a trustee security. Therefore I say that, unless this House reinserts this Clause, it is taking away a right which has already been given, first of all by Section 111 of the private Act of 1899, and then by Section 9 of the public Act of 1919. In another place it was suggested that this Act of 1919 was intended to apply only to the issue of housing bonds, and Lord Hylton, in anticipation of this point, said that it was strictly limited to housing authorities, and that the value of the concession to housing authorities would be taken away if a similar concession were granted to authorities which were not housing authorities. If there were any doubt on this matter, however, it is set at rest by a statement of the Minister of Health himself, in Clause 10 of his Memorandum No. 21. He there states that, under Section 9 of the Act, where a local authority or county council has obtained the consent of the Minister so far as the purposes of the Housing (Additional Powers) Act are concerned, to the issue of local bonds, not only those bonds, but mortgages on any fund or rate granted by that authority or council on the authority of the Act shall rank as a trustee security. It is perfectly clear that, in the view of the Minister of Health himself, these bonds, for whatever purpose they were issued, were to rank as trustee securities. This action by the Ministry of Health was criticised in another place in language which, I am bound to say, was not very civil. The Lord Chancellor said that the Ministry of Health, in so far as this matter was concerned, had no locus standi, that the matter was one which did not concern the Minister of Health, and that he had no right to offer an opinion. I have no desire to interfere in what, perhaps, was only a lovers' quarrel between the Minister of Health and the Lord Chancellor, but I am bound to say that it is quite clear that in that quarrel the Government took the side of the Minister of Health and not of the Lord Chancellor.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

I beg my hon. Friend's pardon. There is nothing inconsistent between the statement in the circular and the statement made by Lord Hylton in the House of Lords. The statement in the circular is a pure statement of fact, and Lord Hylton's statement is a statement of the same fact in different words. Where my hon. Friend has gone wrong is in the inference that he has drawn from the two statements of the same fact.

Photo of Sir Henry Betterton Sir Henry Betterton , Rushcliffe

I do not appreciate for the moment where I have gone wrong, but this I do appreciate, and I think the House will appreciate that there is a direct conflict of opinion between the Minister of Health and the Lord Chancellor.

Photo of Sir Henry Betterton Sir Henry Betterton , Rushcliffe

Otherwise how could the Lord Chancellor have said the Minister of Health had no right to offer an opinion? We know that the Minister of Health did offer an opinion, and we know that the Lord Chancellor said he had no right to offer an opinion, and as I was endeavouring to show when my right hon. Friend interrupted me, I think I am right in saying the Government has supported the view of the Minister of Health.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

My hon. Friend is attaching the Lord Chancellor's remark to a circular issued by the Minister of Health. He is mistaken in doing that. The Lord Chancellor was not referring to that circular.

Photo of Sir Henry Betterton Sir Henry Betterton , Rushcliffe

I do not wish to pursue the point, but in the Bill which is at present before the House, the Ministry of Health (Miscellaneous Provisions) Bill, there is a Clause—Clause 19—it is one of the Clauses I know which was thrown over yesterday, but still it is in the Bill, and therefore it must be presumed to be in the Bill with the concurrence and approval of the Government. It proposes to give power to trustees to invest in county council mortgages and it enacts that all mortgages granted after the passing of this Act by a county council under the authority of any Act or Provisional Order and secured on the county fund or on any revenues or any part of any revenue of the council shall be trustee securities. I should like to know whether that Clause has the approval of my right hon. Friend, because if it has not, it will certainly encourage me in my opposition to it in Committee. But if it has the approval of my right hon. Friend, how can that be consistent with the contention in the House of Lords that the powers of local authorities with regard to these trustee securities are powers limited in respect of money for housing, for which, of course, there is a dire necessity? So if my right hon. Friend persists in supporting the attitude of the House of Lords, he is discriminating against this Board.

The Noble Lord on the Woolsack made another point. He said—and I am again possibly anticipating the point which my right hon. Friend will make— There are hundreds and thousands of institutions in this country who could put forward arguments as strong as those put forward by this corporation for making their mortgages trust securities and could contend that it would be equally right to make their mortgages trust securities. My right hon. Friend is a master of accurate and precise expression, and I am sure he would agree that this language of the Lord Chancellor is a fantastic and a grotesque exaggeration. Hundreds of thousands! Are there hundreds, let alone thousands, nay, is there one other authority in this country which is in the same position as the Water Board which we are now discussing? If there is, I do not know it. This is an authority which is not trading for a profit. It is an authority whose revenues are secured upon the rates of four of the principal corporations of the country, and therefore to say that there are hundreds of thousands of other corporations in a similar situation is the language of exaggeration. Since my right hon. Friend and I seem to be not quite at one as to the precise meaning of the Minister of Health's attitude, I observed yesterday, with regard to the same Clause 19, that the Minister of Health said: I will mention that group of Clauses which will lead to economy in local government. This Clause 19 is one of them. All these are useful Clauses although none of them are vital just now. They are all economical Clauses. The first comment I should like to make is that I should have thought any Clause which is an economical Clause at the present time is a vital Clause, and if it is a vital Clause to county councils, which are dealt with under Clause 19, that their securities should be trust securities, it is just as economical and as vital to this Board that a Clause should be inserted, the security being equally good, that their securities should also be trustee securities. I rather suspect the real reason of the opposition of the Government to this Clause is this. They fear that if they extend the range of trustee securities the securities so added will be in competition with Government securities, and will tend to raise the rate at which the Government can borrow. From the speech of the Noble Lord on the Woolsack I gathered that all the rest, of his arguments were really very much by the, way. That was the real argument on which he relied. I suggest two answers to that argument. The first is that the main, and, indeed, the only object of the Trustee Act is, in the first place, to provide protection for trustees, and in the second place to provide protection for the beneficiaries. The second answer is that the effect of borrowing at a higher rate by the Board, which will be the effect if this Clause is not reinserted, will be to put up the rate at which the individual constituent autho- rity can borrow. The effect then will be that other municipal corporations all over the country will have to put up their rates too, because their security is no better, if as good, as the security of the Board, and the ultimate effect will be that the right hon. Gentleman himself will have to borrow at a higher rate than he otherwise would. Therefore, the action of my right hon. Friend is not merely unfair to the Board, but it will not have the effect which he hopes it will have. If he believes it to be in the national interest, he is perfectly right to adopt the attitude I expect he will adopt, but the effect will not be what he thinks it will be, but may be precisely the opposite.

The only other point is that which was referred to by the Chairman of the Committee. This Clause was passed by a Committee of the House. A few months ago we had a Debate in the House upon the Leith and Edinburgh Boundaries Bill. The House showed some inclination to throw over the findings of its own Committee, and so important was it considered that the principle should be maintained that the House should support its own Committee, that the Chairman of Ways and Means, with all the weight of his great authority, begged the House to consider before it threw over the findings of the Committee. That is a great principle, which we ought to maintain, and so great was the importance which the House attached, not only to the personality of the right hon. Gentleman—of course, that goes without saying—but to the gravity of his arguments, that it followed his appeal to support the action of its own Committee in that particular case. It is significant that Lord Emmott, who for many years occupied the position which the right hon. Gentle man holds to-day, took precisely the same point in another place. He said: I do not object to that in any way, but I do think it is rather an arbitrary proceeding to try and upset a decision deliberately come to by a Committee of the House of Commons where the point was specifically raised. So we have this case, that both the present and the late Chairman of Ways and Means have been pressing, one on this House and the other on the other House, the paramount importance of maintaining the principle that this House should support the findings of its own Com- mittees. If the Government, on the very first occasion on which it suits them, ask this House, without overwhelming reason, to reverse a decision of its own Committee, they will be doing a great disservice to that principle, for the maintenance of which these two eminent authorities have made so great an appeal. I beg the Government even now to consider whether they can avoid doing a grievous injustice, and whether they cannot now see their way to allow this Clause to be re-inserted.

Lieut.-Commander HILTON YOUNG:

It dawned upon me, as I imagine it must have dawned on other hon. Members in the course of this Debate, that there is a wide question of general policy of great importance concerned. It will not, therefore, be impertinent that one should say a word upon it, although he has no special knowledge of the action of the great cities concerned, because, unless it is said by such a Member, it is not likely to be said at all. I approach this particular question from the point of view of one who holds strongly the opinion that the list of trustee securities has dangerously increased, is increasing, and ought to be diminished. It was in listening to the most judicious and temperate observations of the hon. Member who presided over the Committee to consider this Bill that I thought I saw where our policy might be led astray in this matter. He told us that the Committee considered, no doubt most deeply considered and most judiciously decided on, the question of the value of this security. We shall land ourselves in an impossible situation if it is looked upon as a function of Committees of this House to decide upon the values of securities. It will follow from that, as the Committee is only a Committee of the House, that it will cast the burden of deciding the value of securities on this House as a tribunal. That is what hon. Members supporting this Resolution are calling on this House to do to-day. What would the result be if this procedure became established? Here and there, time and again, now this security and now that, new to the list and new to the individual would be proposed through the channel of private Committees. In consequence, sooner or later, and I think sooner than later, all barriers, all defences, and all boundaries to the list of trustee securities will be absolutely broken down. That would be a most dangerous thing, and would entirely destroy the value of trustee securities. As the guardians of trustees in these, matters—and it is given to us to act as guardians of those interests—we ought to hold most resolutely by those rules that alterations in the Trustee Act should always be a matter of the classes of security, decided on general lines as questions of principle. For that decision there must be a unity in authority, and there can only be such unity in authority if it is left very much as a matter of Government principle and decision. We should not do ill to pass a self-denying ordinance in this matter, as in other questions of finance, and to say that in matters of the trustee list we would only move on the Motion of a Minister.

Photo of Major Sir Keith Fraser Major Sir Keith Fraser , Harborough

I do not think the Government is likely to support this Motion. I think the objective of the Treasury is to curtail investment, and that that is a very unwise policy. You may curtail Government trust securities and money in charge, but you cannot curtail the terms of a trust. People are getting to understand what Government trust securities are, and they are making their wills to-day. Twenty-five years ago money was left to me in trust. The Government in those days had cornered all trust securities. What is that worth to-day? I am a poor man; I ought to be a rich man. People are learning by experience that they cannot trust the Government with their securities. The Government are trying to corner securities and they are not allowing people to invest money over a wide field. I advocate wider power for trustees, and unless the Government give wider powers people who are making their wills will invest their money in the Colonies and where they like. They are not going to be humbugged by the Government. People are getting a bit uneasy about these Government securities, and the Government must either go with the tide or they must go down. Why do they object to this security being a trustee security? This is one of the best securities. The position of the Water Board is exceptional. How can honest people deny them the right to borrow money on trust security? It is the best security in England. Are you going to say that you wiil not allow widows and orphans to invest money in this excellent security; that while you will allow Leicester, Sheffield Nottingham and Derby to borrow money on their trustee security, you will not when they join allow them to borrow money on trust security? If you do this you will make people distrust the Government when they are making their investments.

Sir J. D. REES:

There was an arithmetical axiom in my school days that, the greater includes the less; but if this Clause is not restored there will be a new political axiom, and that will be that the less excludes the greater. The steel of Sheffield, the lace of Nottingham, the hosiery of Leicester, and the railways of Derby are all good enough on the back of securities to make a trustee security; but when you get all these great products and all these great cities rolled into one at the back of one security, at the back of one body, it is not good enough to be a trustee security. That strikes me as being a very extraordinary state of things, and there is more in it than meets the eye. My hon. Friend the Member for Central Nottingham (Mr. Atkey) so very ably and clearly put the case of our joint city that I should not have troubled the House with any observation had I not thought it necessary to emphasise the solidarity of the City of Nottingham in favour of the restoration of this Clause, and their resentment, I might almost say indignation, at the action of the House of Lords in cutting out of the Bill that which was passed as the deliberate act of a Committee of the House of Commons and of the House itself. The hon. Member (Mr. Atkey) is a member of the Water Board as well as a representative of one of the Divisions of Nottingham, and I accept everything he said except his statement that water is the greatest of all amenities. Had it not been for myself as substitute he would have been presiding to-morrow night at the annual banquet of the Licensed Victuallers of Nottingham. In spite of this fact I accept him most fully, and I am sure the House will, as the mouthpiece of Nottingham. If there is one thing that would make one more indignant at the excision of this Clause it would be the fact that it has been done, as I believe, in the interests of the policy of housing, which I only support because it is a Government policy, although I believe it is a bad policy. I believe that housing and all other businesses will go on the better the less the Government have to do with them. I cannot help thinking that the very unusual action which has been resorted to in this case is really due to the reaction and interaction of the housing policy, and as the right hon. Member for Sheffield (Sir F. Roberts) said, there is a question of parliamentary good faith at stake. There was something very like a bargain. It is extremely desirable to keep the most meticulous and scrupulous faith with local bodies in these matters, because local bodies have, owing to the action of Parliament, been compelled to take action, which I firmly believe they do not think necessary, in the direction of everlasting encroachments of anything designated social reform, which have put up the rates to a desperate and dangerous extent, so that the breaking point has been reached.

Unless the Government allow a free vote, any hon. Member for any one of the cities concerned will be placed in an awkward position in which he ought, not to be placed. There are several of us who, while we have local patriotism and are inspired by it in regard to our constituencies, also firmly believe that to support the Government at the present time is the duty of a patriot, overriding perhaps even his duty to his own constituents. Consider the position of a Member who is unwilling to oppose the excision of this Clause if the Government presses for it, and puts on its Whips, and who yet firmly believes that in the interests of his own constituency and of all corporate bodies and of the investors in this stock this Clause should be restored. He is in an unfortunate position in which he ought not to be placed, and I appeal to the Government at least to allow us to have a free vote. My hon. Friend the Member for Rushcliffe (Mr. Betterton) devoted a good deal of his speech to a criticism of the Lord Chancellor. The Lord Chancellor on that occasion was not speaking as a judge. The House of Lords was not sitting as a judicial tribunal, and we might fairly consider the remarks of the Noble Lord on this occasion as being those of one, of God's creatures, and not necessarily inspired. I accept entirely the criticisms which my hon. Friend so temperately, so moderately, and so convincingly laid before the House. It will be most unfortunate if we do not succeed in restoring this Clause. I am not one of those who rave generally against any action taken by the House of Lords. I believe that the House of Lords almost invariably acts in the most patriotic, moderate and reasonable manner. In the 15 years during which I have been in this House never have I thought the fact that the House of Lords took certain action was anything against it, but rather that it was in its favour. Nevertheleess, I do believe that their action in this respect has been unfortunate. They have thrown over the deliberate decision of a Committee appointed in this behalf, which most carefully considered the matter, and the decision of the House of Commons. I beseech the Government if they will not recede from the ground they have taken up at any rate to let us have a free vote on this occasion and not place their supporters in the awkward situation of having to decide between doing what they think right for their constituencies, and supporting the Government which I believe is one of the chief duties of Members of Parliament.

Photo of Mr Albert Green Mr Albert Green , Derby

We have had expressions of opinion from three of the great cities concerned in this matter, and I, as one of the representatives of Derby, join in the opposition to the excision of this Clause by the House of Lords. The hon. Member for Norwich (Lieut.-Commander Hilton Young) seems to suggest that the reason for Government opposition to this Clause is that, by increasing the number of trustee securities, it will weaken Government ability to borrow money at a lower rate of interest. It was provided by Section 3 of the Act of 1899 that, for the purpose of investment of trust funds, the Board should be deemed to be a corporation of a municipal borough, having, according to the returns of the latest census, a population exceeding 50,000, and that the Trustees Act should apply as if the Board were referred to in that Act. Having regard to the fact that that Clause is incorporated in the Charter of this Water Board, taken in conjunction with the further Acts passed in connection with the housing schemes, it is not increasing the scope of trustee securities. We have to take into consideration, further, the opinion of the Ministry of Health that one of its great duties at present is the provision of houses. The provision of houses is one of the reasons why the Derwent Valley Water Board have to enlarge their scope of operations, and to provide a greater amount of water. If it were not for the development of the different areas of the constituent authorities which compose this Board, there would have been no need for the enlargement of the operations of the Board. All who come from that particular area know how these great towns have developed, especially during the last 10 years, and made it essential that further supplies of water should be provided. In making this provision we are providing for the development of that area, and for the new houses that are being built, and unless the House gives sanction for borrowing this money as a trustee security, the rate of interest which must be offered by these great corporations for their housing funds must be raised. Any increase in the rate of interest which the Derwent Water Board have to offer for that purpose will be reflected in the increased rate of interest which has to be offered by the different corporations carrying out housing schemes, and this will have an effect on the greater call on the Treasury to meet the deficiency which will arise on the housing schemes of the different boroughs.

In addition to the question of the increased rate of interest and the extra cost to the constituent authorities, and thus to the Treasury, there is also at stake the question of the authority of this House. We have had this question discussed before a Committee of this House and in this House, and never was there any protest or word of objection raised by the Treasury. It went from this House to the House of Lords, and it was not until the eleventh hour that the Treasury officials themselves intervened. It was not really the action of the Members of the House of Lords itself, but the action of Treasury officials, and the principle which is at stake to-night is whether this House of Commons shall be the governing authority in a great matter of this description, or whether we are to be governed by bureaucratic officials, who have no responsibility whatever to the constituencies up and down the country. I hope that this House will see that the Clause is restored, and if the Government cannot see their way to take off their Whips, though I am a supporter of the Government, I shall be compelled to vote against the Government in this matter.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

I do not know whether the hon. Member includes me in the class of bureaucrats. I confess I do not recognise myself under such a description. I do not think that that kind of handling of the question will help the House to decide the issue before us. I have sat in this House for 28 years. I do not think I have ever hitherto taken part in a Debate on a Private Bill. The House will realise that least of all in my present position should I do so if there were not a principle of public policy at stake. An hon. Member has alluded to the strong appeal made by the Chairman of Committees the other day for the House to support the Committee. I have always followed that rule myself. It has been decisive for me in almost every vote I have been called upon to give on such an occasion. If this were an issue between two local authorities I should not rise to-night, nor would it be necessary for the Treasury to offer any opposition to the Bill. The case for the promoters was stated with great lucidity and great fairness by my right hon. Friend the Member for Sheffield (Sir S. Roberts), who moved to disagree with the Lords Amendment. He ended with an appeal, which has been repeated since, that I should leave this question to the free decision of the House, and that I should not use the ordinary machinery of Government influence in order to secure a decision in my favour. I am going to respond to that appeal, but I hope the House does not take me for a fool, and that hon. Members realise that in consenting to that course I know the risks I am taking, I know how handicapped I shall be and already am, and that I am trusting myself to this great Court of Parliament to give a judgment on a great question of public policy uninfluenced by personal or local considerations.

I shall not put on the Whips, but there has been very assiduous Whipping on the other side. A great many people, with no interest or no previous knowledge, without waiting to hear the other side of the case, have been asked, and have promised, their votes. I have so great a faith in this Assembly that I will take off the Whips. I shall not be surprised if I fail to carry with me the assent of the House, but I will try. I call the attention of the House to the character of the Debate. We have had a great many speeches. Every speech but one has been from an interested party. The voice of the great public, which has no local, but only a national interest, has come only from the hon. Member for Norwich (Lieut. - Commander Hilton Young). He, and he alone, has spoken as a Member of the Commons of England, and not as a representative of an interested constituency. I hope that my hon. Friends who spoke for the other side will not think I am blaming them. It is right that, in a matter of this kind, they should represent, and give to the House, in the strongest possible terms, the local interests of their constituents. There has been nobody for the other side except one spokesman.

Photo of Mr Stephen Walsh Mr Stephen Walsh , Ince

We have had no chance yet.

10.0 P.M.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

There have been plenty of chances. Only one Member has risen, and that Member spoke against the Motion which has been moved. I beg the House's pardon. My right hon. Friend (Sir H. Samuel) spoke as Chairman of the Committee. As to the attitude of the Treasury, the hon. Member who spoke last complained that throughout the proceedings the Treasury had never made their opinions known. He is under an entire misapprehension of fact, and, I think, under an entire misapprehension of Parliamentary procedure. We made our opinions known to the promoters of this Bill the moment they put their Clause down. What is the complaint, if complaint there be? It is that we did not appear as opponents of the Bill in Committee. We had no locus standi to appear. Sir Erskine May in his work on Parliamentary Practice observes:— Except in cases in which the consent of the Crown may be withheld from a Bill, Government Departments are without any means of enforcing the adoption of their Clauses either by the parties or the Committee, and their relations to the Committee and Parliament are often not a little anomalous. We cannot petition; we cannot appear by counsel; we are not parties to the proceedings of the Committee. The Committee were placed in possession of our view by counsel for the promoters, but counsel for the promoters could not and did not argue our case. And when it is said that the Committee considered the case with great care and came to a deliberate and considered judgment, I must remind my right hon. Friend the Chairman that before counsel had got to the Treasury objection, he expressed his agreement with the view of the promoters. I do not think if my right hon. Friend had had the Treasury case, or the case as it was put by the hon. and gallant Member for Norwich, fairly argued before him, that he and his Committee would have come to the same conclusion. I beg to assure the right hon. Gentleman that there was no discourtesy intended to himself or to the Committee of this House over which he presided, but we, as I say. have no locus standi to appear. We have before us one case in which a request was made to appear before the Committee, and it was resented as an improper proceeding, and as an improper attempt on the part of the Government to influence the proceedings. Is it fair to reproach us then that we, with no locus standi, did not do that which has been reported to the House as an improper thing on another occasion? Had my right hon. Friend expressed to me or my Department a desire that we should give our views to the Committee, although not parties to the inquiry, we should have done so. We had no such indication. We followed the usual course. We give notice in these cases to promoters of our objections. We do not on that account stop the progress of the Bill; we cannot. I do not know of a case where the promoters have not submitted to objections which the Treasury raised.

What does this Bill propose to do? Why are the Treasury, and why am I interested? Why am I speaking here? The Bill proposes to make that a trustee investment which, under the general law of the land, is not a trustee investment. There are two officials of the Government who have a special responsibility in respect of the list of trustee securities. They are the Lord Chancellor and myself. We cannot release ourselves from it, and it is pursuance of that responsibility that the Lord Chancellor made the appeal in the House of Lords which, fortified by a similar appeal from a great judge, Lord Sumner, carried the House of Lords with him. It is in pursuance of the same responsibility that I make the same appeal to this House. It is to the interest of every borrower to get his obligation within the lists of trustee securities. Borrowers constantly attempt to do it. Is the House going to allow what is and what is not a trustee security to be judged and decided, not on some general principle by a general Act of Parliament, but by the chance majority of a particular night on a particular private Bill in the House of Commons? If so, the list of trustee securities becomes worthless. The added value attached to them by the fact that they are trustee securities is written off. What is and what is not a trustee security is no longer a question of public policy, but a question of the chance majority and of the number of Members of Parliament who, in their representative capacity, are interested in the policy.

I hope I have said enough to show the House that, be I right or be I wrong in the line I have taken, we are deciding to-night not a small local issue, but a big question of public finance, public policy and public security. If you break down the barriers which have guarded the trustee securities so far, you break faith with the owners of trustee securities. An hon. Member has spoken to-night as if we are breaking faith with the Derwent Valley Water Board or the Derby Corporation if this Amendment be not carried. I cannot follow him. It is alleged that, because their stock was admitted to the class of trustee securities, therefore we are bound to admit any other obligation to them if we admit it in the case of anyone else. No such bargain was made by Parliament, or ever contemplated or thought of at the time, and it is absurd to say the House is not free to judge this question on its merits without being hampered by the decision of 1899.

If you once admit that, by a private Bill, the list of trustee securities is to be enlarged, you break down the sanctity which has hitherto surrounded that list. Hon. Gentlemen have spoken as if this were a case which stood by itself. That is not so. I have in my hand a list of seven cases, all occurring since 1904, in which great corporations or other public authorities have sought by private Bill to extend the limit of the trustee securities, and in every case but one the Clause has been withdrawn at one stage or another of the Bill, in deference to the objections taken to it by the guardians of that class of security. In every case but one these great public authorities have yielded to the arguments, reasons and objections given by the constituted guardians of these securities, and, mark the exception, and mark the conditions with which that exception was surrounded, because it strengthens my case. It was the case of the Edgware and Hampstead Railway, in which a certain Clause empowered trustees for land situated upon or in the neighbourhood of the company's railways to hold stocks and shares if they considered that the railways would be of substantial advantage to their land; but only on condition that, before so investing, each trustee or trust applied for and obtained an order of the High Court authorising the investment. I think an exception so guarded, where the trustee has to prove to the satisfaction of the High Court that the investment is in the interest of the trust, makes my case stronger than if there had been no exception to my general scheme.

Photo of Lord Henry Cavendish-Bentinck Lord Henry Cavendish-Bentinck , Nottingham South

Is there not the case of the Staines Reservoirs Act, of 1896, and the Southampton Harbour Act, 1903, also?

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

It is rather a misfortune for those who have to speak that our minds do not always travel over the same ground and exactly in the same order as those of all our audience. My noble Friend has invited mo to address myself to a point to which I was coming next. It is pleaded by the promoters that this exception has already been made in their own case by an Act of 1899, and in the two other cases mentioned. Let me say in the first place that I think it was a pity those exceptions were made. It shows how perilous it is. It is a small thing in each case. You will find a great deal to be said in favour of the particular authority, but just as much can be said in favour of a great number of other authorities, and it emphasizes my argument, that if you decide on particular cases in particular private Bills, instead of, as the hon. and gallant Member for Norwich urged you should, in a general Act, you will not do justice even and fair, your law will be partial, you will grant favour to one authority, and refuse it to another in a similar position. But even so, there is a vast difference between those three cases and the case with which I am now deal- ing. Those three cases extended to particular public authorities the provisions of a general law; the Amendment asks the House to vary the general law in favour of a particular body.

Let me make that plain. Right or wrong, not without grave doubt and anxious consideration, we extended by general Act to all housing authorities the privilege of making their mortgages trustee investments. We did that in order to help them in housing finance. It is perfectly true that we did not, as I would very much prefer to have done if the thing were to be done at all—and indeed, with this experience, as I now bitterly regret that I did not do—we did not confine it to money raised for housing purposes, because it was pressed upon us that the finance of these housing authorities was one, that their credit was one, that you could not separate it into compartments, and that they had large mortgages outstanding which might be affected if the new mortgages for housing were of a different character. The old mortgages might be called in, and the authority, when it was trying to raise new money, might be confronted with great demands for the repayment of old money. Accordingly, we extended this privilege to all housing authorities, not without grave anxiety, but because the problem of housing finance is for the local authorities and for Parliament a most difficult one, and because we felt that we must use every means which would facilitate the carrying through by them and by ourselves of the immense task which lies before us in this matter of housing. It was solely to facilitate housing that we did it. The privilege was confined to housing authorities, though not to money raised by them for housing purposes. This Bill takes an authority which is not a housing authority, which cannot help and cannot injure housing, and proposes to extend to it, among all public authorities in a similar position, the right which by general Statute is given to housing authorities alone.

My hon. Friend the mover suggested an alternative form of words which he thought did single out the body in which he is interested from any others. I venture to say that he himself, if he came down to this Bench, would make a stand against demands by others in a comparable position. There is a similar authority in my own district in the Midlands, not for water, but for sewerage. Their mortgages, if they have any, are not trustee securities. How could I resist their demand to have that privilege extended to them if the House grants it to this particular body? Water authorities, sewerage authorities, harbour authorities all over the country might come and make the same demand that what we did for housing authorities, because they were housing authorities, and in order to help housing, should be extended to them, though they have nothing to do with housing. Again, I say, I am not asking Parliament to take away any privilege which Parliament has already conferred on the Derwent Water Board. They may issue trustee stock to-morrow if they like, and I do not know whey they do not do it. They cannot, so long as the general law of the land remains unchanged, issue mortgages, and claim that those mortgages should be trust securities. I say I will not use the machinery; I throw myself on the good sense and public spirit of the House, and I beg the House not to deal piecemeal with these great questions in deference to a group of Members who speak under the influence, the legitimate influence, of their local corporations, and not to be led into breaking down, case by case on Private Bills, the general law which regulates the admission of securities to the trustee funds.

I am not suggesting for a moment that this is not a perfectly good security; it would be absurd to do so. What are the rules as to the admission of trustee securities? You have, in the first place, to admit only securities of which on general principles you approve, and to admit them, not individually, not by favour, but as a class on grounds of principle. In the second place, you require to have a list of trustee securities sufficient to meet the demand for trustee securities. If you go beyond that you do injury to every holder of trustee securities and every authority which is allowed to issue trustee securities. You destroy the value of the list, you do irreparable injury to those who, on the faith of your public policy and on the faith of the rules which you have publicly passed, have invested their money, or directed that their money should be invested in that particular class of security. I have put what I con- ceive to be the great principle of public policy involved. I hope the House will affirm the principle, and not do otherwise by their desire, either to follow my right hon. Friend (Sir H. Samuel), who had not all these arguments before him, or to please the hon. Gentlemen who came from the few constituencies concerned.

Photo of Mr James Thomas Mr James Thomas , Derby

The Chancellor of the Exchequer opened his speech by saying that this is the first time in 28 years that he has taken part in a private Bill discussion. As one who is going to oppose him to-night, I can only say that I regret that he has availed himself of this opportunity to take part in Debate, but I think it is only fair to say that no one could have stated the case for the Government more fairly or eloquently than the right hon. Gentleman has already done. I do want, however, to submit to the House that he has stated the case unfairly from the point of view of the Derwent Valley Water Board. I do beg the House to follow the line of wisdom in this matter. The Chancellor has said, in substance, that when in 1899 this House agreed to the Derwent Valley Water Board it merely gave authority to issue stock for trustee securities. But the Chancellor of the Exchequer brushes that on one side, and also says, in substance: Why should this House of Commons be bound by something that was done in 1899? As a matter of fact, the Chancellor of the Exchequer was bound to admit that the Bill of 1899 did more than that. It authorised this authority to be placed on precisely the same footing that was then existent or might be given to any subsequent authority. It is important that the House should clearly understand that, because it is vital to a fair consideration of the whole case.

In the second place, in answer to my hon. Friend the Member for Norwich—who, incidentally, I think, the Chancellor had no right to assume was the only disinterested person in this House, for surely Members representing constituencies that are directly affected by a decision, or may be ultimately affected by a decision, as much represent the public as anyone else in the House—the right hon. Gentleman made certain observations. I do ask the House to observe that if they vote with the Chancellor of the Exchequer to-night their municipalities will be affected just as we are affected at the moment. It is not a question of creating a new trust as described by the Chancellor of the Exchequer. It is a question of taking away a trust already existent. [HON. MEMBERS: "No no!"] Very well, then, if I can prove that it is so—[An HON. MEMBER: "YOU cannot!"]—I am entitled to the support of those who now disagree. Up till now the Chancellor has created the impression that the only object of those of us who are supporting this Bill, and disagreeing with the Lords, is that we are anxious to add—to use his own words—to the list of Trustee Securities. That is the statement made. That is the statement the House is asked to vote upon. It is a reversal of the case. I repeat that in 1899 certain authority was given to this body. There is no doubt or question about that. When, as the Chancellor of the Exchequer has said, the Ministry of Health decided upon a housing policy, they reversed the situation so far as this Board was concerned, as the Chairman of Committee has already explained. This body was then compelled to come to the House of Commons and say, that owing to the action of the Government itself they were adversely affected. The House of Commons unanimously decided that, being adversely affected by the action of the Ministry itself, they would restore the position of the Board. That was done unanimously by Members of this House.

Photo of Mr Augustine Hailwood Mr Augustine Hailwood , Manchester Ardwick

May I ask the right hon. Gentleman whether the Ministry of Health existed in 1899?

Photo of Mr James Thomas Mr James Thomas , Derby

If my hon. Friend had been present during the whole of the Debate he would have understood that the action of the Minis-try of Health was only a few months ago. I think the House generally understands clearly that there was a new housing policy introduced not very many months ago. In 1899 the authority was given and maintained by this body until the Ministry of Health introduced their Housing Bill that gave every local authority the power of a trust security. That immediately affected this body adversely and they came to this House. They then went to a Committee upstairs which unanimously decided that the power should be retained. A Committee of the House of Lords also unanimously decided to give them that power.

I ask this House to judge this matter fairly on its merits. When we give a Second Reading to a Bill here we send it upstairs to a Committee and it is at least assumed that an impartial and fair consideration is to be given to every aspect of the case. We have heard tonight that every aspect of this case was considered by the Committee. We have heard that they unanimously came to that decision. We have heard that the House of Lords were equally unanimous, and now we have had the statement from the Chancellor of the Exchequer as to why the Treasury itself takes exception. I can understand bankers being anxious over this matter, but what I cannot understand is any hon. Member of this House going into the Lobby saying that he is voting for Derby, Sheffield, Leicester, or Nottingham individually having all the authority and power of a trust, but because they combine in the interests of the people they represent then they are not to be made a trust security. That is the crux of the whole case.

Strip the whole thing, and it boils down to this: Derby, Nottingham, Sheffield, and Leicester, as individual corporations, obtain all the power that is necessary, but because in the interests of the community they combine to give cheaper water and more facilities to the people they represent, this Parliament is asked to say that there is less security by the four combining than if they stood alone. That is the issue before the House which we have to determine. [HON. MEMBERS: "No!"] You will say "No" by your vote, but that will not alter the facts of the case. It will not alter the fact that instead of the House being called upon to vote to extend the trustee security, they are being called upon to vote to take from the trust security power that already exists. [HON. MEMBERS: "No!"] The most remarkable thing is that the most shouting comes from those who have not heard the Debate. Those who have followed the whole Debate will admit that that is the issue before the House. It is because I believe that we are voting in the public interest, it is because municipalities must be encouraged and helped, it is because I believe we have no right to compel an authority of this kind to pay more money than they ought to pay, and which it is necessary to pay, that I believe the House ought to vote for disagreeing with the Lords Amendment. I want to say how much I appreciate the decision of the Chancellor of the Exchequer to take the Whips off. Incidentally, the agreement was only arrived at a few minutes ago, because when we came to the House we were under the impression that the Whips were being put on. I interpret the right hon. Gentleman's action as at least an indication that it would enable him to know what the feeling of the House is on this matter. I ask the House not to miss the one simple issue it is called upon to decide. It is this: If four municipalities combine together for the advantage of the ratepayers, then those municipalities should at least be as strong as any small one acting on its own.

Photo of Sir Owen Philipps Sir Owen Philipps , City of Chester

During the war the building of houses practically ceased, and at the end of the war there was such a great shortage of workmen's houses that the question deserved and received the immediate attention of the Government. In order to facilitate the building of new workmen's houses the Government passed an Act which authorised local authorities to issue housing bonds as trustee securities, and I feel strongly that the urgent need to increase the number of new houses made it absolutely necessary, however undesirable it may have been from a purely financial standpoint, to give local bodies the power of raising money under the Trustees Securities Act. By doing so we have undoubtedly helped on housing, although it may result in some cases in a considerable loss in the future to widows and children, whose money may be invested in securities of some small local authorities which may not prove desirable. I think the action of the Government in this matter will by general consent be admitted to have been wise. I am personally very pleased that the Treasury is taking a firm stand in the matter and has put before the House and before the country the broad issue. I hope the House of Commons when voting to-night will-realise that they are voting on a big issue, i.e., whether the Trustee Securities Act is to be interfered with by Private Bill legislation. In my view, even at present, the list of trustee securities is so large that it has taken away from the great corporations in this country one of their most valuable possessions, namely, the power of being able to raise money for the benefit of the great masses of the country at a low rate of interest. Gradually Parliament has, by public Acts extending the list of trustee securities, made it so long that it has already materially increased the rates at which big municipalities and other public authorities have to borrow money. It is not all due to the War. Some of it is due to the lengthy list of trustee securities. We are on a very slippery slope to-night, as the Chancellor of the Exchequer has pointed out, and if logrolling in this House is begun and three or four boroughs combine, you will have a large number of Members coming down to speak in favour of extending the list of trustee securities, and the list may

be extended without much opposition, from other Members not interested in that particular locality. That will lead to this result, that while you may think you are doing good to some particular constituency, in the long run, owing to the further extension of the list of trustee securities, other constituencies will have to pay more for their money than they would if you voted in support of the action which the Treasury has taken to-night.

Question put, "That this House doth disagree with the Lords in the said Amendment."

The House divided: Ayes, 75; Noes, 159.

Division No. 363.]AYES.[10.41 p.m.
Adamson, Rt. Hon. WilliamGraham, D. M. (Lanark, Hamilton)Parkinson, John Allen (Wigan)
Allen, Lieut.-Colonel William JamesGraham, R. (Nelson and Colne)Raffan, Peter Wilson
Atkey, A. R.Green, Albert (Derby)Richardson, R. (Houghton-le-Spring)
Balfour, George (Hampstead)Gregory, HolmanRobinson, S. (Brecon and Radnor)
Banner, Sir John S. Harmood.Gritten, W. G. HowardRoundell, Colonel R. F.
Burnes, Major H. (Newcastle, E.)Grundy, T. W.Samuel, Rt. Hon. Sir H. (Norwood)
Bentinck, Lord Henry CavendishGuest, J. (York, W. R., Hemsworth)Seddon, J. A.
Betterton, Henry BGuest, Major O. (Leic, Loughboro')Sexton, James
Bowerman, Rt. Hon. Charles W.Hartshorn, VernonShaw, Thomas (Preston)
Broad, Thomas TuckerHayday, ArthurSmith, W. R. (Wellingborough)
Bromfield, WilliamHenderson, Major V. L. (Tradeston)Stephenson, Lieut.-Colonel H. K.
Brown, James (Ayr and Bute)Hirst, G. H.Swan, J. E.
Cairns, JohnHolmes, J. StanleySykes, Sir Charles (Huddersfield)
Cape, ThomasJones, G. W. H. (Stoke Newington)Thomas, Rt. Hon. James H. (Derby)
Casey, T. W.Kelley, Major Fred (Rotherham)Thomson, T. (Middlesbrough, West)
Chadwick, Sir RobertKenworthy, Lieut.-Commander J. M.Vickers, Douglas
Davies, Evan (Ebbw Vale)Kenyon, BarnetWalsh, Stephen (Lancaster, Ince)
Devlin, JosephLawson, John J.Waterson, A. E.
Edwards, Allen C. (East Ham, S.)Lunn, WilliamWhite, Charles F. (Derby, Western)
Edwards, C. (Monmouth, Bedwellty)Maclean, Nell (Glasgow, Govan)Wilson, Rt. Hon. J. W. (Stourbridge)
Edwards, G. (Norfolk, South)Middlebrook, Sir WilliamWilson, W. Tyson (Westhoughton)
Entwistle, Major C. F.Morden, Colonel H. GrantYate, Colonel Charles Edward
Finney, SamuelMorgan, Major D. WattsYoung, Robert (Lancaster, Newton)
Fraser, Major Sir KeithMurray, Dr. D. (Inverness and Ross)
Galbraith, SamuelNewbould, Alfred ErnestTELLERS FOR THE AYES.—
Goff, Sir R. ParkNicholson, Reginald (Doncaster)Sir Samuel Roberts and Mr. J. F.
Green.
NOES.
Acland, Rt. Hon. F. D.Cayzer, Major Herbert RobinGuest, Capt. Rt. Hon. Frederick E.
Addison, Rt. Hon. Dr. C.Chamberlain, Rt. Hn. J. A. (Birm., W.)Hacking, Captain Douglas H.
Agg-Gardner, Sir James TynteChllcot, Lieut.-Com. Harry W.Hailwood, Augustine
Ainsworth, Captain CharlesChild, Brigadier-General Sir HillHamilton, Major C. G. C.
Armitage, RobertClough, RobertHarmsworth, C. B. (Bedford, Luton)
Bagley, Captain E. AshtonCoats, Sir StuartHennessy, Major J. R. G.
Baird, Sir John LawrenceCockerill, Brigadier-General G. K.Henry, Denis S. (Londonderry, S.)
Baldwin, Rt. Hon. StanleyColvin, Brig-General Richard BealeHerbert, Dennis (Hertford, Watford)
Banbury, Rt. Hon. Sir Frederick G.Conway, Sir W. MartinHills, Major John Waller
Barlow, Sir MontagueCraig, Colonel Sir J. (Down, Mid)Hinds, John
Barnett, Major R. W.Davies, Thomas (Cirencester)Hohier, Gerald Fitzroy
Barnston, Major HarryDavison, Sir W. H. (Kensington, S.)Holbrook, Sir Arthur Richard
Barrie, Charles CouparDean, Lieut.-Commander P. T.Hood, Joseph
Barton, Sir William (Oldham)Elliot, Capt. Walter E. (Lanark)Hope, Sir H. (Stirling & Cl'ckm'nn.W.)
Bell, Lieut.-Col W. C. H. (Devizes)Eyres-Monsell, Commander B. M.Hopkins, John W. W.
Bird, Sir A. (Wolverhampton, West)FitzRoy, Captain Hon. E. A.Hopkinson, A. (Lancaster, Mossley)
Blake, Sir Francis DouglasFord, Patrick JohnstonHorne, Edgar (Surrey, Guildford)
Boles, Lieut-Colonel D. F.Foreman, HenryHotchkin, Captain Stafford Vere
Boscawen, Rt. Hon. Sir A. Griffith.Forestier-Walker, L.Hunter-Weston, Lieut.-Gen. Sir A. G.
Bowles, Colonel H. F.Foxcroft, Captain Charles TalbotInskip, Thomas Walker H.
Bowyer, Captain G. E. W.Fremantle, Lieut.-Colonel Francis E.James, Lieut.-Colonel Hon. Cuthbert
Breese, Major Charles E.Ganzonl, Captain Francis John C.Jodrell, Neville Paul
Brown, Captain D. C.Gardiner, JamesJones, Henry Haydn (Merioneth)
Burdon, Colonel RowlandGibbs, Colonel George AbrahamJones, J. T. (Carmarthen, Llanelly)
Burn, Col. C. R. (Devon, Torquay)Gilmour, Lieut.-Colonel JohnKellaway, Rt. Hon. Fredk. George
Campion, Lieut.-Colonel W. R.Gray, Major Ernest (Accrington)Kidd, James
Carew, Charles Robert S.Greenwood, Colonel Sir HamarKing, Captain Henry Douglas
Carr, W. TheodoreGreenwood, William (Stockport)Knights, Capt. H. N. (C'berwell, N.)
Lewis, Rt. Hon. J. H. (Univ., Wales)Pollock, Sir Ernest M.Sutherland, Sir William
Lindsay, William ArthurPownall, Lieut.-Colonel AsshetonThomas-Stanford, Charles
Lloyd, George ButlerPratt, John WilliamThomson, F. C. (Aberdeen, South)
Locker-Lampson, Com. O, (H'tingd'n)Prescott, Major W. H.Thomson, Sir W. Mitchell- (Maryhill)
Lort-Williams, J.Pretyman, Rt. Hon. Ernest G.Townley, Maximillan G.
Lynn, R. J.Pulley, Charles ThorntonWaddington, R.
McLaren, Robert (Lanark, Northern)Randles, Sir John S.Ward, William Dudley (Southampton)
M' Lean, Lieut.-Col. Charles W. W.Raw, Lieutenant-Colonel N.Warner, Sir T Courtenay T.
Macpherson, Rt. Hon. James I.Reid, D. D.Wheler, Lieut.-Colonel C. H.
Mitchell, William LaneRemer, J. R.Whitla, Sir William
Molson, Major John ElsdaleRodger, A. K.Williams, Aneurin (Durham, Consett)
Mond, Rt. Hon. Sir Alfred M.Royds, Lieut.-Colonel EdmundWilliams, Lieut.-Com. C. (Tavistock)
Montagu, Rt. Hon. E. S.Rutherford, Sir W. W. (Edge Hill)Williams, Col. P. (Middlesbrough, E.)
Moore-Brabazon, Lieut.-Col. J. T. C.Samuel, Samuel (W'dsworth, Putney)Williams, Col. Sir R. (Dorset, W.)
Morison, Rt. Hon. Thomas BrashSanders, Colonel Sir Robert A.Williamson, Rt. Hon. Sir Archibald
Morrison, HughScott, A. M. (Glasgow, Bridgeton)Willoughby, Lieut.-Col. Hon. Claud
Mosley, OswaldSeager, Sir WilliamWilson, Daniel M. (Down, West)
Munro, Rt. Hon. RobertShaw, William T. (Forfar)Wilson, Lieut.-Col. M. J. (Richmond)
Murchison, C. K.Sprot, Colonel Sir AlexanderWilson-Fox, Henry
Nall, Major JosephStanier, Captain Sir BevilleWise, Frederick
Newman, Sir R. H. S. D. L. (Exeter)Stanley, Major Hon. G. (Preston)Wood, Sir H. K. (Woolwich, West)
Norris, Colonel Sir Henry G.Stanton, Charles B.Worsfold, Dr. T. Cato
Parker, JamesSteel, Major S. StrangYounger, Sir George
Pease, Rt. Hon. Herbert PikeStrauss, Edward Anthony
Pennefather, De FonblanqueSturrock, J. LengTELLERS FOR THE NOES.—
Philipps, Sir Owen C. (Chester, City)Sugden, W. H.Lieut.-Commander Hilton Young
and Captain Coote.

Resolution agreed to.

Remaining Lords Amendments agreed to.

Photo of Mr John Whitley Mr John Whitley , Halifax

I beg to move, in the Preamble, to leave out the words And whereas the moneys required by the Board for expenditure on revenue account are (so far as they are not obtained from other sources) provided by means of contributions payable on precepts issued by the Board by the Corporations of Derby, Leicester, Nottingham and Sheffield (hereinafter referred to as 'the four Corporations') out of the revenue of their respective water undertakings and the proceeds of the general district rates leviable by them respectively:And whereas the Board are authorised to raise either by borrowing on mortgage of their revenue and the moneys receivable by them from the four Corporations or by the issue of debentures or annuity certificates under 'The Local Loans Act, 1875,' or by the creation and issue of stock any moneys which they are for the time being authorised to raise for expenditure on capital account:And whereas the Act of 1899 contains provisions by virtue of which any stock issued by the Board is a security available under the provisions of 'The Trustee Act, 1893,' for the investment of trust funds as if such stock had been issued by a corporation of a municipal borough having according to the returns of the last census prior to the date of investment a population exceeding 50,000 and is thus assimilated to stock issued by any of the four Corporations:And whereas by virtue of 'The Housing (Additional Powers) Act, 1919,' any local bonds issued under that Act and mortgages of any fund or rate granted after the passing of that Act by any of the four Corporations are securities in which trust funds may be invested as if they were referred to in Section 1 of 'The Trustee Act, 1893':And whereas it is expedient that it should be provided that any mortgages granted by the Board after the passing of this Act shall also be securities in which trust funds may be invested. The decision to which the House has just come makes it necessary for me to move this consequential Amendment. The matter has been overlooked in the other House. The Amendment they carried ought to have been accompanied by an Amendment to leave out the words that lead up to the Clause which has been omitted from the Bill.

Amendment agreed to.