Cunard (Insurance) Agreement [Money].

Part of the debate – in the House of Commons at on 10 November 1930.

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Sir HILTON YOUNG:

I have no comments to make on the merits of this scheme, but there are two points of financial procedure which require elucidation. The first is that raised by my right hon. Friend the Member for Hillhead (Sir R. Horne). I feel confident that the President of the Board of Trade will realise that there is a strong argument in favour of greater elasticity in fixing the rate of the construction risk. We have heard that fixed rates at a definite figure in the Bill can only be merely prudent. It must not be taken for granted by anybody with a practical acquaintance with the subject, but when real doubt has been expressed, as in this case, the right hon. Gentleman will see that it is more prudent in the final provisions in the Bill to allow elastic machinery for fixing the rates, rather than to fix them at a figure which might prove to create some dislocation in the market.

The second matter on which I should like to ask for an explanation is purely a question of financial procedure upon the Resolution. Paragraph (c) of the Resolution provides that there shall be constituted a special fund into which there shall be paid all premiums and out of which expenses shall be paid. That is, in effect, asking the Committee to short-circuit the Consolidated Fund as regards certain receipts of public moneys; and I am sure that the right hon. Gentleman will agree with me that whenever the Committee are asked to short-circuit the Consolidated Fund in order to allow for payments into and out of a further fund, the Committee should be told of the reasons for that course. It would seem to me prima facie that there are some reasons against this course and in favour of the more orthodox procedure of allowing all the receipts to go into the Consolidated Fund, because in effect we are by this procedure constituting one of those special sinking funds which are, as regards the general principles of public finance, usually considered to be undesirable. So on broad principles, in order to avoid a multiplication of funds and sinking funds, it would seem proper to follow the ordinary procedure and allow these payments to go into and out of the Consolidated Fund. There may be a special reason why it is of some advantage that this special fund should be created, but there is a wide principle at stake, and the Committee should be informed of the reasons.