Second Schedule. — (Amendments as to Ultimate Incidence of Contributions under Part I of the Principal Act.)

Part of Orders of the Day — War Damage (Amendment) Bill. – in the House of Commons at on 4 June 1942.

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Photo of Mr Geoffrey Shakespeare Mr Geoffrey Shakespeare , Norwich

I have not intervened in these Debates before because I was not able to do so, but I am very sorry that when I do so I should have to differ from one who was my old Chief when he was Minister of Health. My hon. Friend the Member for Hastings (Mr. Hely-Hutchinson) has justified the present position on the broad grounds that it would upset a form of service which has been of very great advantage in general housing development. That is true, but as far as I can see, no one wants to upset it, neither the hon. and gallant Member for Hornsey (Captain Gammans), the hon. Member for Basset-law (Mr. Bellenger) nor the hon. and gallant Member for North Newcastle-on-Tyne (Sir C. Headlam). All that they ask is that, in providing against an unknown risk which is something altogether different from the ordinary risks that may fall in peace-time, but a risk which falls upon rich and poor alike, there should be no form of property, investment or finance which should be put into a privileged position. That is the position without a shadow of doubt. It does not matter whether rich people invest in equities, debentures or mortgages, the fact remains that companies which carry on with borrowed money are having a bad time now. The whole of the burden of providing for the security of the money advanced by the mortgagee falls on the equity and not on the mortgagor. It really does not comfort a particular company to know that at some unspecified date in the post-war period they will earn 18 per cent. The point is that here and now this burden has fallen upon them. These housing companies, particularly the Voluntary Housing Associations who use this form of mortgage, find it very difficult to keep up their contributions.

I realise the difficulty of the Chancellor of the Exchequer. It is difficult to distinguish between the different forms of lending in respect of the different propertie's. He has been rather ingenious in Section 25 of the Act in making a distinction there. The principle is admitted in that Clause that, in so far as building societies lend money in respect of certain classes of mortgage, they should pay a proportion of the contribution accofding to a sliding scale. All we ask is for an extension of that principle. We are putting a liability upon building and other societies, which is not shared by insurance companies. Why should we put one in a more favourable position than the other? I think the Committee will agree that there are certain institutions, like banks, which do not make a general principle of investing in property. If I want to borrow money from my bank, I may have to put down some security, some collateral, but it is not the business of a bank normally to invest in property. It is the business of a bank to accommodate clients in finance, and no one would wish to increase the liability of the banks. But there are agencies which normally and habitually advance money on the security of a mortgage or of debenture shares in a company, all of which is in the nature of an investment. It should be possible for the Chancellor to find some method whereby, if such advances do take the form of investment in property, then, at least the man who is mortgagor or the man who is lending the money should bear his share of the burden that falls on every one, rich or poor alike.

I cannot understand the basis on which this Bill is drawn up. It does not matter whether a man puts his house against a loan and gives a pearl necklace to his wife. The point is that he invests his money in a house. For what purpose he requires money seems to me to be immaterial. Under the Amendment the mortgagee, instead of getting 5 per cent., would get 4½ per cent. In other words, he would receive one-tenth less as his contribution for the general security of the property concerned. I think a holder in equity would be very lucky if, after the war, he thought he would get back nine-tenths of the value of what he had lost. I hope the Chancellor will realise that there is great feeling in the Committee and outside, and that he will be able to do something to meet it.