I beg to move, "That leave be granted to introduce a Bill to enable trustees to borrow money for the purpose of exercising any option to convert Securities given under the War Loan Act, 1915, to holders of that Loan, and to indemnify trustees for any loss in respect of any such borrowing or any transaction in relation to the Loan, and to authorise the investment of moneys subject to any trust in any Securities created under that Act."

The Bill which I ask leave to introduce will enable trustees to borrow money for the purpose of obtaining under the War Loan Act, 1915, conversion of securities now held by them. The House will remember that under the terms of the existing War Loan holders of new War Loan are entitled to convert certain amounts of old War Loan, Consols, and Annuities, of which they may also be holders. It has been brought to my notice that many trustees who are now holders of Consols and old War Loan will be most anxious in the interests of the estate to convert their Consols and old War Loan into new War Loan, but they are not in possession of the necessary funds to enable them to apply for a sufficient quantity of new War Loan. It is proposed now to give such trustees the power to borrow money for the purpose of the purchase of a sufficient quantity of new War Loan in order to enable them to convert such convertible securities as they may hold. The power of borrowing is strictly limited to that purpose, and to the amounts requisite for that purpose.

I know it may be said that it is making a big stride to give power to a trustee to borrow money, but in this case the borrowing is strictly limited to a specific purpose, which is for the benefit of the estate. It does seem to be rather hard upon the person who is the beneficiary of property in Consols that he should not be entitled to the benefit of the conversion to which holders of Consols are entitled merely because his trustee has not available the necessary funds for the purpose of the application. The risk that the estate runs, I venture to assume, is the minimum risk.

The amount that can be borrowed is only the amount which is required for the purpose of the application for the new War Loan. The estate, while it will owe a debt in respect of the new application, will have at least double the quantity of the new War Loan as compared with the amount of the debt, and, even if the new War Loan hereafter has to be sold at a loss, the estate will still benefit unless the loss is extravagant — and I do not think we have any reason in this House to apprehend that. The estate would still benefit, because of the great advantage conferred by the conversion. I think there would be a real hardship upon estates held in trust if facilities were not given to trustees to do this. I do not mind calling the attention of the House to the fact that it is a real advantage to the State that every opportunity should be given to persons in possession of means to apply for the Loan. The draft of the Bill—and that is all I am in a position to lay before the House at the present moment—is in the Vote Office, but it is not quite complete. It should include another Clause, which I should like to read to the House:—

"It is hereby declared that any sum paid to any Court, or otherwise under the control of any Court, may without prejudice to any other mode of investment be invested in securities created under the War Loan Act, 1915, and any finch sum may, if the judge so direct, or in accordance with the Rules of Court, be realised and reinvested in that Loan."

In the course of the Debate yesterday a question was raised by an hon. Member as to whether funds which have been paid into Court under an award of the County Court judge in compensation cases can be invested in the new War Loan. They may now by Statute be invested in Consols, but the hon. Gentleman who raised the point was doubtful whether they could be invested in the new War Loan. In order to make it quite clear, I thought it advisable to ask the draftsman to include a Declaratory Clause, providing that any sum paid into Court may be so invested. Here, again, it is to the obvious advantage of the beneficiary of the trust sum that his capital should be invested in a 4½ per cent. security instead of a 2½ per cent. At the same time it is to the advantage of the State. I see the hon. Member (Mr. Shirley Benn) who raised the point last night is now present. We are not quite sure it is necessary, but in order that there may be no mistake we have introduced this Declaratory Clause into the Bill.

What is to be the rate of interest?

There is no provision as to the rate of interest, nor is any such provision needed. The Loan obviously will only be for quite a short period. The trustee will borrow the money for the purpose of applying for the new War Loan, and when he has applied for the new War Loan, he will use that new War Loan for the purpose of converting, his Consols, and he will then have, in the trust fund, the original quantity of stock in converted Consols, but also the new War Loan stock bought for the purpose of conversion. He will, after the issue is closed, be able to sell new War Loan stock, and pay off the debt, so that whether he pays 4 per cent., 4½ per cent., or 5 per cent. interest, it will not be very material to the estate, because it is only for a very short period that the loan will be required. What is important is that, whereas the estate obtains for its capital 2½ per cent. only, in future, after conversion, it will get 3 per cent.

How about Parliamentary deposits here and in the House of Lords?

The hon. and learned Member means the deposits on private Bills; they are held permanently.

But why should they not have the benefit of the 4½ per cent.?

I shall have to look at the original Bill to see whether there is power to invest these funds. I think there is, but I am not quite sure.

Can the right hon. Gentleman say out of what funds the interest is to come? Is it to be paid by the trustee or the beneficiary? Out of what funds is the loss, if there be any loss on the realisation of the War Loan, to be made good?

It will be paid out of the estate. The transaction is for the benefit of the beneficiaries of the estate, and the profit or loss will accrue to or fall on the estate.

I understood the right hon. Gentleman to say that the operation was to the advantage of the beneficiaries, and yet the loss, if there is to be one, is to fall on the estate. Surely that is not right.

I was having regard to the interest of the beneficiaries in the estate as a whole. If the beneficiaries of the estate are to get the benefit of the conversion, I assume that if there be any loss it will fall on them in their due order. They will get the immediate profit, but they may have to refund any loss. Inasmuch as the result of the conversion to them is an increased income from Consols—an increase from a 2½ per cent. to a 3 per cent. basis—it is very unlikely that any mere turn of the market will involve a loss on the sale of the new War Loan which would wipe out the advantage to them of the conversion. I think it would be most improper to prevent the estates getting the advantage of the terms now offered. I hope I have sufficiently explained the Bill, and if the House will give it a favourable reception now, I would ask, inasmuch as it is-urgent, that it should be carried through all its stages to-night.

Does this Bill apply to funds in Chancery?

This is only a Bill to enable trustees to borrow money for the purposes of conversion. The only other Clause is a Declaratory Clause, enabling funds in Court which are dealt with under a specific Act to be used for the purposes of investment in the new War Loan. If the House agree to the introduction of the Bill I propose, for very obvious reasons, to ask the House to pass it through all its stages to-day. The value of the Bill will, of course, be exhausted by next Saturday week, when applications for the new War Loan will be closed, and, consequently, unless we give time for the trustees to make use of the provisions of the Bill we shall deny to the estates concerned all the advantages which I hope they will derive from it. I beg to ask leave to bring in the Bill.

I desire to put a point to the right hon. Gentleman which has not been covered. Take the Trinity College deposit of £5,000 and also Parliamentary and House of Lords deposits. I do not know how they stand. If the right hon. Gentleman would say that between now and the Bill going to the House of Lords he will look into the matter and see that it is wholly covered, I do not object. I hardly think it is right to push this Bill through all its stages without giving us some little opportunity of looking at it. We might take the Second Reading, but there should be some stage at which we could make Amendments if necessary.

I want to be assured that the term "trustee" in the Bill legally covers a case in which a Government Department is itself a trustee. I have in mind a case in which a Government Department holds, on behalf of a great number of beneficiaries under a "Superannuation Act, some millions of money in Consols. Will it be possible under this Bill for that Government Department itself to exercise the power of borrowing which the Bill otherwise confers upon a trustee? It is a very important point to these beneficiaries, and I should like to have some assurance upon it from the Chancellor of the Exchequer.

I am afraid it is my fault if I did not put my question quite clearly to the right hon. Gentleman a few moments ago. Perhaps he will permit me to put it again, and I will give an illustration in order to make it quite clear. Supposing there is an estate of £10,000 consisting of Consols which gives to a beneficiary, whom I will call John Smith, £250 a year. John Smith's trustees convert under this particular Bill, and the result will be that John Smith receives £300 a year instead of £250. There is a loss on conversion, made up of the sale at a discount of the new War Loan and of the money to provide the interest on the sum which has been borrowed in order to make the conversion. Who is going to pay that loss? Is John Smith going to pay, he being the beneficiary and getting £50 a year extra, or is the body of the estate going to pay, and so deprive the remainder man of the capital which should be his? I think I have made the point clear now, and it is a question which should be answered. My hon. and learned Friend near me (Mr. Sanderson) wants to know whether that is dealt with in the Bill. I cannot answer that, because I did not know the Bill had been printed and I have not seen it. With regard to what the hon. and learned Member for North-East Cork (Mr. T. M. Healy) said just now, may I venture to suggest, as none of us have seen the Bill, that we should take the Second Reading to-day, then we might dispose of the Committee stage to-morrow. One day would make no difference, but I think we ought to have some opportunity of looking into the Bill, which is an important one, so that we may have, if necessary, a slight debate upon the Committee stage.

I think that is an extremely reasonable proposal, and we should be willing, if the general principle is accepted, to take the Committee stage to-morrow. I think the principle will meet with the general acceptance of the House, and I will answer to-morrow the objections and the points raised.

I would like to suggest one point for the consideration of the right hon. Gentleman. It is not, I need hardly say, put forward in any other spirit but that of a desire to help in this great work of raising the funds. The point is, that under the proposal as it has been laid before us there will be probably a large number of trustees who will have to sell large quantities of this War Loan very soon after they have converted their Consols or other securities. That will mean throwing a lot of this War Loan upon the market and possibly a temporary depreciation in its price. All I want to ask the Chancellor of the Exchequer to-day is to consider carefully whether something could not be arranged to prevent that depreciation occurring. It might only be a temporary one, but it would certainly be rather damaging if it did occur.

I am very glad indeed that my right hon. Friend has agreed to postpone the Committee stage, because this is a proposal at which we ought not to rush. It is a proposal to encourage trustees to enter what is more or less a gambling transaction. That is a very serious thing for this House to do. A trust is formed for the express purpose of providing a certain income to the beneficiaries without any risk whatever. We are going to encourage the trustees to run a risk possibly for the benefit of the beneficiaries but possibly for their loss—[An HON. MEMBER: "Why not?"]—not because we are thinking about the beneficiaries at all, but because we want to make a good Loan. The question put by my hon. Friend who has just sat down (Mr. A. Williams) shows clearly what was in his mind. This is a proposal we ought to look at with a great deal of caution. It does not seem a proper thing that this House should encourage trustees to gamble in the beneficiaries' property.

I do not go so far as my hon. Friend (Mr. Holt) in regarding this particular arrangement as a gambling arrangement. I do not know whether we are now having a Debate on the Second Reading, but I am not at all prepared to say that the principle of the Bill has been sufficiently explained to make it acceptable to those who have a large experience in the administration of trusts. There is already a procedure whereby, at a very small expense, if a transaction of this sort is beneficial to a trust, either the trustees or any beneficiary can get the approval of a judge in a particular case if he thinks it is a proper thing to do. I do not at present understand on what principle and how it might be more beneficial to a trust estate for the trustees to borrow money, the trust estate being liable for any loss that may occur in raising the money with which to apply for the War Loan. It all depends how-much you have to sell. I know the difficulty. All trust securities are necessarily depreciated by the issue of this Loan. What I do not see at present is how it can possibly be more economic, rather than to sell at what price you can get now, to borrow money by pledging the investments or placing them in the hands of somebody else to sell at his discretion. He must have a market to sell at his discretion. It may be all right, but at the present moment I do not think the principle is made out satisfactorily from the point of view of the beneficial administration of the trust.

I would like to ask the Chancellor of the Exchequer whether the facilities given by this Bill will apply to charity trustees? There is an enormous number, as the Chancellor of the Exchequer will know, of small parish charities all over the Kingdom which are vested, I believe, in the official Trustee, such as charity funds or charity lands. Will they have an opportunity of taking advantage of the facilities afforded by this Bill for the purpose of converting their Consols? The amount of Consols held by small charities throughout the country is something enormous. It would be a great advantage to them if they could convert. If the right hon. Gentleman can answer that question I should be much obliged.

I have some hesitation in speaking about the Bill, because I have had no opportunity of seeing its terms. I have listened to the statement made by the Chancellor of the Exchequer and, so far as I can understand it, I am bound to say I am in favour of the principle. I suppose most trusts of any importance contain Consols as part of the securities. There is no doubt whatever that this new War Loan at 4½ per cent. and the conditions attached to it have affected very considerably the position of Consols. Looking at the matter from the point of view of a trustee, I do not think it has affected them for the better. Therefore it seems to me that the trustees ought to be put into a position to get the most benefit they can in connection with that which is perhaps the most important part of their securities. Having regard to what was said just now by the hon. Gentleman opposite (Sir P. Beale) that trustees ought to sell instead of borrowing, I would respectfully draw the hon. Member's attention to the fact that it is very difficult indeed to sell Consols at the present moment.

I said that.

I did not catch it. In fact, it is almost impossible to sell. Therefore, if the trustee is to get the advantage of the War Loan, if he happens to be a holder of Consols, the only possible way to do it is to give him power to borrow for the purpose of applying for the Loan. If he has not got it, the only possible way by which he can get it is to give him statutory power, as is proposed by the Chancellor of the Exchequer. I am not so familiar with this branch of the law as some of my hon. Friends on this side of the House who, I am sorry to say, are not here—for instance, my hon. and learned Friend Mr. Cave; but, as far as I can see, I think the principle is a good one under the present extraordinary circumstances.

Of course, the advantage to trustees derived from this Bill falls entirely on those trusts whose funds are invested in different securities. In that case they are pledging the whole of the trust funds for the purpose of converting a proportionate amount. In the case of trusts in which the whole trust fund is in Consols it is, of course, obvious that they would only be able to borrow about half the amount and convert five-eights. It seems impossible otherwise to give sufficient security to convert the whole of the Consols. The principal object I had in rising was to emphasise the disadvantage which was suggested by the hon. Member (Mr. Aneurin Williams), who said that the depreciation caused by the sudden throwing upon the market of large quantities of new War Loan might have very serious effects. I should like to call the attention of the Chancellor of the Exchequer to this aspect of the case. In the anticipation that as the result of this Bill large quantities of War Loan will be thrown shortly on the market, is it not possible that investors who now might otherwise apply for the War Loan will hold back in order to take advantage of that depreciation?

I think the last suggestion is not one which is likely to be realised. We do not anticipate that these powers of borrowing will be as widely exercised as some persons seem to think. A great many estates will sell securities in order to apply for the new Loan. Some I know cannot, but a great many will, and I am sure what a good trustee will do will be to go through the list of securities and sell American securities and securities of that kind, for which he can obtain a ready market at a good price. I have personally done this work myself, and I know as a fact that there are some other securities which can be sold. That will be done, and the funds will be applied for the purpose of applying for War Loan. We are thinking now of the case of trustees who wish to apply and have to borrow for the purpose. A trustee will not throw his new War Loans on to the market immediately after the issue. He will sell the War Loan prudently and wisely in order to get the best price for the estate.

As to the notion that it would be necessary to throw it upon the market, it is quite a mistake. The War Loan is issued on such favourable terms that there is sure to be a large active market in the stock after the issue is closed, but I certainly do not anticipate that there will be any such vast number of sales as will lead to the evil which the hon. Member thinks is likely to happen. There, will be a very large demand after the issue is closed for new War Loan, which is much more likely to send it to a premium, by persons who are holders of Consols and old War Loan and have not acquired the War Loan in time for the purpose of conversion. People forget that the amount of War Loan which would have to be applied for in order to convert all existing Consols, annuities, and old War Loan, is something like £700,000,000 or £800,000,000, and it is perfectly clear, when we remember that a considerable number of those who apply for War Loan will lock it away and never use it for the purpose of conversion, that applicants for conversion will be in excess of the stock which can go round, and so far from anticipating a drop in the stock, I should rather anticipate that it will hold its own, even though trustees do wish to sell. I quite agree that one stock may be a stock which has been used for the purpose of conversion and the other is a stock which has not been so used, but the market demand for the investment is equally well satisfied with the stock which can be-described as ex rights, as the stock cum rights. In Committee I shall be in a position to answer all the points which have been raised, with regard to particular kinds of trustees and trust stock where they are provided for under this Bill. I do not think, however, that these points touch the principle of the measure.

My hon. Friend (Mr. Holt) treated this as a Bill which was authorising a gamble by trustees. Is he justified in even approaching the subject from that point of view? By the issue of the new War Loan we automatically reduce the capital value of the trust fund. If the trust fund is in Government securities we do something to increase its capital value if application is made for the new War Loan. I cannot regard it as a gamble to give power to a trustee to enable him to take advantage of the opportunity which is offered him. Let us be quite clear on the point. If there is to be any loss to the estate on this transaction you will have to see new War Loan, a 4 per cent. Government security, standing at something not far short of 20 per cent. discount. That is not a possibility which we are contemplating at present, and certainly not a possibility within the time in which the trustees could regulate their accounts. There is no gamble.

How do you make out that it would have to drop 20 per cent. Surely if it drops 1 per cent.—

No; because he converts Consols, which pay him now 2½ per cent., into stock bearing 3 per cent., consequently the estate has a large margin before the loss occurs. That is how it happens. A mere 1 per cent. drop would not wipe out the advantage of conversion. It would have to be a drop of more than 5 per cent. or 10 per cent. before the advantage is lost. I might put it at something between 10 per cent. and 20 per cent. discount before the advantage to the estate would be lost. In those circumstances we cannot regard it as a gamble. I quite admit that it is contrary to some principles of equity, but when the principles of equity were, after many years of practice, deduced from the legal constitution I do not think conversions of this kind were in contemplation. We have to adapt our principles of equity in relation to trusts to the new conditions of conversion, and I cannot believe that it would be contrary to any real principle of equity, properly understood, that a trustee should be able to enter into a transaction which is for the benefit of the estate.

made an observation which was not heard in the Reporters' Gallery.

Yes, in proper cases I have no doubt they will do it by a simple application to the Court, but in other cases, where they cannot do it except by borrowing, I think they ought to be allowed to borrow, particularly as the security is so uncommonly good.

I wish to ask a question about procedure. The right hon. Gentleman says he will answer questions on the Committee stage. The Debate will be confined to the Clauses, and it is possible that some questions asked may not be in order on the Clauses. I suppose the right hon. Gentleman will arrange with the Chairman of Committees that the rules may be a little relaxed.

Will the Bill be circulated in the morning?

The Bill will be circulated immediately. I will ask the Chairman of Committees if he will be so kind as to allow us that latitude. The case which was put by the hon. Baronet is that of a trustee of an estate of £10,000 in Consols. If he will allow me I will take the case of the old War Loan, because the figures are easier. He wants to know what will happen in case there is a loss. Let us work the figures out in regard to £10,000 of old War Loan and see what it means. The trustee of the estate will go to his bank and he will say, "I desire to borrow from you £10,000 for the purpose of applying that sum to new War Loan, and I give you as security £10,000 of old War Loan. The bank will, assuming that it is an obliging bank, advance from time to time the necessary sum up to the total of £10,000 in November, in order to apply the £10,000 to new War Loan. The bank will hold as security against £10,000, old War Loan of £10,000, and new War Loan, £10,000; so that the bank will have ample margin for the whole Loan. The old War Loan will then be converted into new War Loan on an additional payment of £500. The estate will now be in possession of £20,000 of new War Loan, on which the interest at 4½ per cent. would bring in £900 a year. The estate before this transaction is undertaken possessed £10,000 old War Loan, on which the interest was £350 a year. The estate, therefore, will have a surplus income of £550 a year; against that the estate have got to pay back £500 of cash borrowed and interest on the £10,000 borrowed. If it borrows from the bank at 5 per cent. it can pay the interest on the money borrowed with a margin, but if it has to borrow at more than 5 per cent. it will have a slight loss. Suppose there is a loss and that in order to repay the debt the holder has got to sell, not £10,000 of new War Loan, but £11,000. I am leaving a margin of 10 per cent. Of the £10,000 a sum of £500 will go to pay for the cash advanced, and £500 will go to pay the loss on the transaction, assuming that there is a loss. That will still leave the estate with £9,000 of new War Loan at 4½ per cent., which is very readily calculated, and will bring in £405 a year. The estate started with £350 a year, and it ends up the transaction with £405 a year, and in that calculation I have allowed for a loss of £500.

I wish we were in Committee. May I point out that I understand the right hon. Gentleman to say that the estate will have £9,000, but it started with £10,000, and it would have £10,000 at par in thirteen years? It had got its old War Loan of £10,000, therefore there is a loss of £1,000 to the estate. There is an increase in the interest, but the trustees have to regard the body of the estate and not the interest.

That is perfectly true. I was looking at the case only from the point of view of interest for the time being. Though that sum would be redeemable thirteen years hence at par, when you get the amount the estate is saleable for it would have a greater value if the transaction is made as I have pointed out than if it is not made. If the hon. Baronet will work the sum out on paper he will see that the gain to the estate is obvious. The estate as a whole will benefit. In the case of Consols or Annuities it is exactly the same as in the case of old War Loan. However, we may resume the discussion in Committee to-morrow.

Will the right hon. Gentleman deal with the point I raised?

I will deal with the point in Committee to-morrow.

The right hon. Gentleman suggests that the case which he has given holds equally good with Consols, but does he maintain that if a trust consisted of £750 worth of Consols, the trustees will be able to borrow £1,000 for the purposes of conversion? What would be the security?

I do maintain that. The trustees would not be able to go and lodge £750 of Consols and receive from the bank £1,000 for them, but if the trustees lodged with the bank £750 worth of Consols and gave the bank the right to hold the War Loan, for which application was made, as well as the Consols, then I think the bank would be willing to lend the £1,000.

I hope sincerely that the Chancellor of the Exchequer between now and the Committee stage will reconsider this question of possible depreciation of stock after conversion, because it is quite clear that the people he spoke of as wanting to buy stock will want to buy stock cum rights of conversion, but with respect to those who hold stock ex rights of conversion, that demand will be no good to them. When they want to clear up an account with their bankers as between capital and revenue on their trust account, they will certainly be under a strong temptation to put their stock ex rights upon the market. I think there will be a serious danger of depreciation of stock ex rights. What I desire is that something should be done to avoid that, which I believe would be a serious disadvantage. I also would like to say that as between capital and revenue on trust estate it is absolutely essential that something should be put into this Bill in the Committee stage, or else trustees will be afraid to launch out in this matter and apply as we desire them to apply, because they will not know whether they are to treat the bankers' charges and possible loss on re-sale of War Loan as falling properly upon income or upon capital. If they make a mistake, of course they are liable to have it charged some day upon themselves personally. Therefore I hope that it will be distinctly provided in the Bill when we come to the Committee stage how any losses of that sort and any expenses of that sort are to be borne.

I hope there will be an opportunity when the Bill is considered in Committee to deal with a point which arises out of these transactions in regard to people not being able to deduct their interest on Loan from their Income Tax on Income. I will give a typical case of a trust which has an investment in Consols of the nominal value of £10,000. The trustee is able to sell these £10,000 worth of Consols to the Government with the object of converting them into £10,000 of new War Loan which he is privileged to do on the strength of holding these Consols of the nominal value of £10,000. He sells them to the Government at the value of 65, which is equal to £6,500 on conversion. By placing that amount of £6,500 new War Loan, together with the £10,000 of new War Loan which he would get by virtue of his possession of his £10,000 worth of Consols, there is an amount of £16,500, which will be the security to the Bank for the loan from them of £10,000 with which to pay for the new War Loan. There now arises the situation that the trustee will have to pay his banker interest at 5 per cent. on the borrowed money of £10,000, which means £500 a year, and as the total income from the £16,500 new War Loan at 4½ per cent. is equal to £742, he will have to pay Income Tax upon that amount, and will not be allowed to deduct from that sum of £742 the £500 interest which he has had to pay to his banker. In that case, from the rough calculation I have been able to make, the total income of the new estate will amount to only £242, as against £250 income on Consols at, say, 2½, without calculating the loss in Income Tax.

I have made provision for that. We agreed yesterday that we would meet that case.

I have not had that quite clear. If that is so, I am quite content.

Oh, yes, we agreed yesterday that we would meet that case.

I am in doubt about the transaction which the Chancellor of the Exchequer put to us just now, namely, the conversion of £10,000 of old War Loan into new War Loan, which involved the purchase of £10,000 of new War Loan. He put to us the case of an obliging banker, whom he assumes would leave his money out for ever. Supposing he does not, and the money is called in? Who is to be responsible? Is the trustee to make himself personally responsible? Is it clear that the bank may not call upon him at any time? If, on the other hand, the trustee has to go to a solicitor and raise the money through him, look at the cost of the stamps on the mortgage deed. I think the transaction which the Chancellor of the Exchequer gave us is exceedingly remote. The trustee has got to find £10,000 and convert it into new War Loan; in addition he has got to find a sum of £500, and it is suggested that the security of the old War Loan and the scrip of the new War Loan will be satisfactory security to the bank. That may be so as long as the bank likes to leave the money out, but if not a difficult situation may be created and the trustee may be involved in an immense obligation. Suppose the money is called in, what is he to do? What is the position then of the trustee who borrows money from the bank? I do not know whether it will do much harm to bring in the Bill, but I hope that no trustee will act upon it. I object entirely to the principle of the Bill.

I would like a rather clearer answer than that which the right hon. Gentleman gave to the hon. Member for Windsor. Suppose a trust estate to consist solely of Consols, of course the Chancellor does not pretend that you can on these Consols raise enough money to convert it all. I am sure that his answer would be that if you raise what you can, and put it into War Loans, and mortgage the Consols and the War Loan, that would be an advantage to the estate. It seems to me that that is hardly correct and that it must depend on what interest you are paying on the money which you have borrowed. Then, there is another point. If you put this security into the hands of the bank, or whoever you borrow the money from, they may realise those, Consols at any time and at any price. I do not think that the question which was put by the hon. Member has been answered in a way that would give any greater feeling of security to beneficiaries under a trust estate, if the trustees are to have this large power.

I view this matter from a different point of view from those who have spoken in this Debate, because I am a trustee and I hold Consols for the benefit of the beneficiaries of this trust; and as I have sat here and listened to this Debate I have been considering what I ought to do myself, and I am candidly of the opinion now that it would be a rather difficult and uncertain transaction for me to go to my banker to-morrow and say on the strength of this Bill that I want to borrow money, and, if I did so, I am quite sure that I should not in a week's time feel so secure about this trust as I do at the present moment. For one thing it is quite impossible for me to make any agreement with my banker for a loan at a fixed rate, say, for more than six months. In a year's time, if the War continues, the rate of interest will most certainly be raised, and I can conceive that trustees in my position would be in a very difficult position. I hope that if this Bill passes a word of caution will be uttered, at any rate, by those who are greater authorities in the House than myself as to the difficulties and dangers that may have to be met, so that only those who can do so with complete security, and with some margin against possible risk, should invest in the War Loan on the terms offered by this Bill.

I would ask the Chancellor of the Exchequer to be good enough to allow the Second Reading of this Bill to stand over until we have seen it. At present we do not know the contents of the Bill. However much we may be disposed to agree to the principle of having it brought in a first time without Debate and without consideration, it seems to me to be unfair to the whole body of trustees and to all the beneficiaries who are concerned to ask for the Second Reading and to force it through the House before we have seen even what the title of the Bill is to be. As to the position of the trustees and beneficiaries —and I suppose we are all in that position in some way or another—I wonder what we have done, what sinners we are, that we should have this calamity forced upon us, that trustees should have to consider whether they are to convert their present holdings into the new Loan, the fate of which is dependent upon the War and upon rates of interest, which, as the hon. Member for Somerset says, will certainly increase. It is a very serious thing for those who have to advise beneficiaries whether they should relinquish the tempting offer held out by the Chancellor of the Exchequer to increase their incomes by some 50 per cent., as beneficiaries are not able to resist the temptation, and all trustees who have any concern for the welfare of their securities will be urged to take advantage of the present opportunity of convening their holdings, and many trustees will feel that there is considerable difficulty, and they will be bound to advise the beneficiaries that on no account should a conversion be made of the trust moneys in their name. At least that is the judgment which I arrived at after hearing what has been said.

I am extremely sorry to hear my hon. Friend say, as a result of this Debate, that he has definitely come to the conclusion that he will have to advise all beneficiaries that in no circumstances should advantage be taken of the conversion of their money into the new War Loan for the benefit of the estate. I do not think that that is the general feeling of the House. Let me remind him that this power is only optional. No trustee is bound to follow this Bill. A trustee who thinks that he is doing better for an estate by leaving beneficiaries to get 2½ per cent. instead of 3 per cent. is at liberty to hold his views, but I think, on the other hand, that the House will be well advised to give trustees the opportunity to improve the income of the beneficiaries and to allow this Bill to go through the Second Reading to-day, on the understanding that we take the Committee stage and the other stages to-morrow, so that the Bill may become law in time for trustees to apply for the new War Loan.

May I ask the right hon. Gentleman whether this Bill will be taken as the first Order to-morrow? The Committee stage of the Munitions Bill is down for to-morrow, and there is likely to be a prolonged Debate upon it. I should like to know the order in which the two measures are to be taken.

I should like an opportunity to consult my right hon. Friend. I should think that the Munitions Bill will probably come first, but I will not answer for it.

The scope of this Bill practically means that we are having a reconstructed Royal Patriotic Fund in operation, and, though there might be other alternative methods by which those funds could be administered, still as the Government have agreed that a more democratic and widely extended patriotic fund will meet the case we need not occupy the time of the House to-day in suggesting any alternative body to whom those powers might be committed. Some of us have views on that, but as this Bill is in type and the Government are agreed upon it we do not think it worth opening up the matter now. Therefore my remarks will be confined to the Bill as it is printed. The first Clause provided that twenty-six persons, who are to make up this new corporation, shall include a minimum of women representatives. I think that the Government might consider whether that minimum is too small, and whether it might not be increased. The bulk of those pensions will be paid to widow's or female dependants of soldiers or sailors who are killed during the War, and therefore presumably, if the women can be obtained, they are in a better position than the majority of men to determine how far those pensions should be paid and to what amount, especially as regards the supplementary portion. Of the twenty-six members the minimum number of women allowed is only four. If my right hon. Friend will consider this point it may lead to a concession of considerable value.

The House will be glad to observe that the salaries of the chairman, and possibly the vice-chairman, if that is considered necessary, will be upon the Consolidated Fund. That is an excellent suggestion while the House is engaged as we are at the moment in discussing purely war proposals. But, when we return, as we hope we shall speedily return, to more normal times, the Consolidated Fund Bill is used in the House of Commons by the Whips on either side for the discussion of business which cannot always come up, and the discussion of the Consolidated Fund Bill in ordinary times rather takes the form of a field day in the House. I desire to suggest that it might be possible to create an opportunity whereby the annual discussion of the distribution of those pensions might come more regularly before the House of Commons. I do not know whether it could not be done on the Army or Navy Votes instead of on the Consolidated Fund Bill, which, in normal times, is confined to one Bill. This year we are having several Consolidated Fund Bills, but in normal times there is only one. I think perhaps that it is limiting the occasion too much. Then, coming to Sub-section (6), page 2, I am not sure that the number of the quorum which is necessary for the statutory Committee is large enough. Members will observe that five Members of this statutory Committee of the twenty-six who are to form the Royal Patriotic Fund Corporation are to form a quorum. Five is less than one-fifth of the whole of those members. There are on the statutory Committee more than five officials of various Government Departments—one from the Treasury, one from the Admiralty, one from the Army Council, one from the Local Government Board, one from the Local Government Board for Scotland, and one from the Local Government Board for Ireland. That is to say that the quorum might possibly be made up of none but officials of Government Departments. I think that that ought to be remedied. Twenty-six is the full number of the Committee. I would suggest to my right hon. Friend that they ought to increase the five to nine. I do not take any specific number, but if you keep to five it would be possible for the affairs of this Committee to be controlled entirely by the officials of Government Departments. I think, in the interests of people who are to derive those pensions, that it is advisable to increase the quorum, so that they may be sure on every occasion that a certain number of officials other than members shall be present.

Then with regard to Sub-section (7), the term of office of a member of the statutory Committee is to be three years, and the retiring members shall be eligible for re-election. I would point out that this provision, precisely as it stands, would break the continuity of policy of that Committee. If you make it compulsory that every member of the new Committee shall retire at the end of three years, it is conceivable, though not probable, that the membership of that Committee might be entirely changed. I suggest to my right hon. Friend that in Sub-section (7) he might very reasonably make an arrangement by which one-third of the Committee might retire every year after serving three years, so that there would always be one-third of the Committee who had a knowledge of its continuous policy, and anything which was required in the way of stimulus from outside might be secured in the new third being re-elected. I hope that Sub-section (8) of the same Clause does not mean that we are in for a very large crop of new officials. It is suggested that you may employ a secretary, an assistant secretary, clerks, and servants, and also that there may be a scheme of pensions for those persons. I do hope that this Committee will not create more officials than are absolutely necessary, and that a minimum number of persons will be engaged to conduct this business. I would suggest to the Chancellor of the Exchequer, who is saving so much money at the present moment, that, at any rate, at the commencement, the work of this Committee will be large. After it has been settled for some time, the work will become routine in character in a large number of cases, and I trust that in the establishment of a pensions scheme for the people engaged in that work—for, as in the establishment of the insurance scheme for the country, a large number of people will be required at the beginning but will not be continued—the Chancellor of the Exchequer will take care that only the minimum number required to carry this scheme through, looking at the fact that in future the work will be routine, should be put on the pension list.

I now come to Clause 2 of the Bill, in regard to the establishment of local committees. I have a point to raise, and it is one upon which other Members also feel strongly. By Sub-section (2) it is proposed to set up new local committees for the purpose of aiding in the localities what the statutory Committee is doing at the centre. There, again, there is an arrangement for members of the Committee, to consist of members of city and borough councils, and the minimum number of women included is to be not less than two. I hope that a larger number of women will be put on the Committee, because they are the very kind of persons who can assist the Committee determining whether supplementary pensions ought to be given. But why have a new Committee at all? You have in our localities at present the Pensions Committees dealing with old age pensions. I myself have served on one of those committees in my municipality, where there were at least two city councillors from each ward sitting on the old age pensions committee There were also co-opted members from the city who were interested in the administration of schemes similar to this. Why create new Committees, which, as the House will observe, require new officials, when there are already in existence the Pensions Committees engaged with just such another work, and which could do well and ably the work which is now required. On those committees are the very type of persons you are going to ask to come on to these local committees for the purpose of administering these pensions and allowances. I do suggest that this is a point in which the Bill might be improved.

Then as regards Clause 3, I have one or two words to say. I think Clause 3 is important from the point of view of the administration of these pensions. The House will remember that we have accepted in spirit, and I gather from the form of this Bill—I hope the Chancellor of the Exchequer will correct me if I am wrong—that we have also accepted the decision of the Committee, and that we cannot increase or decrease the sums allowed for separation allowances to dependants, and of pensions for the widows of our soldiers and sailors. If you look at paragraph (b) of the Clause I think you will find I am right. May I ask whether I am right in assuming that we are not entitled under the form of this Bill to deal with the sums that are given, and that these are permanently fixed under the Report of the Committee which we have accepted.

They are settled.

I would remind my right hon. Friend that what he asked us to do was not to accept the Report in its entirety, but to accept the spirit of that Report.

I think my hon. Friend is mistaken. So far as the actual amounts of pensions and allowances are concerned, those are the sums to be actually paid.

I wanted to obtain that clearly, and to be quite sure about it. Clause 3 says, "The functions of the Statutory Committee are to frame a scheme of supplementary Grants." I hope that in the course of the Debate the Chancellor of the Exchequer or the right hon. Member for Fulham (Mr. Hayes Fisher) will deal with this point, and will give the House some indication of what is precisely meant by these supplementary Grants. We have a large variety of pensioners to consider. We have, for instance, the widows and children of men who have served in the ranks, or of able-bodied seamen of the Navy, who gave up a very great deal to go to the War, and whose people are left in a very unfortunate position. We have also this fact to bear in mind, that, according to the figures given us by the Pensions Committee, whatever is paid to the widow of a soldier, or sailor, or rather whatever is given to the widow of a soldier or sailor, is different according to whether she resides in London, in the provinces, or in the country. I have called attention to the point before in the House of Commons, that in dealing with the pensions, it is perfectly obvious that the widow of an agricultural labourer who had served, or of anybody in a country district who had served, is so many shillings better off per week than the widow of a soldier in a provincial town. In London there is a special provision of an extra 3s. 6d. per week for rent, and therefore the case of the widow in London is perhaps not so difficult as that of the widow in a provincial town—big towns like Manchester, Glasgow, and Edinburgh, where the widow is going to be 2s. 6d. or 3s. a week worse off than the widow of an agricultural labourer. I do hope that on any discussion which is to follow the reply from the Front Bench will give us some indication that these things will be taken into consideration by the Committee, and will receive sympathetic consideration. On Sub-section (d) of the Clause, which deals with Grants in cases where no separation allowances or pensions are payable out of the public funds, I should like my right hon. Friend to take special note of this fact, and that he will give me if he can a specific answer. Just look at the phraseology of that Section. They are, "To make Grants in cases where no separation allowances or pensions are payable out of public funds." Does that mean that as soon as this Bill passes all its stages in the House that the new Patriotic Fund is to be the authority who will determine, so long as the War lasts, cases for separation allowance that cannot be dealt with by Army Order? Is that right?

Yes.

Many of us in this House are interested in this question. I have raised a particularly hard case, and without going into the whole facts of it again, I would merely point out that a young man joined the Army, but did not take the separation allowance because his father was alive. While serving, his father died, and his mother then required the separation allowance. Under the Army Order Regulations now, though the lad is serving his country, his mother cannot get the separation allowance. I think everybody will agree that this is hard lines. If the Government are not going to deal with that themselves by Army Order, then the sooner this body gets to work in dealing with cases of that kind the more satisfaction will be given to Members of this House. I wish to call my right hon. Friend's attention to paragraph (i), which is to make provision "for the care of disabled officers and men after they have left the Service, including provision for their health, training and employment." Another specific question on which I should like to be clear is this: Am I to understand that paragraph (i) means that the Royal Patriotic Fund Corporation, as reconstituted under this Bill, is going to take it over and put into operation the Report of the Committee appointed by the President of the Local Government Board upon the provision of employment for sailors and soldiers disabled in the War? Can my right hon. Friend say if that is so?

Yes.

I think that is very important, because my right hon. Friend will remember that the summary of the Committee's recommendations was that in regard to soldiers and sailors disabled during the War provision for them was a duty to be assumed by the State. Secondly, that the duty should include the restoration of a man to health, the provision of training facilities if he desires a new employment, and the finding of employment for him if he stands in need of such assistance; thirdly, for the discharge of those duties, that a Central Committee should be appointed to act through the agency of the public Department, or independently as may be decided; and, fourthly, that the Central Committee should have the assistance of sub-committees in Ireland and Scotland, and so on. Does this Subsection (i) mean that this is going to be the Central Committee referred to in this Report?

Yes.

The House may take it, therefore, that this is the body which is going to deal in future with the question of our disabled sailors and soldiers? We want to understand that.

That is so.

I am only endeavouring to elicit the information in order to see exactly what is included in the Sub-section. There is only one other remark I desire to make about that Sub-section. Are you quite sure you have taken all the powers you want? You have paragraphs from (a) to (i) and why not say at the end of the Clause "and any other relevant matters," and not tie yourselves down when there are other incidental things relating to the work of this Committee which will arise? I know that paragraph (g) includes amongst the functions of the Committee

"To determine any other question in relation to pensions or grants or separation allowances which may be referred to the Committee by the Admiralty or Army Council."

Do you think those powers are wide enough? I think the right hon. Gentleman will agree that the wider the powers of this Committee are the better, and therefore I suggest to him to take a note of the point and see that he gets all the power he wants. Sub-section (4) of Clause 3 provides that a statutory Committee shall each year make a Report of their proceedings which shall be included in the Annual Report made by the corporation to His Majesty. Will that Report be a Parliamentary Paper distributed to Members in the same way as other Parliamentary Papers, because obviously if the salary of the chairman and that of the vice-chairman are placed on the Consolidated Fund, thus enabling questions to be raised in Parliament, then these Reports should also be available. I do not propose to make any comment on Clause 4, although there are some things that strike me in it, but I do not want to take all the time of the House. Section 5 provides that any lord mayor or mayor or lord provost or provost who is a member of the corporation is to be appointed. Is that necessary? After all, is not the man who is lord mayor or lord provost of a city one of the busiest men in the city council? Is he not a figurehead for many purposes, and why put him on a committee on which he does not want to be? I have served under quite a number of lord mayors, and I have always found that while they are lord mayors they cannot take any interest in any committee, since they have got all the city work to do. Why then rope them in, and why not make the person to be appointed the chairman of the pensions committee or someone of that kind? Subsection (2) of Clause 5 provides for the co-option of as many members as thirteen by the corporation. Is that the local corporation or the Royal Patriotic Fund Corporation?

That refers to the Royal Patriotic Fund Corporation.

It did not seem to be quite clear.

Clause 1, Sub-section (1), refers to the Royal Patriotic Fund Corporation, "hereinafter referred to as the Corporation."

In what I have said I thought it better to put these points than to discuss anything further generally on the Bill. I believe that the sooner we get some body set up and at work the better. There are a great many people in the country whose relatives have been killed in the War to whom a separation allowance is being continued as a pension. These people are very anxious to be put on a satisfactory footing and to get a pension. Then there are a great many people who have been receiving separation allowances as dependants, and they are not sure whether they are entitled to pensions or not. They are still getting a separation allowance. It may be the case of a sister or an aunt or a stepmother to whom the man has made an allotment. I am perfectly certain that the country wants to be satisfied as soon as possible that the Government is looking after the interests of the relatives of our men who have been killed at the front, and therefore I have confined my criticism to what I hope may be found to be helpful to the Committee.

My hon. Friend who has just spoken has, I am sure, in the course of his speech displayed a very wide knowledge of the circumstances of the case which this Bill proposes to meet. If I do not follow him through the various matters which he has mentioned I hope he will understand it is not because I am not anxious to reply immediately to him, but because I do not on the present occasion propose to make a speech at all. On a former occasion, introducing the Report of the Select Committee, I outlined the scheme of the present Bill, and I gathered then that the general opinion of the House was in favour of some scheme of the kind. In speaking on that occasion I told the House that the Select Committee had founded their scheme largely upon the evidence brought before them by my right hon. Friend the Member for Fulham (Mr. Hayes Fisher), the Parliamentary Secretary to the Local Government Board, who sits next to me. It is quite true that the scheme which he proposed to the Committee was a much-larger one, but the Committee, while seeing a great deal in his larger scheme to recommend it, were unanimously of opinion that at the present time and under present circumstances it would be impossible to get such a large scheme as he proposed set going. The present scheme, therefore, while modelled upon his proposal, does not embody all his ideas, and, indeed, in one or two respects runs rather counter to his proposal. When I spoke on the Report of the Select Committee my right hon. Friend then accepted the modified scheme proposed by the Committee. He was on that occasion sitting opposite, and he then expressed his willingness to assist us in every way in his power, although the scheme was not fully his scheme, in making the then proposals of the Committee a success. I am fortunate enough now to have my right hon. Friend sitting next me on this bench, and in consequence I think it would be most desirable that he should take the more active part in any reply as to the details of this measure. By that arrangement, while allowing the opportunity for some other labours and saving time, the House would have the advantage of being replied to by a Minister with a more detailed knowledge of the work of the Royal Patriotic Fund Corporation than anybody else. He is vice-president and chairman of the Executive Committee, and as this is a Bill to set up a statutory Committee of the Royal Patriotic Fund Corporation, I am sure the House will agree that it is best to leave the discussion of the details in the right hon. Gentleman's hands, and that course I venture to adopt.

The statutory Committee is to look after the pensions both of officers and men, and two representatives of the Soldiers' and Sailors' Families Association have been appointed on the Committee. May I ask the right hon. Gentleman to take the question of officers into consideration, and to appoint to this Committee two representatives of the Officers' Families Fund so that they can keep the Committee informed of the present wants and needs of the families of officers? The Officers' Families Fund has had great experience during the South African war and the present War of the special needs and requirements of the families of officers. I hope, therefore, that the right hon. Gentleman will give some special representation on the Committe to that body. There is the further point, and that is, I suggest that some provision should be made in this Bill that the pensions allotted to officers and men, in the event of any further service being required by the State from those officers and men, should not be liable to confiscation, or to consideration of any appointments that are given to those men.

While I think that the subject could not be left in better hands than those of the right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher), I regret that the Chancellor of the Exchequer should withdraw from this discussion and not follow criticisms which undoubtedly will be of value I think to him and to the Government with regard to this Bill. I rejoice that this Bill has been brought forward at the present time, and I think it ought to have been brought forward long ago. There are arrears waiting at the War Office which require immediate treatment and which cannot be attended to until this new body is constituted, and even then I can foresee that some time will elapse before that body gets into operation. I notice that the Committee stage is put down to follow immediately on Second Reading. I must press the Government not to take the Committee stage to-day. If they do we shall have no opportunity of putting down Amendments.

There is no intention of taking the Committee stage to-day, and there never was.

I am glad that we shall have the opportunity of putting down Amendments which we require. I do not object to bringing in the Royal Patriotic Fund Corporation, and I agree with my right hon. Friend that it is, perhaps, the best body to deal with the subject, but I do hope that some means will be found whereby the very important questions that will be decided by this corporation will come under the purview of Parliament. We never had a problem of such magnitude before to deal with, and I think it is regrettable that the whole of the administration of pensions under this Bill is going to be withdrawn from this House and handed over entirely to the statutory Committee of the Royal Patriotic Fund Corporation. I rather wish to refer to one particular branch of this question. It is one with which I have been intimately connected, because for the last few weeks I have acted as chairman of a Committee set up by the War Office for the purpose of adjudicating on questions of separation allowances to be made to dependants. The question of separation allowances and pensions to dependants is a much more difficult question than that of allowances to wives or pensions to widows. Wives have a definite amount allowed to them, and widows are to have a fixed amount, subject to a certain latitude given to the Royal Patriotic Fund to increase the amount in suitable cases. Allowances and pensions to dependants hang upon totally different considerations. Every case has to be considered on its merits, and no one except those who have been engaged in this particular work can realise the difficulties of fixing the amount which represents the proper compensation for dependants.

I do not know whether Members realise the actual problem which presents itself in regard to dependants. We have not only to give separation allowances to dependants, but we have to decide what amount will put the family in approximately the same degree of comfort that they were in before. I will give a simple illustration to show how difficult a question this is. Suppose you have a family of four people where the soldier has been paying into the common stock 15s. per week. Suppose that that family, by reason of the earning capacity of the other members, has had a total income of 60s. a week. That brings out an average of 15s. a head. Therefore, as the soldier had been bringing in 15s., the dependants' allowance would probably be nothing, or near to nothing. The mother would get nothing because the man would be supposed to have been consuming to the extent of 15s. and bringing in the same amount. Now take the case of a poorer family, in which the soldier's contribution has been 15s. and there is another contribution of 10s., making a total of 25s. In order to place that family in the same degree of comfort, you have to realise that the man was actually contributing something to the maintenance of the rest of the family. As a rule, we should find that particular case would be assessed at 8s. or 9s. a week. There you have two instances, showing the immense difficulty of settling not only what the dependants should have as separation allowances, but what should be given when it comes to a question of pensions, because in the one case the mother would get no pension, and in the other she would get a pension based on the particular sum of 8s. or 9s. That is only typical of thousands of cases occurring all over the country every day, which have to be adjudicated upon by the various pension officers or committees.

That does not exhaust the question of how dependants' separation allowances are to be turned into dependants' pensions, because a widow may very properly be given 10s. a week for life by reason of her husband's death, but when a son dies it does not at all follow that you are entitled to give the mother a pension equivalent in amount to the separation allowance. A mother expects her son to marry, and to go out into life. There would be no justice in giving a pension equivalent to the amount allotted as separation allowance. The House will realise that it is a question not only of mothers, but of fathers, brothers and sisters. All these people are now receiving separation allowances upon a system laid down by Parliament, namely, that they shall be put into a position of approximately the same degree of comfort as that in which they were before the man went to the War. All these people ought to stand in a totally different position when it comes to a question of pension. What I find in the Bill is that the Government have absolutely shirked this question. It has been shirked all along, until at the present moment it has disappeared altogether. In their first Report, paragraph 13, the Select Committee state:—

"Pensions to dependants cannot be settled by fixed rules, but must, to a large extent, be dealt with on the merits of each individual case. We propose that some body, either an existing organisation, reorganised and strengthened, or a new body to be specially created for the purpose, should have discretion to frame schemes for pensions or grants to dependants on the expiration of the twenty-six weeks allowance from the notification of death. The general aim of such a scheme should be to secure to the dependants, so far as may be possible, approximately the benefit they receive from the deceased sailor or soldier during his lifetime, subject to the proviso that the amount awarded shall not, in the case of any dependant, exceed the amount of a widow's pension."

That was the line of suggestion, which, as I have already said, I think, was mistaken. When the matter came to be considered on a second occasion, all that was reported is in paragraph four of the second Report, where it is stated the functions of the statutory Committee should be mainly as follows:—

"First, to decide questions of fact, in regard to pensions payable out of public funds to dependants other than wives and children. The scale of payment to such dependants will be determined by the finding of the Committee, and the payment itself will be made, as in the case of separation allowances and all other pensions payable out of funds provided by the State, direct by the naval and military authorities."

That points out, first of all, that the decision of questions of fact in regard to pensions would be one of the functions of the statutory Committee, and that the scale of payment to such dependants would be determined by the finding of the Committee. As far as I am able to understand, the Bill only refers to this question of dependants in Clause 3, Sub-section (1) (a), where it is stated that

"the functions of the statutory Committee shall be to decide any question of fact on the determination of which the amount of a pension or grant payable out of public funds to a dependant other than a widow or child may depend."

The statutory Committee of the Royal Patriotic Fund will decide questions of fact upon which the determination of the amount of pensions rests—that is to say, questions of fact as to what relation existed between the man and his family, the amount of money that he contributed, and so forth. But the real question which lies at the root of it all, namely, upon what basis, or upon what scale these pensions are going to be settled for all time, as far as I can see, is not referred to in the Bill. We are no further forward at all, so far as I understand the Bill. I may be wrong. The Secretary to the Admiralty (Dr. Macnamara) indicates that I am right. If I am right, this very difficult question of the system upon which these pensions are to be based, is left to nobody, or else to the Government, or to the Departments to settle without any reference to Parliament If that is so, the whole question of the granting of pensions upon a totally new system, a system not known in this country, or, I believe, in any part of the world, a system under which pensions are to be paid to relations who are not widows or children, is going to be left entirely to the War Office and the Admiralty to decide. I submit that that is not at all the right course to adopt in relation to a financial matter of any magnitude, least of all to one of the magnitude which this will undoubtedly be, because we shall be dealing with claims involving hundreds of thousands of pounds

Clause 2 deals with the constitution of local committees. My experience of this work is, that you are bound to have local committees of some kind; but they must be very closely supervised by a central authority The system will be satisfactory or not according as it is administered on some uniform principle all over the country. You will not have the same figures, but you must have the same uniform system; and you cannot get that uniform system unless the arrangements made are subject to the supervision, and the very close supervision, of some central authority. I do not know why—I think some good reason ought to be given—the old age pensions committees are being absolutely ignored. I have seen a good deal of the results of their work. Many of the committees certainly have devoted an immense amount of time and responsible attention to their duties; others, I can only say, have not. From many parts of the country, I quite agree, we have had most ridiculous proposals. But these committees certainly have experience, and they know what they are about. Under this Bill—if I may speak specially of London—there are to be new committees appointed by the borough councils. I think it is a mistake. In London the pensions committee is a committee of the whole county. It is undoubtedly a great deal of experience. My right hon. Friend (Mr. Hayes Fisher) knows its work much better than I do, because he has been in touch with it on the county council recently, since I left that body. As far as I have been able to see its work in connection with the particular branch in which I have been interested lately, it has given a great deal of attention to the subject, and has dealt with this difficult question with great ability. Perhaps the most difficult work of any in the Kingdom is the work that they are doing in London, where the circumstances of individuals are so difficult to ascertain.

I certainly think, if you are going to have a committee in London, it should be one committee for the whole county. I do not think you gain anything by having committees of the borough councils. I quite agree that you get more local knowledge, but it is not so much local knowledge that you want. You want a knowledge of London life, and you want the work to be systematised. I do not think you will systematise it if you hand it over to various committees formed by the borough councils. I have no doubt my right hon. Friend will have some arguments to put forward in favour of that particular proposal. I merely suggest that in my opinion it is a mistake, and I hope that it may be reconsidered before the Committee stage. Those are the only points of importance which occur to me. We have only had the Bill in our hands this morning, and it is difficult to form an opinion as to how it will operate in detail. As I have already said, I warmly welcome it, now that it has at last appeared, and I hope it will be passed into law. I only ask that when we get to the Committee stage the Government will consider any proposals for improvements in detail which may be put forward by Members in different parts of the House.