Memoranda presented to the Royal Commission.

  • Great Britain. Royal Commission on Population.
Date:
1950
Catalogue details

Licence: Public Domain Mark

Credit: Memoranda presented to the Royal Commission. Source: Wellcome Collection.

    126/128 (page 120)
    for 10 years on the verbal understanding that he will surrender the dividends and return the capital after 10 years. Clearly if there was any covenant the ruse would be transparent and the income would not qualify for imputation pmil the end of the expectation period. Is this a comfortable proposal to make? 6. I suggest that the proposal is not a comfortable one. This man of mature years, modest income and substantial family is not solid. If his health breaks down, or—supposing his £800 p.a. to be an investment income —if he squanders it by a foolish speculation, and the rich relation cannot be sure that these things will not happen, he will become a case of distress. The rich relation might then be sorry but feel that he has other calls upon his charity. But if the poor relation has legal possession of £6,000, with no more than a verbal promise to repay, it becomes much more difficult for the rich relation to do nothing to help him. I suggest therefore that the rich relation is bound to look askance at the original proposal, and I suggest furthermore that the £800 a year man, foreseeing this, is unlikely to make it. A man of that age and responsibility does not usually like to ask financial favours even of relations. 7. Furthermore the gain from allthis is not very great. While the money is nominally with the £800 a year man he has to pay contributions on the full £1,000. Thus he only gains on the imputation of contributions after the end of the expectation period, in this case for 10 years. The contribution on £200 for 10 years is £100. The increased endowments for 3 children resulting therefrom are approximately 3 x ¢ x £100 = £240. I suggest that when all this was explained to the rich relation, as it would have to be, rather than part with his legal claim over £6,000 for 10 years, and so far as the law is concerned perhaps for ever, he would say, “ My dear fellow, I will gladly give you £240 towards the education of your admirable children”. 8. For those reasons I do not think that this wangle would occur very often. 9. If, however, experience showed that it was occurring on a considerable scale, it could be prevented altogether by withdrawing the general concession that contributions after the end of the expectation period would be reduced below the level previously imputed in proportion to any fall of income below £1,000 p.a., and by only making the concession on condition that the cause of the fall was shown to be unavoidable. This condition could be interpreted generously but not so as to include free gifts of capital to other people. (‘) It might be supposed that the shares need not be transferred for more than - 5 years to affect more than one child, since even if the transfer does not affect the endowments of Nos. 3 and 4 during their dependence, the difference between the endowments the father got for them and those due to him for them in consequence of the extra £200 will be credited to him on the “assessment day” at the end of the expectation period. But this will profit him nothing, if the shares are then restored, for the credit in respect of the higher income imputed after the expectation period will only take effect if that income comes in. If the income does not come in, what is credited to him in respect of the extra expected contributions will be automatically withdrawn. But, suppose, it may be urged, that the father is allowed to retain the shares until he is 66. In this case there will be no wangle, for he will pay contributions throughout on £1,000 p.a. and the fact that he does not in fact ~ enjoy £200 of this is irrelevant to the solvency of the Fund. (66493) Wt. 3370— K20 5/50 D.L. | PRINTED IN GREAT BRITAIN 4