HC Deb 22 May 1891 vol 353 cc950-60

SECOND READING.

Order for Second Reading read.

A LORD OF THE TREASURY (Sir H. MAXWELL,) Wigton

In asking the House to consent to the Second Reading of this Bill, which I now rise to move, I would say that it is doubtless in the recollection of the House that during the present Session we had a discussion, on the Motion that you, Sir, should leave the Chair, on the general subject of Friendly Societies. From what happened on that occasion there was some evidence of uncertainty on the part of hon. Members who took part in that Debate as to the different kinds and classes of Friendly Societies in this country. The fact that so many different kinds of societies were included in certain provisions of the General Friendly Societies Act of 1875 had led to the assumption that there was not much difference in the object, constitution, and management of these societies. But that is very far from being the case, as was shown by the evidence adduced at the inquiry by the Friendly Societies Committee, which sat in 1888 and 1889. The inquiry by that Committee was practically limited by the terms of reference to the condition of those societies which were Collecting Societies—those which are defined by the 30th section of the Act of 1875 as collecting contributions from members beyond a distance of 10 miles from the head office. There is a clear distinction between such societies, which are managed by paid officials, and the ordinary Friendly Societies, which are usually managed by an unpaid body selected from among their own members; and it might tend to dispel certain apprehensions which have arisen on the matter if I say at once that this measure is confined entirely to societies and Industrial Assurance Companies doing business by paid collectors. The hon. Member for Sheffield, in the course of the Debate to which I have referred, showed some impatience because the Government had not adopted the recommendations of the Select Committee. The present measure carries the greater portion of those recommendations into effect, and deals with certain evils and risks attending the societies. Those Collecting Societies were described by the Chief Registrar before the Committee as necessary evils. I cannot go so far as to fully endorse that expression, because I know that those societies and the Industrial Assurance Companies do fulfil very important and useful functions in the interests of the classes for whom they are worked. The provisions of the Bill are directed, not so much against thoroughly well-established and well-managed societies, as against those which are utterly rotten and are badly managed, some of which would very likely receive their death blow from some of the enactments of this measure. As to the principal alterations in the law made by the Bill, it is proposed, in the first place, to abolish the ten-mile limit, collection beyond which at present constitutes a Collecting Society, and instead of that definition it is proposed to substitute the condition that any society collecting contributions by paid collectors, whether by commission or salary, should in future be known as a Collecting Society, and should be under the obligation to register at the Registry of Friendly Societies. At present there is no obligation to register; but in future, if the Bill be passed, it will be obligatory under certain penalties for the managers of every such society to do so. Clause 3 is to the effect that no society working by paid collectors shall in future use the designation "Friendly." It seems to be almost necessary to make this provision because of the confusion that has existed in the public mind between this class of society and those societies which are really, in the best sense of the word, Friendly Societies, such as the large Affiliated Orders. By no other means has it been found possible to draw a line between the two classes of societies, and that it is necessary to draw such a line, and that the public should be clearly informed as to the difference, every one who has inquired at all into the subject must be pre-pared to admit. Collecting Societies existed primarily for the interest of the managers and those who get a living out of them; whereas the great Friendly Societies to which I have referred, and to which the managers give their services gratuitously, exist wholly for the benefit of the members insured in them. Therefore, it is proposed that in future all Collecting Societies shall be called by the title of Industrial Assurance Societies, a title like that which describes the kindred institutions—the Industrial Assurance Companies. The 4th clause contains a very important provision, under which any new society of this description will be required to pay a deposit of £500 as a guarantee into the hands of the Registrar. Clause 5 makes a similar provision in respect of Life Assurance Companies doing industrial business, and I would remind hon. Members that the necessity for this provision has been forcibly demonstrated in the history of some of these companies. I mean such companies as the Yorkshire Provident, companies which existed before the passing of the Life Assurance Acts of 1873 and 1874, and, having been kept in a state of suspended animation, were afterwards resuscitated, and thus avoided the necessity imposed by these Acts of making a preliminary deposit of £20,000. That company existed five or six years, and then came to unmitigated grief, all the moneys invested in it being lost to the policyholders. The 9th clause provides that all societies and companies doing industrial insurance business shall in future place a surrender value on their policies. It is well-known that the immense profits which some of those societies have made have been largely due to lapsed policies. From various causes persons in a humble rank of life and dependent upon the fluctuations of wages find it impossible to keep up the payment of their premiums, whereupon all the money they have paid in premiums is forfeited to the companies. That practice amongst Insurance Companies doing ordinary business should be met, and therefore we propose that after five years every policy shall bear upon it a surrender value. The 10th clause deals with the question of how far the Chief Registrar of Friendly Societies shall be responsible as referee and administrator of the affairs of Friendly Societies. Is he to be only a Registrar, and do nothing more but register rules, good or bad, as a machine, or has he to exercise a discretionary and beneficial control over the management of these societies? Now, it seems most desirable that if rules and tables are to be submitted to the Chief Registrar for his approval and endorsement, that approval and endorsement should not be formal merely. Therefore by Clause 10 we propose to confer upon him the power to refuse to register such rules as are, in his opinion, contrary to the provisions of the Friendly Societies Acts, and by Clause 11 he has power to disallow rules which seemed at variance with the interests of the members of the societies. Clause 18 provides for more stringent regulations being made than at present exist for the valuation of the assets and liabilities of the societies. Perhaps one of the most important provisions of the Bill is contained in Clause 20, which abolishes the necessity for obtaining the signatures of 500 members before an Inspector can be appointed to inquire into the affairs of the society. It has been found that it is practically impossible to obtain 500 signatures without the aid of the collectors, whose interests may be, and probably are, against such an inspection taking place. By Clause 20 the Chief Registrar, on the application of any member, supported by such evidence as he and the Treasury may think desirable, can order an inspection of the affairs of the society to take place. With reference to the subject of Infantile and Juvenile Insurance, a Select Committee of this House has inquired very carefully into the matter, and the conclusion they have come to is that, although undoubtedly there is evidence of the existence of many cases in which the present facilities have been abused, still the probability is that the extent of the evil has, from its very nature, so impressed itself on the public mind as to cause people to think the evil much more general than it is. My own opinion is that, although there are undoubtedly cases of great cruelty and crime arising out of the insurance of infant life, the prevalence of it is not so great as has been supposed. The Committee, at all events, have come to the conclusion that a great hardship will be inflicted on numbers of deserving people were insurance for children's funeral expenses to be absolutely prohibited. It is not one of the least creditable motives of poor parents that they should wish to make cheap and easy provision for the decent burial of their children. These societies and companies, bad and costly as they are in many instances, still supply a want among the working classes which up to the present has not been otherwise supplied. Therefore, the Bill, instead of prohibiting infant insurance, merely regulates the system, and surrounds it with precautions which will limit the risks of abuse. In asking the House to read the Bill a second time, I do not claim that it is at all a perfect measure. The subject dealt with is highly complicated, and it is proposed to send the Bill to the Standing Committee on Law.

Motion made, and Question proposed, "That the Bill be now read a second time."

(11.23.) MR. T. P. O'CONNOR (Liverpool, Scotland)

I think the House will be well advised in agreeing to the Second Reading of this Bill. It will no doubt require much consideration in some of its clauses, but it is beyond question that such a measure is urgently called for by the condition of some Industrial Insurance Societies. I have had exceptional opportunities of becoming acquainted with the amount of suffering and fraud inflicted on the poorer classes by some of these societies, and no public man could do a better service to the working classes than expose some of the fraudulent methods employed. I do not agree with the hon. Baronet in his opinion that it is commendable on the part of the poor to wish to spend a certain amount of money on their children's funerals. I think it shocking that parents should take away from their surviving children what are to them large sums of money to indulge in the empty pomp of a big funeral. If these expensive funerals were done away with there would be no necessity for infant insurance, and no temptation to the shocking crimes by which the country has been alarmed. One of the most useful clauses of the Bill is Clause 6, to which some of the Industrial Societies have taken particular objection. This clause disqualifies the collector from acting on the Governing Bodies of the societies. At present in fraudulent societies when any question as to the management is raised, the collectors are called in to vote down the objecting members of the organisation. The collectors cannot be impartial because their livelihood depends on the existence of the societies. A strong objection has been raised to Clause 9, which deals with the surrender value of insurance policies. This is a very necessary clause, because at present many poor people are compelled to forego all benefit of the premiums they have paid by inability at some time to continue the payment of the premiums. All the large Life Insurance Offices provide for a surrender value of policies, and there is no reason why the poorer classes should not enjoy the same benefit.

SIR H. MAXWELL

I wish the House to understand that, although the clause provides for a surrender value, it does not follow that some societies have not made such provision already.

MR. T. P. O CONNOR

A legitimate objection has been taken to Clause 14, which compels a collector, if requested, to show the names of the members on his books to any person from whom he collects money. The principle of the clause I think sound, but there are practical objections to it. Collectors sometimes have between 3,000 and 4,000 names on their books, and to compel them to exhibit the names during their rounds might cause great inconvenience. Demands for the production of the books might also be made in the interests of rival societies. I approve Clause 15, which requires that notice in writing should be given to everybody entitled to attend the meetings of a society. The clause relating to the subject of inspection I also think good. The present law requiring that a demand for inspection shall be made by 500 persons is practically inoperative, for poor people are not accustomed to act together in these matters, and cannot combine with facility. A large number of rotten societies have been able to live on from year to year in consequence of the difficulties in the way of joint action on the part of the subscribers. I cannot sit down without joining in the regret that has been expressed at the death of the illustrious Prelate who took so deep an interest in the subject dealt with by the Bill.

(11.35.) MR. BARTLEY (Islington, N.)

I hope the Bill will be read a second time now, and after amendment become law this Session. I venture to warn the House, however, on one or two points. I think we are apt to exaggerate the importance of registration. Registration will do a great deal of good; but there is the danger that people will depend more on registration than upon the rules. I also think the importance of drawing a distinction between societies—calling some Friendly and others Industrial—is rather exaggerated: people do not go much by the name but by what they get from the societies. Again, we must bear in mind that many people prefer to pay 1d. at the door to paying a ½d. to a much better institution, such as the Post Office to which they have the trouble of taking the money. We must not condemn altogether the societies which collect the subscriptions in this way. Reference has been made to surrender value. Of course, I think, that if there is any surrender value it ought to be paid. But we must remember that if a person pays 1d. or 2d. a week into these societies for five years or so, there is not much surrender value at the end. To do justice to some of these societies I think it will be found that there are exaggerated notions as to the surrender value of the money paid into them. The fact is, many people pay this insurance not as insurance but as a sum to provide for burial. The real crux of the Bill is, however, that we are making the Registrar responsible for these societies; that is a point for serious consideration in Committee. The Registrar is to examine the rules, and if he thinks they are not proper or beneficial to the mem- bers he is practically to refuse to register, and no society can exist if it be not registered. We must recognise that if the Bill passes in anything like its present shape the Registrar of Friendly Societies will become practically responsible for the soundness of these societies. I look with some apprehension on that state of affairs. The hon. Baronet (Sir H. Maxwell) says the registration has nothing to do with the soundness of the societies, but with the rules. The soundness of the society depends on the rules, and the public will feel if the Registrar says the rules are sound and proper and legal, some how or other the society ought to be the same. I hope the House will carefully consider that the present measure really means that the State is really to become responsible for the soundness of these societies.

(11.43.) MR. LAWSON (St. Pancras, W.)

I do not rise to oppose the Second Reading. On the whole, I believe the Bill will have good effect in protecting the poor from fraudulent insurance, but I think we ought to proceed with great caution when we are interfering with our national thrift organisation, imperfect as it may be. I cannot agree with the Registrar who is said to have described the societies as "necessary evils." I do not think they ought to be classed together in that way, for there are some that stand in a very different position from others. I quite agree that there is a marked difference between the Collecting Societies and the great Affiliated Orders. At the same time, Collecting Societies do touch classes not touched by the Affiliated Societies. I do not say that it is not a just and proper thing that there should be a surrender value, but I think it will interfere vitally with the financial arrangements of these societies. In the consideration of this Bill I think the authorities should be heard, and they cannot be before a Standing Committee. I therefore ask the hon. Baronet whether it would not be better to refer this Bill to a Select Committee. I do not speak with any authority, but I am quite certain the societies will have evidence to tender which was not submitted to the Committee over which the hon. Baronet presided. I beg the House to proceed with very great caution in this matter, because the difficulties are greater than appear at first sight. Nothing will be lost by hearing those connected with the great Collecting Societies. The provisions of the Bill will be criticised, not only by the Collecting Societies, but by the Affiliated Societies which have objected to Government interference all through, just as they have lacked Government assistance.

(11.47.) THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN,) St. George's, Hanover Square

The point raised by the hon. Member has been under the consideration of the Government, and we have deliberately come to the conclusion that it would be best to refer the Bill to a Standing Committee. During two years there has been an inquiry, and, as a result of that inquiry, the draft of this Bill has been embodied in the Report. I believe I am correct in saying that the greatest of the Friendly Societies view this Bill, on the whole, with favour. The Members of the Standing Committee will have an opportunity of being made familiar with the views of the societies, and though the societies will not be heard before the Committee, we shall certainly have that despatch which we should not have before a Select Committee. We are most anxious the Bill should be passed this Session, and there is not much time to lose. I am glad to think that the House is disposed to assist the Government in bringing about a reform which I believe will be of the greatest advantage to a large class of people.

(11.48.) MR. CHANCE (Kilkenny, S.)

I do not rise to oppose the Second Reading. It is perfectly evident that some pretty strong step is necessary to prevent the establishment of societies which are nothing less than fraudulent, but I echo the warning given by the hon. Member opposite (Mr. Bartley) that there will probably be some danger in passing clauses which cast on a Government official the duty of declaring to the public whether or not the rules of any particular society are proper or not. I have no doubt whatever that some unscrupulous societies will use the fact that their rules have been passed as in some degree a guarantee by the State. There is another small matter I wish to refer to. I notice that societies will, after the lapse of one year become unlawful associations unless they are registered. On being registered, a society, however small, is compelled to lodge the sum of £500. No matter how large a society may be, it is not to lodge more than £500.

SIR H. MAXWELL

That only applies to new societies. It is not retrospective.

MR. CHANCE

The objection is very much lessened by that fact, which I confess I had overlooked. I can perfectly well understand that in the majority of cases the sum of £500 will be found a reasonable deposit, but there are societies whose operations are so extensive that £500 will mean practically nothing to them. I should like to see some provision inserted in the Bill by which, in the case of large societies, a larger deposit than £500 will be required. But to turn to the other side of the picture, I know of many cases in which the deposit of £500 will be a great deal too much. In Ireland, and especially in seaport towns, there exist small societies which will come under the Bill.

SIR H. MAXWELL

Not unless they employ paid collectors.

MR. CHANCE

If the point is made clear my objection will disappear. I submit you will have small societies formed, and if you ask them to deposit £500 you will ask them to do more than they are able. In other cases a £500 deposit will be wholly inadequate. I suggest that a sliding scale might with advantage be adopted.

(11.55.) MR. CRILLY (Mayo, N.)

I wish to point out an objection I feel there is to the 14th clause. The clause provides that a collector of an Industrial Insurance Society shall, at the request in writing of any member whose money he collects, and who has been for more than a year a member of the society furnish a list of names and addresses of the persons from whom he collects money. I know that many poor persons might pay their pennies and sixpences during the week, and would not like their neighbours to know they had paid them.

SIR H. MAXWELL

It does not apply to companies, but only to societies of which the persons insuring are members.

MR. CRILLY

Well, then, I am quite prepared to follow the example of my hon. Colleague and leave that point, but I think it would be worth while to refer the Bill rather to a Select Committee than a Grand Committee. I think the interests of these societies should be safe-guarded as carefully as possible.

Question put, and agreed to.

Bill read a second time, and committed to the Standing Committee on Trade, &c.