HC Deb 11 December 1900 vol 88 cc597-607
* MR. GIBSON BOWLES (Lynn Regis)

In accordance with our ancient constitutional practice I rise to move an Amendment whereby we affirm that grievance shall precede Supply. The subject which I shall deal with to-night is important, although I trust to make my remarks upon it as brief as possible. I was attacked on the last occasion I made a motion of this kind, on the ground that it was not the proper or usual thing to do. Yet it is a most necessary thing to do. This motion of an Amendment to your leaving the chair on going into Committee of Ways and Means, is, Sir, one of the few opportunities that private Members have left of bringing forward matters of general interest, and matters with regard to which we are afforded no opportunities upon the Estimates. There are now but four opportunities left to Private Members—the Queen's Speech, the Estimates and Questions, and this. The fourth is the most important opportunity of all. I say this for the benefit of new Members. The Chancellor of the Exchequer has threatened me with the abolition of this rule of the House—a most ancient rule—and I am officially informed that steps will, be taken by the Government to that end. I hope when the time comes I shall have the support of both sides, of the House in resisting any such alteration if ever it be proposed. Now, Sir, the subject that I am about to deal with undoubtedly is of very great importance. It is the subject of a very great national liability, which by many is not realised, and which by some is even denied. I do not think the Chancellor of the Exchequer will deny it. It is the question of the liability of the Consolidated Fund—that is to say, of the taxpayers of this country— to make good the deficit of the Post Office Savings Bank. The Post Office Savings Bank has had a remarkable career; for twenty years it showed a. profit on its transactions of £1,600 a year, but four years ago it took a different turn, and since then has shown a loss which now amounts to something like, £34,000. The Post Office Savings Bank is bound, by law to pay its depositors a settled, rate of two and a half per cent., and the Postmaster General's Report, from which all my figures are taken, shows that the cost of managing the bank is 7s. 3¼d. per cent., which, of course, has to be added to the £2 10s., the settled fixed rate of interest which has to be paid to depositors, so that the total cost to the Bank is £2 17s. 3¼d. per cent. But the Post Office has not recently been able to make £2 17s. 3¼d. upon its investments, and, consequently, it has paid more than it has earned for them. The balance-sheet of the Post Office Savings Bank at the end of last year showed a deficiency in assets, as compared with liabilities, of no less than £504,928. This deficiency of the assets as compared with the liabilities was a deficiency shown at the price at which the assets are taken. A great deal might be said about the reliability of this balance-sheet as to the assets. I notice that by some means or other the value of the building has been increased by £100,000 over the cost price. The assets consist largely of Consols, which have fallen considerably since then. The price of this part of the assets at the date when taken was 99½; they are now about 97½, a fall of 2 per cent., which has to be added to the half-million deficiency as shown. The importance of this fact is to be found in the consideration that every halfpenny of deficiency arising in the Post Office assets has to be made good out of the Consolidated Fund. It is the taxpayers, therefore, who are liable. The increasing gravity of the situation has been recognised again and again, and various remedies have been proposed. One remedy proposed has been the old one of investing in a worse security in order to get a higher rate of interest. I believe it was Mr. Fox who made the discovery that no man need want money who would pay enough for it, and it was on that principle that he obtained the money he squandered in gambling, but I contend that the Chancellor of the Exchequer must be constrained to keep the deposits of the Post Office Savings Bank in proper security. But this is not the worst of it. The 130 millions in the Post Office Savings Bank is a liability to pay deposits which are practically payable at call, or within, I believe, ten days. That liability is practically at call. The Post Office Savings Bank is liable, and every taxpayer in the kingdom is liable if the Post Office is unable to meet its liabilities. That is the serious part of the matter. Suppose a large number of depositors demanded gold, as was once recommended in this country in order to coerce a Ministry, what would you do? Sell your Consols? Do you suppose you could sell £67,000,000 of Consols at the particular price of the day? It would be impossible. Down would go the market price, and your assets, instead of being worth half a million less than your liabilities, would be worth two or three millions less. I do not suppose for a moment that depositors will rush for their money all at once, but you are open to that liability. I have already mentioned, one remedy that is proposed, but there are other proposed remedies. The Chancellor of the Exchequer proposed as a remedy that instead of the State paying 2½ per cent, to the depositors it should henceforth pay a rate, to be fixed annually in advance by the Treasury—that is to say, by the very body that borrows the money. The Treasury was yearly to fix this varying rate in relation to the earning power of the money. In other words, by the Bill introduced by the Chancellor of the Exchequer, the Treasury would be called upon to do what no stockbroker or no. stock-jobber can do, namely, to predict the price of Consols during the ensuing year in advance. Is it not evident that such a Bill could not be entertained? The Chancellor of the Exchequer seemed to reproach me the other day for not having, favoured it, but no man of sound sense could favour it. He himself took the precaution of introducing it under the Ten-minutes rule, and the consequence was that it could not be and was not discussed in the House. It certainly would not have survived ten minutes discussion in a House including such a large number of business men. There are other remedies—but I am not the family physician. He is the right hon. Gentleman, and it is for him to propose a prescription, and then we can see whether we can accept it or not. There is this to be borne in mind with reference to the Post Office Savings Bank. The object of those who put money into it is not primarily to obtain a high rate of interest or any interest at all. The object is to keep the money safe for poor persons, who, as a rule, have no strong boxes or banking accounts of their own. The first thing and almost the only thing depositors look to is security for their money, and I do not believe that in one case out of ten they think of the rate of interest at all; indeed I suppose that not in one case out of twenty do they under- stand what the rate of interest means. Another abuse suggests itself. Persons for whom it was not intended have used the Savings Bank to make something out of the State, and they have contributed to the loss that has been incurred. Other persons have used the Savings Bank than those for whom it was primarily intended, and for whom I believe it ought to be kept. Merchants, shopkeepers, rich men and millionaires for all I know, use the Savings Bank for the investment of their money. You might meet that by reducing the maximum sum allowed to be deposited. But however that may be, undoubtedly something remains to be done to put the Post Office Savings Bank on a proper and businesslike footing. I am not alone in holding that opinion. Only last Friday the Chancellor of the Exchequer gave me two answers on the subject. One was that it was an important matter which deserved the attention of Parliament, and the other was that he did not intend to pay any attention to it. Under such circumstances I have used my right to direct the attention of the House in a very short and summary manner to a very grave matter. I trust the Chancellor of the Exchequer will treat it as I have treated it, from the point of view of the liability of the State, that he will recognise its importance, and that he will be able to hold out some hope, not this session perhaps, but in a future session, that he will bring forward some measure which will relieve the State of a growing liability, and which will put the Post Office Savings Bank on a proper footing and restrict its use to those for whom it was intended. I beg to move, Sir.

MR. DISRAELI (Cheshire, Altrincham)

formally seconded the motion.

Amendment proposed— To leave out from the word 'That,' to the end of the Question, in order to add the words 'the yearly loss shown during the four years to the 31st day of December, 1899, on the trading of the Post Office Savings Bank, and the fact that on the 31st day of December, 1899, its balance sheet showed an excess of liabilities over assets of £504,928 1s. 10d., demand the serious attention of Her Majesty's (Government, and render it necessary that early steps should be taken to place the Post Office Savings Bank on a more satisfactory footing,' instead thereof."—(Mr. Gibson Bowles.)

Question proposed, "That the words proposed to be left out stand part of the Question."

* THE CHANCELLOR OF THE EXCHEQUER (Sir M. Hicks Beach,) Bristol, W.

The hon. Member began his observations by saying that he attached great importance to the right of moving Amendments to the motion "that the Speaker do leave the Chair," on going into Committee of Ways and Means. Just at the close of last session, the hon. Member, having discovered that this right remained to private Members, took advantage of it at a time which was most inconvenient to the House of Commons. I will venture to say it was proved to be inconvenient because, after the hon. Member had spoken for some half-hour or more, no one attempted to take part in the debate. Now, again, at a moment when we need all our time if we are to meet the general convenience of the House, the hon. Member has thought fit to take advantage of his privileges. I can only say that if those privileges are to be maintained, they ought to be exercised in conformity with the general convenience of the House; and the way to lose them is to act precisely as the hon. Member has done. It must be remembered that for nearly thirty or forty years this right to move Amendments to the motion to go into Committee of Ways and Means had practically lapsed until the hon. Member revived it.


I could give scores of instances. I do not choose the moment. When the right hon. Gentleman puts down his motion, I put down my Amendment.


Now, as to the Amendment of the hon. Member, in the first place it is impossible for me or any one else to do anything with regard to this question in the present session. The hon. Member recognises that himself. In the second place, I think the hon. Member is entirely wrong as to the facts on which he founds himself. He has stated, in the first place, that the position of the Savings Banks is most precarious, because of the deficiency in annual income as compared with the receipts from investment. He takes a period of three or four years during which that has been the case; but he entirely omitted to mention what I told him only the other day—that in the current year it was probable that there would be a profit. His second point is this—that taking the valuation of the assets of the Post Office Savings Bank on 31st December, 1899, there was a deficiency on a total of 129 millions of £504,000. But on the previous December 31st there was a surplus of over £10,000,000, and that proves that it is impossible to deal with this matter in the off-hand manner which the hon. Member suggests. I think I have said enough to show, I hope, that it is not necessary for the House to proceed with this discussion to-night. I can make no promise with regard to any legislation or proposal for next session. The hon. Member is aware that I have expressed my opinion that the position of the Savings Bank is a matter for the consideration of the House of Commons. I attempted only last session to deal with it by a Bill which I was not anxious at all to force on the House, but which I was anxious to have exmined by a Select Committee, and which would have been so examined if the hon. Member and a few others had not opposed the Second Reading. I can only say that I think I have a little more knowledge of the position of savings banks than the hon. Member, that attention is being devoted to the subject, and that I adhere entirely to what I have said—that the subject is one which deserves the attention of Parliament.


I think the Chancellor of the Exchequer should not be so severe on my hon friend, because we have really very few occasions on which to bring this matter up. I myself have taken immense interest in this subject for many years. The Chancellor of the Exchequer has held out hope year after year, for five or six years, when matters did not press as they are pressing now, that the question would be dealt with, and I think if he had been a little firmer he might have done something in connection with the matter during the last Parliament. Certainly we were given to understand that something would be done. I do not quite agree with my hon. friend with regard to the Bill that was introduced. I think it was a pity that it was not read a second time and sent to a Committee, as we are all agreed that something should be done. We want something done that will put the Post Office Savings Bank on a proper foundation. It is perfectly sound, of course, and I should be sorry if the idea went abroad that it was not absolutely sound. The security is the best in the world, the security of this country. I think the House is indebted to my hon. friend for bringing this matter forward at this moment. But the present is not a favourable opportunity for dividing on the Amendment, and I would therefore ask him to withdraw it.

MR. LOUGH (Islington, W.)

It seems to me that the Chancellor of the Exchequer took up a very reasonable position in the earlier part of his speech. He said that this was an inconvenient time to discuss the subject, and if he had contented himself with that remark I should not have troubled the House with any observations. But when this important subject is touched upon, and when the hon. Gentleman opposite tries to urge the Chancellor of the Exchequer to disturb this long-standing security which exists for the savings of the poor, I always make it a point of duty to protest. The Chancellor of the Exchequer, however, was not—I go the length of saying—quite sound in the latter part of his speech, and I am not quite satisfied with his attitude on the question. In the Bill he introduced he suggested that there should be a fluctuating rate of interest, to be settled from time to time by the Treasury, instead of a fixed rate of interest as at present. That was the principle of the Bill brought in by the Chancellor of the Exchequer, and what I wish to say is that in my opinion no case whatever has been made out for interfering with the rate of interest paid for many years by the Post Office Savings Bank. It is a convenience greatly appreciated by millions of the poor of this country, and it works admirably. The miserable loss which has been mentioned as having occurred in four years has not been contrasted with the large profits made in other years, and the fictitious nature of the case which the hon. Member sought to make out is shown by the answer of the Chancellor of the Exchequer. When such a gigantic business is done the alleged loss that has been j mentioned is surely capable of a great deal of explanation, but no case has been made out for touching this important national institution. My object is to urge the Chancellor of the Exchequer to maintain the rigid attitude he took up in the earlier part of his speech, and not to accept the idea that it is necessary to do I anything whatever.

MR. VICARY GIBBS (Hertfordshire, St. Albans)

I wish to say that I fully agree with the remarks of my hon. friend the Member for King's Lynn with reference to the Bill introduced in the last Parliament, in which a fluctuating rate of interest was proposed at the will of the Treasury. I do not, however, agree that depositors do not know what rate of interest they get. They know extremely well, they base their calculation on the exact amount they are to receive in any one year, and I think it is most essential that they should know what rate of nterest they are to get. I also think that it is essential that the Post Office should not pay a higher rate of interest than they can afford to pay. It is not right that they should work their business at a loss, and that they should compete with bankers in banking business, and engage in very doubtful investments in order to earn the money. The bulk of the money is earned by the Public Loan Commissioners, who lend money to all sorts of undertakings on security which is sometimes very doubtful indeed. As long as the rate of interest is low borrowers go elsewhere, but the moment the rate of interest goes up they rush to the Commissioners and take loans from them for all sorts of undertakings. I desire to associate myself with my hon. friend the Member for King's Lynn in the criticism he passed on the measure introduced by the Chancellor of the Exchequer. I hope the Chancellor of the Exchequer will recognise that something must be done and that when he introduces another measure a feature of it will be a fixed rate of interest.


My hon. friend the Member for West Islington thought it was his duty to explain that he thought that the first part of the speech of the Chancellor of the Exchequer was very reasonable. I rise to say that in my opinion the first part of the right hon. Gentleman's speech was most unreasonable. He blamed my hon. friend opposite for taking this opportunity to bring forward what everyone admits is a very important question. I think we have got to a point now in the administration of this country when really we have got to ask ourselves whether the Government ought to call Parliament together at all. The hon. Member opposite is told that one of the few remaining privileges of a private Member—and my hon. friend is one of the best champions of them—ought not to be availed of to bring forward a motion of this kind, because it was not convenient to the Government.


And to the House.


Of course the convenience of the House means the convenience of the Government. We shall be told that if we discuss this matter at any length to-night the House will be asked to meet on Monday next. That is the sort of argument that we are accustomed to. The Government calls Parliament together, arranges the shortest amount of time to enable them to pass their proposals through their different stages, and. then we are threatened that the House will have to sit in a new week unless they get everything they want. I protest, most emphatically against this way of carrying on the business of the country. What was to prevent the Leader of the House utilising the time that was absolutely wasted on the second day of the session, when the Speaker was in the Chair for the greater part of the day, and when there was practically no swearing-in going on and no business being transacted? That day might have been occupied with the public business of the country. As the business is now arranged it is impossible for us to discuss important motions like that now before the House, because we are told we are interfering with the convenience of the House and of the Government. I hope, Sir, the hon. Gentleman opposite will not be discouraged by the attack made on him by the Chancellor of the Exchequer. I think it is not likely that he will, but I think that also we must form a band of private Members in this House to protect ourselves from the attacks of the Government. We have no opportunities for discussion now; we have merely got to register the decrees of the Government. Nobody desires to interfere with the convenience of the House. But is it fair for the Government to arrange the business in such a way that it cannot be discussed unless Members put themselves in the very undesirable position of being charged with inconveniencing the House?


After the statement made by the Chancellor of the Exchequer, and in deference to the request of my hon friend the Member for North Islington, I should like to withdraw the Amendment.

Amendment, by leave, withdrawn.


I feel it is the desire of the House that necessary business should now be proceeded with. I desired to bring forward the question of the surrenders of British troops during the war, all of which were deplorable, and several of which were disgraceful, but I feel that the moment is not propitious, and as I hope to be able to raise it on a later day I will not now proceed with my Amendment.*