HC Deb 02 June 1908 vol 189 cc1795-806

Order for Second Reading read.

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

SIR F. BANBURY (City of London)

said he would like to know why this Bill was introduced, and why it was necessary to make alterations in the Friendly Societies Ace of 1896. He had read the Bill as carefully as he could, and had come to the conclusion that with one or two exceptions there was not very much in it to find fault with. He was informed that the friendly societies, a very excellent body, were extremely desirous of introducing the Bill, but the House of Commons existed to consider legislation, and because a certain section of the community wished to alter the law, it did not follow that the House of Commons ought to pass the alteration without knowing what it was they were passing. He thought that some explanation should be given of the Bill by its promoters. Clause 2 at once struck him as being rather peculiar. It said— A person of or under one year of age may be admitted as a member of a registered society or branch, and accordingly in Section 36 of the principal Act (which relates to the membership of minors) the words 'but above one year of age' shall be repealed. He had provided himself with a copy the principal Act of 1896, and he would endeavour to elucidate the various references in the Bill. In the principal Act he found that any person who was above one year of age might become a member of a friendly society. It seemed to him to be rather extraordinary that this Amendment should be put into the Bill, practically providing that a child a week old might become a member of a friendly society. There had been occasion to deprecate the bad practice of insuring infant children, which led, he would not say to infanticide, but to very great suspicion that something of that sort had taken place. He had talked with an official of the friendly societies in the Lobby the other day, and he had asked him to explain the clause. His answer was that other companies did it. He thought that of all the bad explanations he had ever heard that was one of the worst He gathered that what the official meant was that because insurance companies insured children under one year of age, friendly societies were anxious to be put on the same footing. But that was putting the cart before the horse. He would suggest to the President of the Local Government Board that the proper course to pursue was to prevent the insurance companies from insuring anyone under one year of age, and in that way put the friendly societies and insurance companies on an equal footing. It was the wrong way to put them on an equal footing by lowering the infant age for friendly societies to the limit which at present obtained in insurance companies. It was a very important question in regard to insurance companies, but it did not touch the principle of this Bill. He thought they ought to have some explanation of the reason of this provision's being put into the Bill, and some assurance from the Government that an Amendment would be made in Committee. Clause 4 dealt with disputes, and said— The expression 'dispute' includes any dispute arising on the question whether a member or person aggrieved is entitled to be or to continue to be a member, or to be reinstated as a member, but save as aforesaid in the case of a person who has ceased to be a member does not include any dispute other than a dispute on a question between him and the society or branch, or an officer thereof, which arose whilst he was a member, or arises out of his previous relation as a member of that society or branch. It seemed to be an extremely complicated clause, and he did not really understand what it meant. "Dispute" was carefully denned in the main Act, and the method of settling a dispute was very excellent, and he did not follow why this very confused section should be added to the principal Act. Clause 7 added a new subsection to Section 87 of the principal Act. The principal Act laid down certain penalties if an official of a friendly society took the money or property of the society and devoted it to property to which it ought not to be devoted. There was a definition in the principal Act and in this Bill as to how the funds of a friendly society were to be invested, and there was a provision in the principal Act that if an official used these funds for a purpose which was unauthorised, certain penalties should accrue, but he was not to be convicted if he acted without intention to defraud. The Bill limited the power of investment of the funds of the society. If an energetic secretary invested the money in something outside the powers given under this Bill and under the principal Act, not with any intention to defraud, but with the idea that he was making a good investment, and the investment turned out wrong and the money was lost, no penalty would follow. That seemed to open a wide door to very harmful practices, and there should be some alteration in the clause. There was also the point of extending the investments of the society in paragraph 3 of subsection (a). On the whole he was inclined to think that was not a very good clause, but some good would result from passing it because friendly societies would be allowed to invest their money in the debenture and preference stock of English railways. He was not sure that it would not be for the good of property in this country if some of the friendly societies had a good deal of money in railways; they would not hear so much from hon. Members below the gangway of their desire to be taken fourteen miles for twopence or one penny and bicycles being carried free and other excellent suggestions which they thought shareholders of railway companies ought to carry out. He hoped they would have a considerable amount of support from the friendly societies if this clause passed. Therefore, though he was not at all sure, from the point of view of the friendly societies, that they were wise in desiring this, he did not in any kind of way wish to oppose it.

MR. STAVELEY-HILL, (Staffordshire, Kingswinford)

said he welcomed the Bill, but there were some things in it on which he would like some information. He gladly noted paragraph (a) as a most useful addition to the five provisions of the principal Act, and, speaking for himself, with the experience he had had of friendly societies, though he quite agreed that there was a danger in insuring children, still if his memory served him aright, ever since the original Act of 1875, children of members had always been entitled to become members of the society at any age, even immediately after their birth. This was an extension to those whose parents were not members. He thought the investment clause in the Act of 1896 was sufficiently wide for all purposes and he could not quite see, though he fully appreciated what had fallen from the last speaker, that there was really any reason to extend the possibility of investment. He took exception to Clause 7 because it was an absolute alteration of the principles of the English law. He had always been brought up to understand that it was an axiom of English law that the onus of proof should be on the prosecution. In this clause and in the subsection on which the Government proposed to act he found the words "a person charged with such an offence shall not be convicted if he proves that he acted without intention to defraud." In every case tried in a criminal court in this country the onus of proof was upon the Crown. Why in this little Bill, which was a beneficial addition to beneficent Acts, were they going to put in a subsection which created a great exception to the ordinary principles of the criminal law of the country? As to the other matters with which the Bill dealt, with the exception of the investment clause, which he thought was sufficiently wide, he wished the Bill every success.

MR. C. E. PRICE (Edinburgh, Central)

said there were just two points not mentioned in the Bill which were worthy of consideration when it was referred to Committee One was with regard to investments of friendly societies in practically their own companies. Railway servants' societies invested their funds in the railway itself, and if it came to grief all the servants would be likely to suffer as the result of that investment. In all cases they should be compelled to invest in something outside their own particular company, and that would give them greater security that in the event of disturbance in the profitable working of the railway company, the servants would not suffer thereby. Another point was that he thought some provision should be made that all friendly societies should be subject to some audit. A great deal of unnecessary trouble and anxiety, as well as misery, had been caused by the fact that the accounts had not been audited by someone entirely outside the society. There would be greater security if there was an audit by a public accountant who was in the habit of asking for the production of books and seeing that funds were properly invested.


said the hon. Baronet was fully entitled to draw attention to the sections of the Bill, but he had made the most of the changes the Bill proposed to make, because they were in reality exceedingly simple. The original Bill of 1896 passed through the House with a very brief explanatory statement by Mr. Hanbury, and it was found to be so in accord with public opinion inside and outside the House that no Member on either side of the House thought it necessary to make any further allusion to the contents of the Bill. He hoped the Bill would pass through the Committee Stage without Amendment. The principal Act itself was taken as representing the opinion of friendly societies at the time, and, so far as he knew, that opinion upon the general merits of the working of the Bill had not changed. But certain difficulties had arisen in the working of the Act, and, consequently, it had been thought advisable to make the changes which now appeared in the Bill before the | House. The hon. Baronet the Member for the City of London, had drawn attention to one or two changes and alterations about which he needed some explanation. The second section of the Bill was one to which he had drawn particular attention. The explanation was really very simple. As the law stood at the present time, members of friendly societies could insure their children in industrial assurance companies, but they could not insure them in friendly societies. The hon. Baronet appeared to be apprehensive that the extension of infantile insurance might lead to greater infantile mortality. He was quite sure that both the hon. Baronet and himself would be in accord in opposing any legislation which might have that result. He could reassure the House on that point, because very careful inquiries had been made and a well-known authority, Dr. Newman, had expressed the opinion that, so long as the insurance was confined to parents insuring their own children, no harm could possibly come. Therefore, there was no such danger as the hon. Baronet anticipated. The object of the alterations to Clause 4 was to try and keep the disputes between members of friendly societies out of the Law Courts and so to speak, within the domestic circle. He was sure that was an object which would have the approval of the hon. Baronet. Clause 4 was really intended to overrule certain decisions which had made the Act very difficult to work. Clause 7 was also intended to get over another legal decision in which it was held that under the corresponding provision of the Act of 1865, to render the treasurer of a friendly society liable for withholding or misapplying monies that came to his hands, it must be shown that he had been guilty of some fraud or misrepresentation. Very considerable difficulties had been experienced in bringing people to book in face of the decision to which he had referred. In order to get over that difficulty it was intended that in this particular instance the onus of proving that he had not acted fraudently should rest on the defendant. This was no doubt a new departure, but it was a peculiar case, and he hoped the House would think it was satisfactorily met under these peculiar conditions, He trusted hon. Members would allow the Bill to go through without further opposition, all the more so because they proposed to refer the Bill to a Committee of the Whole House.

LORD BALCARRES (Lancashire, Chorley)

said the Secretary to the Treasury was quite correct in saying that Mr. Hanbury's Bill went through the House almost sub silentio; the discussion was very brief indeed. With regard to Section 2 of the present Bill he would remind the Secretary to the Treasury that the discussion outside this House with regard to Section 36 of Mr. Hanbury's Bill was very considerable indeed. Those interested in this question ten or twelve years ago would recollect the great amount of controversy and newspaper correspondence which Section 36 produced, for there was a widespread feeling that there had been grave abuses in connection with the insurance of infants in arms. The Secretary to the Treasury proposed to revise that section to the extent of allowing any child to be insured in one of these friendly societies. He was not going to oppose this clause, but he thought it was only right to recall to the House the controversy which took place upon the point twelve years ago. It was never alleged then that infantile insurance led to infanticide or, if alleged, it was only in the rarest possible cases. It was very freely stated amongst all classes of society that this system of infantile insurance did undoubtedly produce what one might call a sense of consolation to the parents, and at that time the National Society for the Prevention of Cruelty to Children seriously held the view that the system, if not an actual inducement to carelessness, at any rate was some palliation of the result. That was what brought about Section 36. Anybody under this new Bill would be able to insure a child at the age of two or three days. He did not feel inclined to accept a parallel in this matter from other companies. Because other companies did it he did not admit that it was necessary that a similar right or privilege should be conferred upon friendly societies. Personally he would rather deprive existing companies of the right than extend what was considered ten or twelve years ago to be something which led to an abuse. He thought the hon. Member was wrong about the question of the parent. There was no limitation in this measure to the parent. Anybody, whether a member of a friendly society or not, would be entitled to insure a child and that privilege was not limited to the parents. The question of the parents or guardians was merely a further sub-section of Clause 36 which dealt not with infantile insurance but with minors. He thought it would be an advantage if these societies could have their accounts audited, but he hoped that no hard and fast rule would be drawn up on that point. There were many friendly societies which according to the strict canons laid down by chartered accountants were insolvent, but nevertheless they were fully competent to carry out the work for which they were established and possessed substantial assets which could not be shown by some of the companies under the Company laws. With regard to the railway companies which had been referred to, many of them were managed by extremely competent men, and it would be ridiculous to limit the investment of these funds except under the general limitations of the main Act by forbidding friendly societies to invest their savings in the great concern with which they were connected. No doubt, technically, this Bill was a Treasury Bill, and the Secretary to the Treasury was naturally the proper person to answer for it in the House of Commons. But he submitted that a change in the law of this character was one in regard to which they were entitled to ask the information and the advice which could only be given by a law officer of the Crown. The amendment of the law here proposed was an extraordinary method of getting over a decision of a Court. The principle was that a man was assumed to be innocent until he was proved to be guilty. The members of friendly societies had no right to come to Parliament and endeavour to get over a fundamental principle of our jurisprudence, and to say that a man was to be held guilty until he proved himself to be innocent. He thought this clause was not germane to the main purpose of this amending Act. This change of the law was far too serious a matter to be dealt with without careful consideration. It might be taken as a precedent in other directions. He hoped the Secretary to the Treasury would take careful counsel with the law officers as to whether it would not be in the interest of general jurisprudence, apart from the convenience of friendly societies, to omit Clause 7 in Committee. If that clause was seriously pressed, it would provoke considerable and long discussion.

MR. WATT (Glasgow, College)

desired to call attention to a point which he hoped the Secretary to the Treasury would consider when the Bill reached the Committee stage. Cooperative societies were registered under the Friendly Societies Acts, and one of the obligations imposed by these Acts was that the societies should send to the Chief Registrar balance sheets made up to within one month of 31st December each year. The co-operative societies found that a very unsuitable time for striking their balance sheets, and particularly so in Scotland, where they found that the end of September was the most suitable date.


I do not think there is anything in the Bill about balance sheets.


said he understood this was a Bill to alter the Friendly Societies Acts. He desired to point out one of the disadvantages of these Acts which might be remedied by the Bill. The Scottish co-operative societies struck their balances on 31st September, one reason for so doing being that the dividends might be paid to members at a time suitable for the paying of rents in November. Instead of striking second balance sheets, the co-operative societies, in order to meet the requirements of the Friendly Societies Acts sent to the Chief Registrar the balance sheets made up to 30th September after adjusting them by the addition on one side of the purchases, and on the other side of the sales made up to 31st December. Every business man was aware that that was not a proper balance. He suggested that either the date for sending in these balance sheets should be altered so that the co-operative societies would not require to make up more than one balance sheet in the year, or that the Chief Registrar should insist that balance sheets which stood the investigation of chartered accountants should be sent in under the Friendly Societies Acts.

MR. GOULDING (Worcester)

said he was a member of a great number of friendly societies, and he had received communications asking him to support this Bill. His observations, therefore, would not be hostile, but rather for the purpose of eliciting a little more information with reference to the measure. He understood that under the present law a member of a friendly society could insure his child above the age of one year, and that it was now proposed to give him the right to insure the child at birth. It was also proposed that a child might when born be made a member of a society. He wished to know whether that Amendment was limited to the parent of the child. He should like to know from the President of the Local Government Board how far this Bill had received the support of the great friendly societies.


I am assured that it is supported by all the great friendly societies.


said he was glad to hear that. It was proposed by Clause 3 to empower societies to invest funds "in any investment in which trustees are for the time being by law authorised to invest trust funds." He would rather see power given to invest funds in certain securities which were not trust securities. He could name securities which came under the Trustees Act in which a man of ordinary prudence would consider it unwise to invest funds. He hoped the House would have some more specific statement than had yet been given as to whether the friendly societies desired the wide scope in regard to investments which this provision was intended to give. He joined the noble Lord the Member for the Chorley Division in asking an explanation of Clause 7. Why was a change in the law in regard to misapplication of property contemplated? He believed that if this change were made the officials of friendly societies would have scope for negligence which it was absolutely undesirable to give them. He hoped they would receive from the Law Officers of the Crown the reasons for this far reaching change in the law.


asked whether the Committee Stage of this Bill was to be taken in the Whole House because it was one of first-class national importance, or because the arrangements with reference to the consignment of Bills to Committees upstairs had proved unsatisfactory. No one would maintain that this was a Bill of first-class importance, and he protested against the time of the House being occupied discussing it in Committee, when Bills which were really of very great national importance were sent to Committees upstairs, where the public outside, and the great majority of this House, heard practically nothing about them. When the rules relating to Standing Committees were passed last year he understood that Bills of first-class importance would be dealt with in Committee of the Whole House, while Bills of a non-contentious character would be sent to Committees upstairs. It seemed to him that the principle which undoubtedly led the House to acquiesce in the change in the system with reference to—


That is not in order on the Second Reading of this Bill.


said he was stating that the hon. Member had adduced that as a reason for allowing the Bill to go for a Second Reading.

Bill committed to a Committee of the Whole House for To-morrow.—(Mr. Hobhouse.)