§ (1) Every approved society and every society desirous of becoming an approved society shall give such security as the Insurance Commissioners may consider sufficient to provide against any malversation or misappropriation by officers of the society of any funds coming to their hands under this part of this Act, but the security so given shall not, unless the Insurance Commissioners are willing to accept security of a smaller amount, be less in value than one half of the aggregate of the annual contributions payable by or in respect of the members of the society who are insured persons.
§ (2) In the case of an approved society with branches having insured persons among their members, security shall be given in respect of each such branch by the society.
§ (3) Except in cases where the Insurance Commissioners are willing to accept other security, such security shall be given by deposit, made in the prescribed manner, of securities belonging to the society.
§ (4) The Insurance Commissioners may from time to time vary the amount of security to be given or maintained by an approved society as may be thought proper, and any such society may, with the consent of the Insurance Commissioners, substitute other securities for the securities for the time being deposited.
§ (5) Any dividends or interest arising from securities deposited by an approved society under this Section shall be paid to the society.
§ Amendment proposed: In Sub-section (1), to leave out the words "but the security so given shall not, unless the Insurance Commissioners are willing to accept security of a smaller amount, be less in 464 value than one half of the aggregate of the annual contributions payable by or in respect of the members of the society who are insured persons," and insert instead thereof the words "and in determining the amount of the security to be required the Commissioners shall have regard to the amount of the funds so coming into their hands: Provided that no society shall be required to give any security which proves to the Insurance Commissioners that the only funds coming into the hands of the society under this part of this Act are such funds as are required for reimbursing to the society sums previously expended by the society under this part of this Act."—[Mr. Lloyd George.]
§ Question proposed, "That the words proposed to be left out stand part of the Clause."
§ Mr. AUSTEN CHAMBERLAINI do not wish to object to the words being left out, but I want to suggest a drafting Amendment, and if I am permitted to do so now it will give the Government a moment to consider it. I recognise that it would be more strictly in order to postpone my observations until the words are actually moved to be inserted. The words proposed read, "Provided that no society shall be required to give any security which proves." I suggest to the Government that the words should read "Provided that no security shall be required from any society which proves, etc." I think that would get over the difficulty.
§ Mr. LLOYD GEORGEI am very much obliged to the right hon. Gentleman.
§ Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.
§ Mr. AUSTEN CHAMBERLAINI beg to move, to leave out the words "Society 465 shall be required to give any security" and to insert instead thereof, "security shall be required from any society."
§ Question, "That the words proposed to be left out stand part of the proposed Amendment," put, and negatived.
§ Words "security shall be required from any society," there inserted.
§ Amendment, as amended, agreed to.
§ Mr. RAMSAY MACDONALDI beg to move, to leave out Sub-section (2).
The Amendment refers especially to trade unions. It is provided that security may be asked from branches, but we think where you have branches and yet a centralised financial management it would be far better if you had a central security for the good behaviour and financial soundness of the branches. That is the object we have in mind, and I believe the Chancellor of the Exchequer is in sympathy with us. Make the central security as complete as you like, and be quite certain it covers all the branch operations. If that is done, we think it is quite unnecessary to ask the branches for security.
§ The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Masterman)The Government have considered the point raised by my hon. Friend, and they are quite clear that "branches" here refers to registered branches, and branches of trade unions would not come under that definition. If that is not sufficiently clear they are quite prepared to accept my hon. Friend's suggestion, and make it clear on the Report stage.
§ Mr. RAMSAY MACDONALDWould you put in the word "registered"?
§ Mr. JAMES HOPEI take it that with an equalised society only a central guarantee would be necessary?
§ Mr. HODGEMight I point out an example? The society I represent has something like 170 or 180 branches. The funds are centralised, and, although the branches are scattered over the length and breadth of England, the west of Scotland, the whole of South Wales and Monmouthshire, yet the trustees of all the branches are the central trustees.
§ Mr. LLOYD GEORGEI am not quite sure I appreciate the point of the hon. Member for Sheffield.
§ Mr. JAMES HOPEThe case I have in mind is that of an equalised society, like the Sheffield Druids, with branches which are equalised. In a case like that, will one guarantee on the part of the governing body be considered sufficient or will separate guarantees be required from the branches?
§ Mr. LLOYD GEORGEI should want to know more about it before I could give a definite answer. In the case mentioned by the hon. Member for South-East Lancashire (Mr. Hodge) the liability is a centralised one. Where the liability is that of the branches, there must be some security on the part of those who are liable.
§ The ATTORNEY-GENERAL (Sir Rufus Isaacs)I am afraid the suggestion to put in the word "registered" will not do, because we use the word "branch" right through with a single meaning. We will, however, consider it again, and, if we think there is any doubt at all about it, we will introduce words which will make the matter more clear.
§ Mr. AUSTEN CHAMBERLAINThe matter requires a little more consideration than the Government have yet been able to give to it. What is wanted is that security should be given by the person or body who is good for the security, and who can be made to pay if there is any default or anything of that kind.
§ Mr. LLOYD GEORGEHe must be liable.
§ Mr. AUSTEN CHAMBERLAINWe can make him liable or he can make himself liable. As I understand the Chancellor of the Exchequer, he must be primarily liable under the Bill. I do not think that is necessary at all. If a central body, which is substantial and as to the credit of which there is no doubt, undertakes for reasons which we need not go into and which do not concern us, to give security for the debts of its branches, even although there is no original liability on the part of that central body, there is no reason why we should not accept that security. It might be a convenience to the branches. The central body will not be liable, and cannot be liable without their own consent and goodwill. They cannot assume liability except at the request and by arrangement with the branches, but, if it is more convenient that some central body not primarily liable for the branches, should give a common security for all the 467 branches, or for any of the branches, and is willing to do so, and can satisfy the Commissioners that the security is good, I do not think there is any reason why we should step in by Statute and prevent it.
§ Mr. LLOYD GEORGEIt does not say the security should be given by the branches, but in respect of the branches, so that a central body could give security under this Sub-section.
§ Mr. AUSTEN CHAMBERLAINIf that be a true interpretation of the Sub-section, I should have thought it scarcely necessary to amend it at all. If it does require amendment, then I want to be sure it is wide enough to cover such cases as I have suggested.
§ Mr. BOOTHI would like to put one important point, namely, on the question of local management. If you allow a society highly centralised to take upon itself these matters by giving security for all branches, it will dictate terms, and some of those branches might find themselves deprived of much local autonomy, as the price of the central body guaranteeing them. I mention it to be borne in mind.
§ Amendment, by leave, withdrawn.
§ Further Amendments made: Leave out Sub-section (3).—[Mr. Lloyd George.]
§ In Sub-section (4), leave out the words "any such society," and insert instead thereof the words "where security is given by the deposit of securities the society which made the deposit."—[Mr. Lloyd George.]
§ Clause, as amended, agreed to.