LOCAL AUTHORITIES (SAVINGS AND HOUSING BANKS). (Hansard, 10 July 1923)

§ Mr. LEACH

I beg to move, That leave be given to bring in a Bill to enable local authorities to establish and maintain savings and housing banks, and for other purposes in connection therewith. I have received some considerable encouragement for introducing this Bill from some answers which were given last Friday by the Financial Secretary to the Treasury when this very subject was under discussion for a short while. The Financial Secretary informed the House himself that if any private Member would be enterprising enough to put down a Bill for the purposes indicated in my own Measure, he would see to it that the Treasury would give it careful consideration. This Bill empowers county boroughs and any combination of local authorities representing a population of not less than 150,000 to establish and maintain local savings banks. In every case it also provides that the Treasury shall be responsible for the Regulations in regard to the conduct of those banks. In addition, it provides powers for the setting up of housing departments enabling the municipalities to make advances on mortgage to depositors in order to help them to acquire their own houses.

In 1916 the Government of that day passed an Act called the Municipal Savings Banks Act, but unfortunately they hedged it round with so many restrictions as to make it impossible for any local authority to conduct a savings bank at a profit. For instance, they placed a limit of £200 on the deposits, and they restricted the depositors to wage workers, who had to make their deposits through the agency of their employers, who deducted the sums weekly, by agreement, from their wages. The banks had also to hand over to the Government the whole of the sums collected in this way, and they were grievously restricted in the amount of interest which the Government paid to them for the money. Finally, as a last restriction, probably 1182 the worst, the banks had to commit suicide three months after the War. In view of those restrictions, it was not at all surprising to find that only one corporation in the country had the courage to adopt this Act. Birmingham did it as an act of patriotism. They were prepared to lose money, and, of course, did lose money, and in course of time they ended their bank as ordered by the law.

In 1919 they came again, this time for the purpose of obtaining, through a private Bill, real powers to conduct a real municipal savings bank. Fortunately indeed for their case, there exists in Birmingham a very famous clan with the surname Chamberlain. That famous clan for generations have had to do with the municipal activities of that great city, and I do not think it is going too far to say that they have enabled the shield of municipalism to remain clean and magnificent wherever they have had anything to do with it. The present Minister of Health is a member of that famous clan, a distinguished member, and it was through his help that the real powers to conduct a savings bank were obtained by the City of Birmingham. Virtually, the powers so obtained are the powers for which I am asking in my Bill to-day. What is good for Birmingham is surely good for the rest of the country, and, indeed, it has been very good for Birmingham. Four years' experience of the working of these powers has made Birmingham very proud of its municipal bank. Their open accounts have grown from 7,000 to 104,000: they are every month in the habit of receiving £200,000 in deposits and, indeed, their whole deposits come to some £3,000,000 they pay their depositors 3½ per cent.; and their profit last year was £9,690. A few days ago—on 18th June, in fact—they were opening a new branch, and the Minister of Health himself went down to participate in the thanksgiving ceremony. He made a proud and very significant speech on that occasion, and I shall take this opportunity of reading a sentence or two, because of the power of his arguments in favour of the Bill that I am seeking to get adopted by this House. On that occasion the Minister of Health said: Well, it was a very well-managed bank; it had certain obvious advantages compared with the Post Office in the facilities which it afforded, especially in the nature of withdrawals. … The conclusion we had 1183 come to was that the secret of the success lay in the fact that it was associated with our municipal system. 'I believe the depositors feel special confidence in the bank,' he added. They know that there is the security of the rates behind the bank, that there is a vigilant and watchful committee of the council looking after it, and it seems to me that this connection with the municipal system gives it a unique character and makes a special appeal to the working classes. You may call it Socialism if you like; I have never been frightened by a name. … It will be a good thing for this country if it should be further extended.' That is exactly what I seek to do. I would like to quote that speech in full, because it is so admirable for my purposes. Many corporations have been either promoting private Bills in order to get these powers or adopting Clauses for their next Bills for the same purpose, but I find that the Local Legislation Committees upstairs are distinctly timid about giving these powers, because, as I believe, they want to see the national Legislature tackle this matter and introduce a general Bill upon it. A day or two ago the Institute of Municipal Treasurers, at their annual conference, similarly endorsed the wisdom of this proposal, and I have incorporated in my Bill the recommended minimum population to the area which they have laid down