HC Deb 26 March 1929 vol 226 cc2375-83
Mr. GILLETT

I beg to move, in page 6, to leave out from the word "banks," in line 30, to the word "and," in line 32.

I would point out that I have subsequent Amendments on the Paper—in page 6, line 39, after the word "shall," to insert the words "cease to," and to leave out from the word "effect," in line 39, to the end of the Sub-section. These two later Amendments are all part of the one I am moving now, and, if agreed to, they would make the Clause read: (1) Section thirty-eight of the Trustee Savings Banks Act, 1863 (which prohibits double accounts in trustee savings banks) and Sub-6ection (2) of Section one of the Savings Bank Act, 1887 (which provides that regulations shall prohibit a person from being a depositor in both a trustee savings bank and the Post Office Savings Bank or from having two separate accounts in the Post Office Savings Bank) shall cease to have effect, and accordingly Sub-section (1) of Section twelve of the Savings Bank Act, 1891, shall cease to have effect. The object of this Amendment, which, I agree, is not as important as the last Clause, is of considerable importance to those who are interested in trustee savings banks. By the Savings Banks Act, 1863, Section 38, a person who opened a deposit in a bank was not allowed to make any deposit in any other account or any other savings bank, and the Act of 1887 prohibits a person from being a depositor in both a trustee savings bank and the Post Office Savings Bank, or from having two separate accounts in the Post Office Savings Bank. The Act of 1891, after reaffirming this position, goes on to say that if it is found that a person has two accounts in the way that had been prohibited by previous Acts, he shall be liable to forfeit any amount illegally deposited. The House will understand that there is a rather severe penalty imposed on any person who has infringed the provisions of previous Savings Banks Acts. No doubt the reason at the back of the minds of those who introduced those Clauses prohibiting a person having two accounts, one of which was in the Post Office and another in a trustee savings bank, was that they should limit the amount of money which might be received in a year. A number of years ago this limit was £30. A person could then pay in only £30 during the year, and the total money that he was allowed to have in was £200. That was raised to £50 and, finally, to what it is at the present time, when a person is allowed to deposit £500 during the year. There is no limit to the amount he may have in the bank, but all the money has to be in one account, and he has to make a declaration to say that he has no other interest in any account in the Post Office or in any other savings bank.

The object of the Clause which the Government are introducing in this Bill is to relax this prohibition to a certain extent, and to allow a person to have one account in a trustee savings bank and, at the same time, an account in the Post Office Savings Bank. The object of our Amendment is to remove the restriction altogether. We do not see why it is needful to have any prohibition if it is for the convenience of a person. Sometimes a man may like to have two accounts for banking for different objects. Seeing hat you have this prohibition as to the amount of money you can have—which we are anxious to remove as we suggested in Committee, but which we are not pressing to remove now—we do not see why the Government need adhere to the Regulation and not allow as much freedom as possible so as to give these trustee savings banks every possible help to get depositors. I should like to draw the attention of the House to an interesting pamphlet written by Mr. Thomas Henderson, the actuary of the savings bank at Glasgow, on the subject of savings banks. He points out that what we are proposing has been done on the Continent, and a relaxation on these lines has been introduced in Continental countries. He says: Indeed, it is not too much to say that an unqualified limitation of this character may seriously prejudice the full usefulness of the banks by neglecting to take cognisance of the psychology of small depositors who desire to earmark savings for specific purposes, such as holidays, travel, family education, etc., by opening one or more accounts in the same bank to be used for the deposit of money set aside for such objects. The savings banks in many other countries have abolished or modified the restrictions with considerable advantage to the depositors in the banks. That is certainly one of the reasons which I bring forward in support of the Amendment which I am moving, to allow greater liberty in regard to deposits and to get permission for the depositor to have these accounts, seeing that there is still the limit which covers the whole of the accounts.

Mr. PETHICK-LAWRENCE

I beg to second the Amendment.

I should like to explain why it is that it would be an advantage to depositors to be able to have accounts in more than one bank. There are a certain number of cases in which some individuals prefer banking in these savings banks to banking in the ordinary way with a joint stock bank. There are officials on certain bodies—it may be some friendly society or savings bank club, or something of that kind—and these people may want to be able to have an account, generally quite small, in one city where their interest lies, but being officials of a saving institution in a city not far away, they would also like to take up an account in another bank in that adjoining city. It seems to us an entirely unnecessary restriction to prevent that being done. There are two possible objections to this Amendment and I think they can both be met. The first objection is that this power might be improperly used and that persons other than those whose interests are catered for by the trustee savings banks might be tempted to have a large number of accounts in savings banks up and down the country. Personally I regard that as a rather fantastic objection. The fact is that to-day there are no very special privileges attaching to an account in a trustee savings bank. The rate of interest is not particularly high, and I do not think that objection is likely in practice to arise.

The second point that they are limited by such restrictions as the Treasury choose to impose. The Treasury chooses to impose a limit of £500 in one year and therefore I do not think it would be of great advantage to try to multiply accounts and so get round the law. The Financial Secretary, I believe, put forward another objection of a somewhat contrary kind. He says that we should still want to impose a restriction on the aggregate amount in all these trustee banks, and if we still impose a limit on the aggregate it will be administratively difficult to check it, if people are allowed to have accounts in more than one savings bank. I do not think that argument amounts to much. It is purely arbitrary on the part of the Treasury that they should impose this limit of £500 on the aggregate amount. It is not a statutory limitation; it is a limitation by order or regulation of the Treasury, and it would be possible for the Treasury to remove that particular form of order, and substitute one to the effect that the amount in any one trustee savings bank could not be more than £500. I doubt whether there is any likelihood, under that form, of the privilege being abused, and, if it were abused, I cannot see that any great disadvantage would arise to the Treasury or the savings banks. They would only have a larger amount of deposits than they have at the present time. The Amendment will provide a certain amount of additional advantage to people who, for particular reasons, find it desirable to have accounts in more than one savings bank.

Mr. SAMUEL

Upstairs in Committee the two hon. Gentlemen who have just spoken expressed their views to me on this subject at some length and they scolded me for not accepting their Amendment on that occasion. I have gone to a considerable amount of trouble to look into this proposal again so that I may convince myself that I was right in my view and that they were wrong. Clause 10, as amended in accordance with this proposal, would, it appears to me, abolish all restrictions of every kind, with one exception, which is that a man must not have more than one trustee savings bank in which he keeps an account. He might have as many accounts as he liked in that one trustee savings bank, and the limit would be up to £500 deposited in any one year. Perhaps it was a slip of the tongue but I do not think the hon. Member for Finsbury (Mr. Gillett) quite realised what he said when he omitted to mention that a man might have a number of accounts in the Post Office Savings Bank as long as the total in one year did not exceed £500. I would point out to hon. Members that we have gone a long way in the last few years in the direction of opening up, by law, the conveniences of these banks. As the hon. Member for Finsbury pointed out, in pre-War days the limit was £50 in one year and £200 aggregate—I ask the hon. Gentleman opposite to mark that figure. Now the limit is £500 deposits in one year, and there is no aggregate limit, and if a man is fortunate enough to save £500 a year he can put in that amount each year for 50 years and reach an aggregate of £25,000. The grievance which the Mover and Seconder of the Amendment seek to make out as to the limitation of facilities is not well-founded in view of those figures. I understood the hon. Member for North Aberdeen (Mr. Benn) to say that he supported the idea of private thrift and so do we. That is the very essence of the proposal of the Bill and of these Regulations. We have been asked why we have these restrictions and I think the answer is quite plain. The hon. Member for Finsbury read an extract from a report by Mr. Henderson. I will give another extract: Whatever be the reason for this limitation of the savings bank account, it is doubtful if, except insofar as it restricts the use of the banks to the genuine savings bank depositor…. The "genuine" savings bank depositor is the point. We do not want the rich man or the big capitalist—the hated capitalist—to make use of these banks. We want to do the very opposite to that which is advocated by the Mover and Seconder of the Amendment, because they want to make the conveniences of these banks applicable to the rich and, perhaps, to the banks themselves. We do not want that. Let me show how it would operate. Here is an example, not taken out of imagination, but an example from actual facts. Assume that the bank rate is 3 per cent. as it was in March, 1923. The joint stock bank deposit rate then was 1 per cent. and Treasury Bills were then about 2¼ per cert. or less. If there had been no restrictions on the facilities of these trustee savings banks you would have had people causing their money to flow into the trustee savings banks in order to get 2½ per cent., with a Government guarantee, which would be a larger amount than their money could earn in the open market. But directly the value of money rose in the open market, these rich people, who had put their money into the trustee savings banks, would at once withdraw it to get more money for their capital in the open market. The National Debt Commissioners would be called upon to find large sums of money, when money was rising in value and when capital value was falling, and you would have a very large sum falling in expense on the shoulders of the taxpayers, which is what we want to avoid. Certain banks did propose to deposit large sums of money in the Post Office savings banks in 1923, when there was no limit, so the limit was then reimposed. If the Committee will reflect, I am sure they will agree that we are protecting the genuine depositor by resisting this Amendment.

Mr. BENN

The Financial Secretary misunderstood me when I interrupted him just now. I was great surprised that the party of private thrift should speak about making grave concessions. Why did he use the word "grave"? The Amendment is intended to facilitate investments by small investors, and the hon. Gentleman speaks about savings banks as if they were night clubs. The application of "D.O.R.A." so beloved of the Home Secretary, should be extended to the Treasury instead of to savings institutions. As regards the classic illustration about foreign banks investing and withdrawing their money at a certain time so as to produce a grave financial crisis in this country, the fantastic nature of the illustration robs it of any cogency in debate. There is one point where I think the Financial Secretary was not dealing fairly with the Committee, and that was when he was quoting from the Report of Mr. Henderson. He suggested that Mr. Henderson supported this limitation of the total amount of deposit, but nothing of the kind occurred. Has the hon. Gentleman got the Report in his hand, or was it simply an extract supplied by a private secretary?

Mr. SAMUEL

I have seen Mr. Henderson almost daily. He has been one of our greatest supporters and his Association has helped us in drafting this Bill.

Mr. BENN

I will read Mr. Henderson's Report. He says: Whatever be the reasons for this limitation of one savings bank account, it is doubtful if, except in so far as it restricts the use of banks to the genuine savings bank depositor, its vigorous application today is in the best interests of thrift. The hon. Gentleman did not quote that last sentence. Mr. Henderson goes on: Indeed, it is not too much to say that an unqualified limitation of this character."— This is from Mr. Henderson, whom the hon. Gentleman sees daily and whose advice and assistance have been so helpful— may seriously perjudice the full usefulness of the banks by neglecting to take cognisance of the psychology of the small depositor. It would have been better if the hon. Gentleman had read the whole thing and shown us that Mr. Henderson supports our Amendment rather than the attitude of the Treasury. What the public will notice, apart from the technicalities of this difficult subject, is the reluctance of the Government, who pretend to be the friends of the private investor, to give him facilities to invest his money in these banks.

Mr. KELLY

The Financial Secretary to the Treasury has not treated us to-day to some of the statements that we had in Committee upstairs, when he suggested

that we might see the great combines of this country and the joint stock banks rushing with their money into these savings banks if we removed the restriction on the number of accounts. The reply that came from our side upstairs was that at last we had found the reason for Lord Birkenhead going to Imperial Chemicals. It was to arrange for that combine to have accounts in the 119 savings banks throughout the country. The statement made by the hon. Member to-night as to why these separate accounts might not be held by people in trustee savings banks and the Post Office Savings Bank amazes me. Cases have been put before him of people who were holding small trusteeships or small accounts in connection with their establishments, and of workmen who were carrying on certain clubs for their people, but despite all the reasons which were given, there is the objection of the Treasury. While I agree with the hon. Gentleman that Mr. Henderson is very anxious for this Bill and has shown that anxiety in many ways, I am sure that that anxiety does not lead him to think that it cannot be amended with advantage. I have not consulted Mr. Henderson about this Amendment, but I am pretty sure that, judging by what was read out this evening, he would agree with this proposal which we have put forward. I am amazed at hon. Members opposite, who pose as such friends of the small investor, opposing such an Amendment.

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

The House divided: Ayes, 134; Noes, 78.

Division No. 279.] AYES. [9.53 p.m.
Acland-Troyte, Lieut.-Colonel Broun-Lindsay, Major H. Fielden, E. B.
Ainsworth, Lieut.-Col. Charles Carver, Major W. H. Forestler-Walker, Sir L.
Aibery, Irving James Cassels, J. D. Fremantle, Lieut.-Colonel Francis C.
Alexander, E. E. (Leyton) Chadwick, Sir Robert Burton Ganzonl, Sir John
Applin, Colonel R. V. K. Charteris, Brigadier-General J. Glyn, Major R. G. C.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Christie, J. A. Gower, Sir Robert
Balfour, George (Hampstead) Colfox, Major Wm. Phillips Graham, Fergus (Cumberland, N.)
Barclay-Harvey, C. M. Cope, Major Sir William Grant, Sir J. A.
Beamish. Rear-Admiral T. P. H. Courtauld, Major J. S. Greene, W. P. Crawford
Benn, Sir A. S. (Plymouth, Drake) Cowan, Sir Wm. Henry (Istingtn., N.) Grenfell, Edward C. (City of London)
Bevan, S. J. Craig, Sir Ernest (Chester, Crewe) Gretton, Colonel Rt. Hon. John
Bourne, Captain Robert Croft Crookshank, Cpt. H. (Lindsey, Gainsbro) Gunston, Captain D. W.
Bowater, Col. Sir T. Vansittart Davies, Sir Thomas (Cirencester) Hall, Lieut.-Col. Sir F. (Dulwich)
Bowyer, Captain G. E. W. Davies, Dr. Vernon Hartington, Marquess of
Brittain, Sir Harry Edmondson, Major A. J. Haslam, Henry C.
Brocklebank, C. E. R. Edwards, J. Hugh (Accrington) Headlam, Lieut.-Colonel C. M.
Brooke, Brigadier-General C. R. I. Erskine, Lord (Somerset, Weston-s.-M.) Henderson, Capt. R. R. (Oxf'd, Henley)
Henderson, Lieut.-Col. Sir Vivian Newman, Sir R. H. S. D. L. (Exeter) Stanley, Lord (Fylde)
Heneage, Lieut.-Col. Arthur P. Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.) Stanley, Hon. O. F. G. (Westm'eland)
Hennessy, Major Sir G. R. J. Nield, Rt. Hon. Sir Herbert Storry-Deans, R.
Hills, Major John Waller Nuttall, Ellis Sueter, Rear-Admiral Murray Fraser
Hopkins, J. W. W. Oakley, T. Sugden, Sir Wilfrid
Hudson, Capt. A. U. M. (Hackney, N.) Penny, Frederick George Thompson, Luke (Sunderland)
Hudson, R. S. (Cumberl'nd, Whiteh'n) Percy, Lord Eustace (Hastings) Thomson, Sir Frederick
Hume, Sir G. H. Perring, Sir William George Tinne, J. A.
Iliffe, Sir Edward M. Peto, G. (Somerset, Frome) Vaughan-Morgan, Sir Kenyon
Jackson, Sir H. (Wandsworth, Cen'l) Pilcher, G. Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Jones, Sir G. W. H. (Stoke New'gton) Price, Major C. W. M. Warner, Brigadier-General W. W.
Joynson-Hicks, Rt. Hon. Sir William Ralne, Sir Walter Warrender, Sir Victor
Kindersley, Major Guy M. Ramsden, E. Watts, Sir Thomas
King, Commodore Henry Douglas Remer, J. R. White, Lieut.-Col. Sir G. Dairymple-
Lamb, J. Q. Richardson, Sir P. W. (Sur'y, Ch'ts'y) Williams, Com. C. (Devon, Torquay)
Lister, Cunliffe-, Rt. Hon. Sir Philip Ruggles-Brise, Lieut.-Colonel E. A. Williams, Herbert G. (Reading)
Looker, Herbert William Rye, F. G. Wilson, R. R. (Stafford, Lichfield)
Lougher, Sir Lewis Samuel, A. M, (Surrey, Farnham) Winterton, Rt. Hon. Earl
MacAndrew, Major Charles Glen Samuel, Samuel (W'dsworth, Putney) Wolmer, Viscount
Macdonald, R. (Glasgow, Cathcart) Sandeman, N. Stewart Womersley, W. J.
McLean, Major A. Sanders, Sir Robert A. Wood, Rt. Hon. Sir Kingsley
MacRobert, Alexander M. Shaw, Lt.-Col. A. D. Mel. (Renfrew, W) Woodcock, Colonel H. C.
Marriott, Sir J. A. R. Sheffield, Sir Berkeley Wragg, Herbert
Meller, R. J. Shepperson, E. W. Wright, Brig-General W. D.
Merriman, Sir F. Boyd Smith, Louis W. (Sheffield, Hallam)
Meyer, Sir Frank Smith, R.W. (Aberd'n & Kinc'dine, C.) TELLERS FOR THE AYES.—
Monsell, Eyres, Com. Rt. Hon. B. M. Somerville, A. A. (Windsor) Captain Margesson and Captain
Morrison, H. (Wilts, Salisbury) Southby, Commander A. R. J. Wallace.
Neville, Sir Reginald J. Stanley, Lieut.-Colonel Rt. Hon. G. F.
NOES.
Adamson, W. M. (Staff., Cannock) Grundy, T. W. Riley, Ben
Alexander, A. V. (Sheffield, Hillsbro') Hall, G. H. (Merthyr Tydvil) Ritson, J.
Ammon, Charles George Hardle, George D. Saklatvala, Shapurji
Baker, J. (Wolverhampton, Bilston) Hayday, Arthur Shaw, Rt. Hon. Thomas (Preston)
Batey, Joseph Henderson, Rt. Hon. A. (Burnley) Shield, G. W.
Benn, Wedgwood Hudson, J. H. (Huddersfield) Shinwell, E.
Bennett, William (Battersea, South) Jenkins, W. (Glamorgan, Neath) Smillie, Robert
Bowerman, Rt. Hon. Charles W. Johnston, Thomas (Dundee) Smith, Rennie (Penistone)
Broad, F. A. Jones, T. I. Mardy (Pontypridd) Snowden, Rt. Hon. Philip
Bromfield, William Kelly, W. T. Stamford, T. W.
Bromley, J. Kennedy, T. Stewart, J. (St. Rollox)
Buxton, Rt. Hon. Noel Lawrence, Susan Sutton, J. E.
Charleton, H. C. Lawson, John James Taylor, R. A.
Clarke, A. B. Lee, F. Tinker, John Joseph
Cluse, W. S. Lee, Jennie (Lanark, N) Trevelyan, Rt. Hon. Sir Charles
Compton, Joseph Lindley, F. W. Viant, S. P.
Connolly, M. Lowth, T. Watson, W. M. (Dunfermilne)
Dennison, R. MacLaren, Andrew Welsh, J. C.
Duncan, C. Maclean, Neil (Glasgow, Govan) Westwood, J.
Dunnico, H. Morrison, R. C. (Tottenham, N.) Williams, David (Swansea. East)
Garre-Jones, Captain G. M. Naylor, T. E. Williams, Dr. J. H. (Llanelly)
Gibbins, Joseph Oliver, George Harold Williams, T. (York, Don Valley)
Gillett, George M. Pali[...], John Henry Wilson, R. J. (Jarrow)
Gosling, Harry Paling, W. Young, Robert (Lancaster, Newton)
Graham, D. M. (Lanark, Hamilton) Pethick-Lawrence, F. W.
Grenfell, D. R. (Glamorgan) Potts, John S. TELLERS FOR THE NOES.—
Griffiths, T. (Monmouth, Pontypool) Richardson, R. (Houghton-le-Spring) Mr. Allen Parkinson and Mr.
Whiteley.

Bill read a Second time, and committed to a Standing Committee.