HC Deb 24 April 1931 vol 251 cc1312-24

Order for Second Reading read.

Mr. D. G. SOMERVILLE

I beg to move, "That the Bill be now read a Second time."

I hope that the House will agree to the Second Reading of this Bill, which I introduced under the Ten Minutes Rule, and which was granted a First Reading without any opposition. The House, I think, felt that it was a very simple, unobjectionable and non-controversial method of dealing with scandals which, I am afraid, occur regularly every Christmas. I am in no way hostile to the formation or the operation of these clubs. It is a very excellent way in which poor people can put aside a small sum of money every week for a few weeks before Christmas, with a view to having a little money saved which they can spend at the Christmas holidays. Unfortunately, many of the people who organise and contribute to these clubs are not experienced in any way in keeping accounts. Very often somebody is elected as secretary who has no knowledge whatever of accounts, or accounting or keeping balance sheets. A large sum of money accumulates in the hands of such persons, and they are not used to the responsibility of such a sum. They may be pressed on a sudden emergency. They may, perhaps, indulge in racing of some sort, and, without thinking of the result, which may, and inevitably does, occur, they spend some of this money. They get further into debt in trying to get the money back, and when the sharing out day arrives they find there is a huge deficit which they cannot possibly make up. I have had a great deal of correspondence about this Bill from all over the country, and I am glad to say that it has met with really no adverse criticisms. One or two communications I have received will show the real necessity for this Bill and the unanimous opinion in favour of it. The Trustee Savings Bank Association has sent the following Resolution: The Executive Committee of the Trustee Savings Banks Association learns with satisfaction that efforts are being made by Members of Parliament to introduce legislation which has as its object the protection of the people's savings entrusted to the care of slate clubs, holiday funds, and other dividing societies of this character. It views with alarm the losses incurred by contributors to many of these funds through maladministration or defalcations, and it strongly urges Parliament to insist upon such safeguards being imposed as will render losses of this character impossible. It deprecates the growing misuse of the words 'savings bank,' which should be confined entirely to institutions functioning under the Savings Bank Act or other statutory authorities affording due protection to the depositors. The National Conference of Friendly Societies sent me the following letter: Dear Sir—I am much obliged to you for forwarding me a copy of your Bill to ensure proper financial control and management of sharing-out clubs, and for your letter of the 13th inst. which accompanied it. There appears to be nothing in this Bill to which any reasonable person could object. Then I have a further communication from the Magistrates' Association, which was written to me just before Christmas: Dear Sir—In rather less than a month from now we shall have the usual crop of defaulting secretaries of these clubs, and although it is rather late I was wondering whether it would be any good if you would write to the 'Times' pointing out the likelihood and possibility, and also suggesting that where clubs are conducted on licensed premises it might be as well if the owners of the premises, usually the brewers, took cognisance of the club, and, through their staff, made sure that the money was still intact. I could quote any number of instances of officials of these clubs being short in their accounts and being sentenced by the courts to long or short terms of imprisonment, but as other hon. Members will probably quote from their own personal knowledge of cases I propose to give only one instance. In passing sentence of six months' hard labour on Alfred Legge, of Romford Road, Forest Gate, for stealing £1,200 belonging to the Royal Oak Loan Club, the magistrate said: The time has certainly arrived when something should be done to regularise these clubs. Time after time this happens, and poor people looking forward to having money to spend at Christmas are rendered miserable at the thought that it has been lost. The unfortunate secretary or other officer who has lost the money had, at the outset, no intention of spending money which did not belong to him, but, unfortunately, he has got into debt and used the money, and there have been several cases where a good character extending over 30 or 35 years has been ruined. We must also consider the feelings of the poor people who have subscribed this money but find, at Christmas, that there is nothing to come to them.

In drafting this Bill I have not proposed any difficult form of registration or the granting of licences. All I suggest is that all money subscribed must be paid into a savings bank or other similar institution in the joint names of two of the members and of the secretary of the club. The trouble in the past has very often been that the man who collects the subscriptions has kept the money in his own house, or in the local public house, or wherever it is the meetings are held. There is an equally simple safeguarding arrangement for the withdrawal of the money. No money can be withdrawn from the place where it has been deposited except on the joint signature of one of the members appointed for the purpose by his fellow members and the secretary of the club. If all these sharing-out clubs are compelled by law to insist on these precautions, then a great many of the scandals and troubles which have occurred in the past will be avoided. I hope the House will be good enough to give a Second Reading to this Bill. I think it is a non-controversial Measure. It is in a similar category to the Bill we have just passed, when Members on opposite sides thanked each other for assisting the proceedigs and for getting something through the House which was non-political and non-controversial. If hon. Members will treat this Bill in a similar way there will be no difficulty in passing it, and one day I shall have the honour and pleasure of seeing it on the Statute Book.

Mr. C. WILLIAMS

I beg to second the Motion.

It will be noticed that my name is not on the back of the Bill, but I am seconding it in order to help my hon. Friend in an endeavour to pass legislation which is in the general interest of the community. It is not often that I am in the position of endeavouring to get legislation on the Statute Book, and I should not do so now but for the fact that, so far as I can see, the Bill will impose no cost on the Exchequer. I believe the Bill will have a general welcome from all who have any knowledge of these sharing-out clubs. My hon. Friend has already told us that it has the support of such institutions as the Trustee Savings Bank Association and other bodies. Two methods are open to Parliament in dealing with a matter of this kind. We can prohibit these savings clubs, although, to my mind, that would be a monstrous interference with the liberty of the subject, or we can endeavour to safeguard them. This Bill seems to be simple and to safeguard those who put their money into these clubs. I do not say that it is always in the best interests of people to join these clubs, but in many cases, undoubtedly, they are helpful to them, if only the people can feel sure that when the time arrives for sharing-out they will get their money.

The first Clause of the Bill introduces the safeguard of requiring that the money must be put immediately into a savings bank or the Post Office. The second Clause is merely a definition Clause. The third Clause is the penalty clause. The penalty fixed is a sum not exceeding £5. It is not intended to make the penalty of a vicious or ill-natured character, but to keep it reasonable. If there are any details of the Bill which hon. Members think ought to be altered, I have no doubt that my hon. Friend will be prepared to consider Amendments they may put down at a later stage. On the other hand, unless there are serious objections of that kind I would like the House to give this Bill a Second Reading. The Measure is brought forward in the definite interests of a good many people in this country, and I ask hon. Members to facilitate its progress in every possible way. It is an entirely non-party Measure, and one which is strictly outside the limits of party controversy.

Mr. HAYDAY

While I support the principle of this Bill, I do not commit myself to all its details, because I feel that it is necessary to protect persons against themselves. In the course of a lifetime spent in industry one witnesses different methods adopted in matters of this kind, and we have all observed the reports which have followed from general looseness in the promotion of sharing-out clubs. In a factory or workshop somebody may suggest the holiday fund idea. A collection of weekly contributions is arranged, and the loss on earnings is not felt so much when it is contributed in that way. It often happens that a fellow workman is chosen as secretary, in some cases without any previous experience. The man may have illness in his family, and in very distressing circumstances he may be tempted to use the funds of the club in the hope that he will be able to repay the money before the sharing-out takes place. Unfortunately, the illness continues and the man finds that he is unable to repay the money, with the result that those who have set aside weekly contributions for their annual holiday or for the Christmas festivities find that their money has gone, and, instead of being a festive season for them, it becomes one of real hardship.

No one starts clubs of this kind with the deliberate intention of becoming a defaulter. The people in charge of these funds, who sometimes need temporary loans, ought to be protected against themselves. When these contributions are paid over, the trust of these people is so simple that no balance-sheet or quarterly or monthly statement is asked for, and therefore it seems to me that the method suggested in the Bill is right. I think that the Bill is necessary, but I would suggest that the penalties might be made to appear rather less of a criminal character and more like a deterrent to make people more careful in these matters. It is not as though penalties were necessary because of some deliberate defalcation. I hope that the House will accord a unanimous Second Reading to the Bill. The hon. Member for Torquay (Mr. Williams) appears now to have become a convert to a different kind of tactics than those which he generally displays in regard to Committee work. It seems as if some sudden reformation has taken place when he comes forward and asks that facilities should be given for the passing of a Bill. The Bill will protect the people concerned and will provide a check which I am certain will prove beneficial to all those connected with clubs of this kind.

12 n.

Mr. ERNEST BROWN

I have been asked by some of my hon. Friends to support the Second Reading of this Bill. I am pleased to hear that the Measure is receiving the support of the hon. Member for Torquay (Mr. C. Williams) who once told us that he never needed a reason for making a speech but only an excuse. This is a useful little Measure, and it has fallen to the lot of a Member of this House to bring in a Bill which he can draft on the basis of a copybook maxim. The Bill has been based on the maxim that "prevention is better than cure." The Measure operates both ways. It prevents in a simple way temptations being placed in the way of the man responsible for the funds and it also prevents the serious trouble which would follow to those who would suffer if the defalcations took place. Sometimes defalcations take place in the case of a little village club where there is often a great deal of friendly feeling between the members, and some protection is required in such cases because the clubs suffer from the inertia of the ordinary members. As a rule, you cannot get the ordinary member of a club of this kind to turn up at meetings unless there is the prospect of a row. For these reasons, I hope that the House will give wholehearted support to the Motion for the Second Reading.

Major LLEWELLIN

I desire to give my support to the Second Reading of this Bill. There is one specific matter to which I wish to draw attention, and that is the way in which the penalty Clause is drafted. It might be construed as a contravention of this Bill if a bank clerk allowed money to be withdrawn from a bank simply on the authority of one signature. If he obeyed those instructions of the people who opened the account, he would still although he might not know it, be committing an offence under this Bill, and obviously you cannot put a man like a bank clerk or a Post Office clerk in that position. I hope that in committee those who have brought in this Measure will see that the penalty Clause does not apply to such people acting bond fide in the execution of their office. I support the Bill because it illustrates another motto of our youth—"Penny wise and pound foolish." If you make a man wise with the pennies that are contributed by putting them straight away into an account, he cannot be foolish with the pounds and spend them on himself.

Mr. ATKINSON

There are two points that I want to raise for the consideration of those in charge of the Bill. It will be noticed that the only savings bank mentioned in the Bill is the Post Office Savings Bank, and I suggest that words might be added including trustee savings banks. There are 107 of these trustee saving banks, with 500 branches throughout the country, and, as they are established for the convenience of poor people, they are generally conveniently placed. They have £78,000,000 of funds, and there is, of course, no question whatever as to their safety and security.

Another point that ought to be considered is with regard to the word "immediate." The Bill provides that the money shall be immediately placed in the bank, and when one remembers that an offence may be committed whether it be done intentionally or through ignorance or accident, I think we ought to be a little more definite about that word. Suppose that the money were collected at a club on a Monday evening, and were not paid in on the Tuesday, because, perhaps, the man has to leave home for work before the bank is open. Suppose that it were not paid in until Wednesday. Has an offence then been committed? I do not know exactly what the word "immediately" means. Supposing that it is not paid in on the Tuesday or the Wednesday, but on the Thursday, has an offence been committed? I suggest that it might be thought wise to substitute something quite definite, such as a period of 48 hours or something of that sort. The word "immediately" might give rise to a good many difficult questions. It might also be thought wise to insert after the word in question, whatever it is, some such words as, "without good excuse." A man may be ill, or he may be unable to go, and I doubt whether it is quite wise to create a criminal offence and impose a penalty without any regard to the circumstances in which the breach has been committed. I know it may be said that these matters can be taken into consideration in considering the penalty, but you do not want to commit a man for an offence, even if the penalty is only small, unless there has been something deliberate or intentional. I raise these points for the consideration of those in charge of the Bill, because I do not want to see the Bill made unjust in any way or create resentment among those who will be affected by it.

Mr. MARCH

I desire to put a question or two with regard to the banking of the amounts collected. I happen to have been treasurer of a loan club in my Division for the last 20 years. We take our money on the Saturday night, and the secretary hands it over to me, but I cannot bank it on the same night, because the banks do not keep open till nine or 10 o'clock. Therefore, I have been in the habit of banking the money on the Monday morning. Some latitude ought to be shown in that connection. Further, I would ask the promoters of the Bill whether any power is to be given to the trustees and treasurer to obtain repayment from people who have had loans and forgotten to pay. We find some difficulty in connection with that matter. Of course we can take an I.O.U. for the amount lent, but that is merely on paper and does not help us very much when we find that sometimes the people have moved away, or sometimes they do not intend to pay, and that it will cost more to take proceedings to obtain the money borrowed than the actual amount involved. There ought to be something in the Bill whereby people obtaining loans can be compelled to pay in accordance with the conditions under which the money is lent, and to give facilities to the trustees or treasurer to get the money back. We have no difficulty with regard to the bank clerks. We put our money in the bank of the Co-operative Wholesale Society. The bank takes the signatures of the trustees and the secretary, and notice has to be given to them, when the account is started, as to who is to be entitled to withdraw money from the bank. Therefore, we find no difficulty whatever in that matter.

Major LLEWELLIN

I think the hon. Member has rather missed the point that I made. The point was that, whatever be the bank, even if it were the Co-operative Wholesale Bank, if those opening the account gave the bank authority to pay out money on one signature, and yet it was a loan club, the bank clerk, in law, could not pay out the money on one signature, although those were his instructions, and, if he obeyed the instructions of those who opened the account, he might be liable, in whatever bank he might be, under the penal provisions of this Bill.

Mr. MARCH

I really cannot follow that. If the withdrawal notice is given to the bank, when the account is started, as to who is entitled to withdraw money from the bank, surely the bank would see that its servants carried out those instructions. We have to get a withdrawal form from the bank, and it has to be filled in in accordance with the resolution sent in when the account was started. If you fill it in in accordance with your own instructions, there cannot be any way to go wrong, and, if anything does go wrong, the bank must be held responsible for the default of its secretary or clerk or whoever it may be. We have had no difficulty for 20 years in connection with this matter.

I approve of the Bill, and shall hope to see it go through. There may be some little difficulty in connection with the coming into force of the Act. It may be found that some societies will have difficulties in getting another secretary in place of the present one, who might not be prepared to accept these terms. Probably some latitude will be allowed in some way in order to give the societies an opportunity of making a reappointment of officers if it is necessary and if it is desired.

Mr. ANNESLEY SOMERVILLE

This Bill seems to me to be a most useful one. In hundreds, and I dare say thousands, of these cases, the amounts dealt with are extremely small, and very frequently they are collected in public houses in remote rural districts. In such cases it is extremely difficult for the collector immediately to bank the money collected, and therefore I would ask that the procedure should be made as simple as possible, so that collectors may not be liable to penalties for not immediately disposing of the money as is provided in the Bill. I have had some considerable experience of these slate clubs in rural parts of my constituency, and in the towns as well, and I may say that I have never known a case of defalcation among them. The collecting is done very carefully, and, as a rule, a balance-sheet is issued, but it is in some cases very necessary to protect people against themselves, and I congratulate my honourable namesake on having promoted a very useful Measure.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

It is always a pleasure to be present in the House of Commons when unanimity prevails. The general public is largely ignorant of the fact that there are many useful Measures promoted and carried through to a successful issue without any controversy arising thereon. Unfortunately it is only when heat and sometimes vigorous controversy arises that the public become aware of our deliberations at all. I have always tried to correct the impression that prevails outside these walls that the only business we do is of a controversial character. No one who reads the Bill or has listened to the Debate that we have had can be doubtful as to the beneficent objects of the Measure, and I thoroughly endorse what has been said by the Mover, that there is nothing in it to which any reasonable person could object. I certainly invite my friends to support the Second Reading and if it came to a vote, I should undoubtedly give my vote in favour of it. Having said that, however, I feel that I ought to utter a certain note of warning.

Although it seems so exceedingly simple, in reality the Bill raises a number of important technical points, and, if it is to become law, it will need a very considerable number of Amendments on points, some of them of major and some of minor detail. Some of the questions that will arise have already been put, but a really large question which has not been raised to any extent is to what kind of bodies the Bill shall apply. I am informed that the definition which the promoters have inserted is in some respects too narrow and in others too wide. As I understand it, the Bill confines itself to societies which share out, but there are other societies which confer benefits in which defalcation can take place which would not come within that definition and, if the Bill is to have considerable valuable effect, I am afraid in that respect it is very much too narrow. On the other hand, it does not confine itself to unregistered societies, and there are a large number of societies which would come within the terms of the Bill which are at present already registered and are, therefore, regulated as required by the existing law. So that, on the question of definition and of specifying the precise societies that are involved, there will, if the Bill is to be carried on to the Statute Book, have to be an Amendment.

There is another difficulty in the way of the effective working and enforcement of its provisions. It is clear that, if a secretary means to be fraudulent from the start, he has many opportunities of evading the law, but his real crime will not be that he evades this Act but that he defaults with the money. On the other hand, it is only in exceptional cases that the Secretary starts out with the intention of defaulting. For that reason, the provision which protects the secretary and all the members against themselves is a valuable one. The Bill will not obtain such publicity that it will be brought to the attention of these small bodies, and a good many will form themselves into slate clubs and will not know of the Act and will not carry out its provisions, and it will be just those hole-and-corner bodies which will get into trouble. In Committee it will be very important for us to see whether some change cannot be made which would enable the Bill effectively to work and not merely be a Bill on paper which never comes to the attention of the people concerned until its provisions have been broken and the default has actually taken place which it is the object of the Bill to prevent in advance.

I hope, by these remarks, that I have not damned it with faint praise. I wanted to warn the House that in its present form it is not fully adequate to attain the purpose which the promoters desire. In Committee, there will be an opportunity of moving Amendments and considering alterations, and, whether it reaches the Statute Book or not, this Debate will have had valuable results in giving publicity to the desirability of action being taken. I am glad, therefore, that the Debate has taken place. I wish the promoters all success, in the sense that I hope a useful Bill will emerge either in this or in a later Session from their efforts, and I trust in the circumstances that the House will give unanimous support to the Second Reading.

Mr. MILLS

I have had some experience of workshop clubs, and I know to what an extent decent people have been victimised at the most critical period of that year—Christmas time. I would suggest that, between now and Committee, consideration should be given to the possibility of seeing to it that by some means or other those who propose to form this kind of club shall voluntarily pool a sum which will enable them to insure, as has been done in very many workshops, where it has been found to work satisfactorily because it insures the people who are putting the money in against any possible defalcation.

The great value of this morning's discussion is that it will give some publicity, although the facts of life are so different from what many Members imagine. The widespread success of the Irish sweepstake is proof positive that, whatever we do, there are under-currents in the social life of our people which no legislation will ever touch. The danger to the community is that in the poorer districts, up every side street in every area, you get what are elegantly termed "diddlum clubs." They embrace everything. They embrace the share-out on the Derby, the share-out at Christmas, the share-out on a "beano" and the share-out for the August holidays. In fact, it is like the things that happen in this House. They share out on every excuse, just as certain Members speak on every excuse without any reason. I join with those who have spoken in commending the Bill to the House, and hope that the experience of the effect of the voluntary insurance bond of those about to engage in sharing-out clubs may be found to be one of the solutions of the problem to which I have just referred.

Question put, and agreed to.

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