§ Order for Second Reading read.
§ 4.41 p.m.
§ The President of the Board of Trade (Mr. Oliver Stanley)
I beg to move, "That the Bill be now read a Second time."
In asking the House to agree to the Second Reading of this short and simple Bill to deal with a rather specialised point, I do not know that it is necessary to take the House at any great length over what I may call the background to the Measure. Hon. Members will recollect that, as far back as April, 1937, the Government announced that, in their view, the indemnification of property against war risks was not a fit subject for insurance. They based that announcement on the fact that the extent of the risk was so incalculable and might in certain circumstances be so great that no actuarial basis existed for making a real insurance scheme.
Therefore, the Government announced that, while they could not themselves put forward any scheme for insurance, 470 they would consider a scheme for compensation for damage of this nature. That announcement caused a considerable amount of disappointment among those who were owners of property. It was natural for all who owned houses to think that, for a small premium—that is always the bait held out—it would be possible to get full indemnity for loss or damage to their property which means so much to them. As a result, therefore, there was a fruitful field for an appeal by companies and individuals who claimed to be able to do, with their rather limited resources, that which the Government, with the whole resources of the State behind them, had declared it was impossible to do.
At various times since April, 1937, there have, therefore, been started various companies on a basis of mutual enterprise, which claimed to give to subscribers protection against war risks to their property. I want to make it clear that there is no accusation that those enterprises are fraudulent in themselves or are fraudulently conducted; but there is an allegation that in fact they give very little protection indeed to those who take advantage of the terms which are offered to them. Even so, it would not necessarily be for this House to interfere. It is for the individual to judge for himself whether the protection he gets is worth what he pays or whether it is not. What has troubled hon. Members and has troubled a number of people outside is whether the people who are asked to, and who do, subscribe to those enterprises understand how little protection, in fact, they are being offered under those schemes.
The first difficulty that strikes one about these schemes is the question of the rate of premium which is to be charged. Hon. Members know that in the war risks insurance scheme for commodities the Government fixed the rate of premiums in the initial period at a rate as high as 6 per cent. In explaining that figure in the House at a subsequent date I told hon. Members that although there were naturally no data on which to go and every calculation must be based on a certain assumption, yet if we take the assumption given to us by those best qualified to judge and by those most knowledgeable of the possibilities of aerial attack in the conditions of to-day, it was 471 such that any premium less than 6 per cent. might be much lower than was justifiable in relation to the possible rate of damage which would be incurred. In the uncertainty which surrounds the whole of this problem of aerial attack, no one suggests that the Government's assumption is necessarily right and that every other assumption or guess is necessarily and inevitably wrong, but the Government's assumption is taken in the light of experience of those who know most about the possibility of aerial damage and bombardment, and it is, therefore, something which must be closely considered and must be taken by anyone dealing with this problem as something not lightly to be cast aside.
Yet when you have the Government charging a rate of 6 per cent. per annum, what is the rate which these companies charge and which they lead the subscribers to believe is going to provide for them some adequate measure of protection? In some cases the rate that they have been charging in peace time has been as low as 2s. per cent.—just about the rate of an ordinary fire insurance premium in a company which has been in existence for years, with an immense accumulated reserve to meet any sudden emergency. The highest rate of which I ever heard was only 15s. per cent., and even now that the war has started, when some of the particularly low peace-time rates have been increased, most of them now range between 5s. and 7s. 6d. per cent. The difference between that and the Government's estimate, not of what is bound to happen but what may happen, is so staggering that it should be brought to the notice of those who subscribe to schemes of this character.
The second thing which one feels may not be fully understood by the subscriber to these schemes is the limitation of liability. The compensation at the end of the war is to be limited to the Government's ability to pay. These schemes which are offered to the public as something so much better than that which the Government will give them for nothing have exactly the same liability. Except in one instance, there is only a promise to pay at the end of the war and in every instance the amount which is to be paid out bears no relation to the actual amount of damage suffered by the individual. It 472 is limited by the amount which happens to be in the fund at the time that the war comes to an end. It is true that in every prospectus which I have seen that fact has been stated, but it has not always been stated very clearly. Most of these communications appear partly in big type, and partly in small type, and I notice that almost invariably in the large type you get a vague general statement which gives an optimistic feeling of security to lead people who read no further to believe that they are getting full and complete cover for the goods which they are insuring, while the sordid but necessary details as to the fact that the money is not paid out until after the war, that the payments are of course limited to the amounts which are then in the fund, and also the fact which appears in many of these documents that the valuation is entirely within the discretion of the board of directors and that it cannot be challenged, appear later on in very much smaller print.
One wonders how far the people who read these documents and subscribe on the strength of them have quite understood what they are supposed to mean. Not every member of the public scrutinises a document of that character with the same care that we scrutinise Acts of Parliament. Obviously, they should do so when dealing with something which purports to concern insurance, even though it is described as mutual insurance. The public has become used to the word "insuring." In ordinary life when we talk about insuring something we have in mind the fact that we shall pay a premium, and usually a very small premium, and we are in the habit of thinking that in the payment of this small premium we shall get complete and immediate compensation for whatever loss we shall suffer. I wonder how many who have subscribed to some of these companies realise what a gap there is between what all of us ordinarily think of as insurance and this mutual system which is here referred to.
Of all the companies which are now in existence only one has yet completed the statutory period which has made necessary the issue of a balance sheet. How many of the subscribers to that company have quite realised the implication of that one balance sheet that has been published? It is true it was only up to 473 the end of 1938, but that balance sheet shows during that year the society had received in subscriptions £30,000 and the rate of premium that they were charging at that time varied between 2s. and 2s. 6d. per cent. Hon. Members will see that on that basis subscriptions at £30,000 in the year should mean property covered to the extent of something like £25,000,000. At the end of the year after payment of expenses and other matters there was just over £25,000 in the fund from which compensation was to be paid on property valued at £25,000,000.
§ Mr. Stanley
Of course, another year has gone by since then and they may have doubled the premium interest and it may be £40,000 instead of £20,000, but whether it is £20,000 or £40,000 it is the damage which one bomb may do to one building that matters, and that is the fund out of which protection is to be given upon £25,000,000 worth of property. I am not saying that a subscriber to that society will necessarily lose his money. Even if the distribution of the £20,000 is over so wide an area of property that each subscriber receives in respect of damage only £1 or £2 he will have paid only 4s. or 5s. in order to get it and he will not necessarily have lost money, but what one wonders is, does the man who is a member of this society and has paid this premium realise that this is the limit of the protection which he receives, or does he think that he is getting some effective cover for the property which may mean so much to him?
The third point with which I wish to deal is the question of the allocation to reserves, the amount of money which is put into the fund, how the fund is secured from which this compensation is to be paid, and the amount which goes to the expenses of management. It is only fair to say that in some cases perfectly proper provisions are made with regard to a fund which is placed in the hands of reputable trustees and which is clearly as safe as machinery of that kind can make it. It is equally true to say in other cases the arrangements with regard to a scheme of this kind are sketchy in the extreme. The same applies with regard to the question of expenses. In some cases the possible expenses are set out clearly and brought to the attention of the subscriber. In others as much 474 as 50 per cent. is to be credited to management expenses—50 per cent. of the premiums received, although it is true to say that it is held out that any surplus of this 50 per cent. after the actual expenses have been paid will be added to the fund. In other cases, although it is regarded with pride how small—in fact, I think, how non-existent—are the salaries to be paid, it is stated that all remuneration is to be on the basis of an unspecified commission on turnover.
Several questions were asked me in the House with regard to what we were to do about these companies. I took the opportunity then of warning subscribers as to the dangers of these methods and the necessity for caution in dealing with them, but I deferred any action pending the setting up of the Weir Committee to deal with the whole question of insurance of property of this nature, possibly with the help of the Government, because it was clear that the findings of that committee would necessarily have a bearing upon the future of these companies. We have now had the report of the committee, and as far as the wide question with which it was set up to deal was concerned that clearly is not a matter for debate upon this Bill, but incidentally in their report they refer specifically to the kind of thing with which this Bill is intended to deal. On page 12 of their report they say that they have considered this particular problem and that they have heard evidence about it. If I may quote some of the words:While we do not suggest that there is any intention to induce the public by misrepresentation to subscribe to these schemes, we are of opinion that many of the appeals made to the public on behalf of the promoters are put in such a form as in fact to mislead the public into thinking that a substantial element of cover against the risk of damage is offered to them.They go on to say that they have received very strong representations against these bodies, and they recommend that some action should be taken to deal with them. There is a passage in which they deal with the remedy:We recommend, therefore, that the appropriate Government Department should consider the most suitable method of curtailing the public activities of the sponsors of such schemes by prohibiting circularisation of the general public in the form of prospectuses or advertisements.They go on to say that they do not 475 feel competent to recommend in detail the course of action to be pursued, but they are convinced that some such action should be taken. In view not only of past history, but of that report as well, the Government felt it necessary to take some action to deal with what might become a real abuse. The methods of treatment which might be applied to these companies were various. First of all, it was possible to prohibit them completely. That was not recommended by the committee; nor, I think, would it be justified. As long as people realise that all they are doing when they subscribe to these companies is gambling on the fact that it will be the houses outside the scheme that will be destroyed, and not the houses inside the scheme, no great harm will be done.
In the second place, certain cases have been brought to my notice where this kind of mutual insurance is quite justified, and, in fact, I think, desirable. There was an instance of a number of owners of small yachts, some laid up in ports all around the country, with varying degrees of risk, widely spread, who, for a fairly substantial premium—much more substantial than any charged by these companies—were considering a scheme. That sort of scheme might be not only justifiable, but of great advantage. Therefore, it became clear that the right way was not prohibition of circularisation, but control of circularisation, making quite sure that when the public subscribe they know what they are subscribing to. If, knowing the degree of protection they are getting, they still wish to subscribe, it is not in the public interest that they should not be allowed to do so. Therefore, the Bill proceeds on the simple plan of controlling the issue of prospectuses and advertisements by companies desiring to take part in activities of this kind.
Clause 1 sets out the things which it is forbidden to do except with the permission of the Board of Trade. The wording of that Clause is taken almost exactly from the Prevention of Fraud (Investments) Act, which we discussed at some length in the spring. In that Bill there was a similar Clause to prevent the circularisation of appeals for investments except under proper safeguard. Clause 2 gives the Board power, when granting permission for this circularisation, to attach certain 476 conditions. Those conditions are not limited to the form and matter in which the actual circular or advertisement is to appear, but extend to the way in which the company is carried on. Conditions may be attached, for instance, as to the way the trust fund is to be run and the amount that it is permissible to place to expenses; and they are not confined to saying that the exact way in which the fund is run or the exact amount of expenses paid must appear in the circular. That seems to me to be sensible—that not only should the public have complete disclosure but that we should control the manner in which companies of this kind are run.
§ Mr. A. V. Alexander
One thing about which we are anxious is the lack of any direct provision for effective control of the whole of the administrative expenses. Does the President of the Board of Trade propose to issue regulations?
§ Mr. Stanley
What I think would probably be the best machinery for securing this would be, when the advisory committee is set up, to discuss with that committee the sort of uniform standard which ought to be observed, and then to suggest to them that uniform conditions should be attached to all permissions. That, I think, would be a better way than the issue of regulations. In answering that question, I rather anticipated Clause 3, which deals with the setting up of that committee. I think that the Board of Trade would be strengthened by such a committee. I think it should be a small committee. I see no reason why it should be a technical one. It seems more important that it should be guided by common sense, seeing that fair play is done, rather than that it should have great actuarial experience.
Mr. Owen Evans
Is it intended that these conditions should apply to societies or groups already existing?
§ Mr. Stanley
Yes, if they issue circulars. If a society next year sends out a reminder that subscriptions are due, that, in law, is an appeal for a new contract of insurance, and will bring the society within the scope of this Measure.
§ Mr. Benson
Assuming that permission is not granted, does that mean that the company will have to be wound up. and that its funds must be distributed among the subscribers?
§ Mr. Stanley
The company will not have to wind up, but it will not be able to circularise its subscribers any more.
§ Mr. Stanley
In some cases societies will be able, no doubt, to carry on. In other cases, perhaps, they will prefer to be wound up.
§ Mr. Stanley
I think that would be causing circulars to be distributed or giving "information calculated to lead" to such insurance. If the hon. Gentleman cares to develop his point, I will see whether there is a loophole there; and, if so, I will stop it up. But I do not think there is. I was saying that I think the Board of Trade will be very much strengthened by a committee of this sort. I do not want it to be thought that we are trying to stop or handicap these associations just because their view as to the possibility of war risks differs from the Government's view. Although, naturally, our assumptions are probably based on better information than they have got, no one pretends in this uncertain world, and this more uncertain war, that our assumptions are necessarily correct. I should like to have an independent committee without what people might call a Government bias, which will act quite dispassionately towards these societies. If these societies are honestly conducted and provided they set out how much—or, I should say, how little—they propose to do for their members, I do not think the House of Commons can be held responsible for people who still subscribe to them.
§ 5.10 p.m.
§ Major Milner
The House is obliged to the right hon. Gentleman for the full information he has given, and, in particular, for the very ample warning he has issued in regard to the possibilities of some of the societies he has mentioned. But it is rather a pity that he did not discriminate between those societies and the good societies, carrying on a legitimate business, who have not indulged in any of the activities of small-print advertising; and that he should have laid himself open to the charge that he has put both sorts of societies in the same box.
478 As I understand, some societies are carrying on a perfectly legitimate business. The risks have been made clear to their subscribers, the protection is adequate and the criticisms that the right hon. Gentleman has expressed do not apply. However that may be, it is quite clear that the Government attach considerable importance to this question of war risks in regard to real property. Their conclusions, as set out by the Chancellor of the Exchequer and the right hon. Gentleman, were substantially supported by the report of the Weir Committee.
While I make no reflection whatever— far from it—on the distinguished persons who constituted that committee, I am bound to say that I do not consider a committee of bankers, industrialists and representatives of the large insurance companies the appropriate, or best, form of committee to decide a matter of this sort. The ownership of real property in this country is very widely spread. I might almost paraphrase a famous saying, and remark that we are all property owners now. Therefore, I regret that the committee was not more widely constituted, and that representatives of small property owners, and those associated with them, were not included. There is no doubt that, because the Government could not themselves assume any responsibility for the insurance of real property, the value of property has been reduced, the difficulties connected with the acquisition or selling of property have been increased, and the small property owners have been left largely unsatisfied by the report of the committee and the Governments acquiescence therein. The conclusions of the committee and of the Government are not, I think, in all cases accurate. The right hon. Gentleman, for example, spoke more than once this afternoon about the inadequacy of the sums available in the case of mutual societies. That is a little difficult to understand when I read—perhaps the right hon. Gentleman will correct me if I am wrong— that one mutual association, which I believe is the oldest, and possibly the largest, has over £200,000 to its credit to-day. That is a much better instance than that which the right hon. Gentleman gave, of an association which had only £20,000 or £30,000 to its credit.
§ Major Milner
The society promoted by the Property Owners' Association—the Property Owners' War Risks Mutual Society, Limited. That £200,000 might, without any increase in subscriptions, be increased to £600,000 or £700,000 if the war lasts the three years that the Government expect.
§ Major Milner
I cannot calculate that for the right hon. Gentleman; but I am sure that his officials could give him the information. With respect to the right hon. Gentleman, I am suggesting that a sum of £600,000 or £700,000 would have been of considerable help to the Government if they themselves had assumed, as they professed to have assumed, some responsibility in regard to real property. The Government have given the impression that the whole thing is really quite fair, and that for the future they are assuming some responsibility with regard to real property. I suggest that whatever that responsibility may be, they would have been very much helped if thousands, possibly millions, of pounds had been available to help the Government to deal with this problem. By their action the Government have thrown away the whole advantage of these sums.
§ Mr. Deputy-Speaker (Colonel Clifton Brown)
The hon. and gallant Member cannot discuss the Government's war risk policy as a whole.
§ Major Milner
With respect, the right hon. Gentleman himself has dealt with the question of passing on Government responsibility, and, in particular, has contrasted their action in this matter with their action and the premium they demanded on the question of the insurance of commodities. I am dealing with the objections which the right hon. Gentleman has raised to-day to the inadequacy of the premiums, and I submit that I am perfectly in order in what I said in regard to that matter. It has been said, I think, by the Weir Committee that the contributions made by property owners would constitute a justifiable earmarking of national assets for one purpose alone. It seems to have been overlooked by the Government and by the Committee that property owners are still liable to make the 480 same contribution as any other class of the community to the general taxation. Why, therefore, if they are willing, should they not make some mutual provision among themselves? The right hon. Gentleman spoke of the Commodities Insurance Scheme in which the Government are charging a premium of 6 per cent. It seems to be quite inconsistent that the Government should accept a premium and insure commodities and yet fail to insure the buildings in which those commodities are stored.
§ Mr. Stanley
On a point of Order. Will my hon. and gallant Friend have an opportunity of replying if the whole of the Weir Committee's Report is to be discussed?
§ Mr. Deputy-Speaker
The report of the Weir Committee as a whole is not concerned with this Bill, but the Bill deals with a recommendation of the Weir Committee in paragraph 14, and we cannot discuss in detail the rest of the report.
§ Major Milner
With respect, the Weir Committee give certain reasons for the decisions and recommendations they make. The right hon. Gentleman has also advanced various reasons, and I am pointing out the inconsistency of the Government in insuring commodities and of starting schemes for the insurance of commodities and failing to support a scheme for the insurance of the buildings in which those commodities are stored. As the Government have taken that decision, we must, of course, accept it, and must therefore agree that the societies which carry on these mutual associations should be regulated, but I cannot help feeling that a very serious disservice has been done by the Government in not accepting the greater responsibility. Had they done so, confidence would have been increased, values would have been steadied, and that help would have been most useful to the building and ancillary trades and to the small property owners, and, as I have already indicated to the right hon. Gentleman, the State would have been many hundred of thousands of pounds, probably millions of pounds better off.
The Government, having decided not to have such a scheme, contributory or otherwise, we have this Bill before us today. We on these benches agree that whatever may be the result of other forms 481 of control in which the Government have indulged, at any rate there is a case for some control of these societies. There is no question, as the right hon. Gentleman said, that some societies give in their advertisement the idea that their schemes provide indemnity or compensation, and many people may be misled into believing that it would be indemnity or compensation in full. I have before me the advertisement of one society called the Independent Mutual War Damage Indemnity Trust which contains a good deal of small print relating to the matter of which the right hon. Gentleman spoke. Incidentally that society uses the word "indemnity," and I understand that the right hon. Gentleman's department has some responsibility in that matter. It has to approve of the title of limited companies, and I understand that, although it expressed the view that the word "indemnity" should not be included in the name of another proposed mutual company, yet the department agreed to the word being used in this particular case.
§ Major Milner
I will hand this over to the right hon. Gentleman as I do not want to give more publicity than is really necessary. The point I am making is that the Department of the right hon. Gentleman has some responsibility in this matter. While it expressed the view in one instance that the word "indemnity" was not desirable, yet it gave consent to another company to use that word in its advertisement. If the right hon. Gentleman will look at the advertisement he will see that the word "indemnity" is used there, and that it may conceivably mislead. I have had handed to me only today a very misleading advertisement of another association called the Mutual Fund, Limited, which speaks of a war damage compensation fund for property and effects. Here again, in my view, the advertisement is quite misleading, and there is justification in that case for the introduction of this particular Bill. Therefore, we on these benches would say that the need for the Bill is established.
The right hon. Gentleman referred to the proposal in the Bill that he would be assisted by an advisory committee, and that, I think, is very desirable. That committee should be of the widest possible character. It should include representa- 482 tives of small property owners in particular, because there are obvious and clear distinctions between some of the schemes which are at present before the public. Some of them are selective. That is to say, they select the property they propose to include in their scheme. They are purely mutual and insist on the property owner putting in all his properties or none, and do not, as in some societies, allow him to put in properties in the more dangerous areas. As the right hon. Gentleman pointed out, there are societies or companies whose expenses are reduced to a minimum, some of the expenses being found from other sources, while there are other societies which charge registration and management fees and pay substantial directors and trustee fees. Therefore, the closest investigation is desirable, and I hope that the right hon. Gentleman will utilise his committee and officials to discriminate between good and bad societies, so that if he agrees to give a licence to a company to carry on this business the public can be assured that within the limits of the mutual scheme they will be protected.
We commend this Bill to the House and express the hope that the mutual or co-operative principle may be allowed to operate in this or other spheres in proper cases, and we regret that the Government could not in the national interest themselves undertake a greater responsibility than they have done in this case.
§ 5.27 p.m.
Mr. Owen Evans
I want to say only a few words on behalf of my hon. Friends who sit on the Liberal benches. I do not want to be out of order, but really the genesis of the Bill is the report of the Weir Committee. I think I am right in saying that it embodies the only positive recommendation contained in the report of that committee, and if the Government had not decided to endorse the report of the Weir Committee, there would have been no necessity for this Bill, or at any rate there would have been the necessity for a much wider and more useful Bill than that which we have now before us. There is, no doubt, a strong case for the Bill. Cases have been cited by the hon. and gallant Member above the Gangway. There are many others. This is a growing evil, and it has arisen because of the very wide interest of the general public in property investment. Investment in 483 property is about the most common form of investment of their savings by ordinary people. There are the owner-occupier, the clerk, and the working man, each of whom buys his house and invests a large portion of his savings in his house, and he does this indirectly through the building society. What is still more important is the indirect interest of the public in real property by reason of the investments of large corporations which virtually represent the savings of the ordinary people of the country. It would be a very serious position for the country if at any time the investments of these insurance companies, which are responsible for these savings, should ever be in jeopardy. There are, undoubtedly, very serious attempts being made to obtain money from the public by reason of the necessity on the part of the public to protect themselves against losses owing to damage to their houses and to their property. I have here copy of an advertisement which has come into my hands, and I find on the front page, in very large print, these words:To property owners. Why not guard against hostile aircraft risks?Frankly, I thought at first that that referred to some new design of shelter that might be superior to any of the Anderson shelters, and I thought I had better look at it, to see what kind of shelter it was. On looking inside, I found that it was quite a different thing. It was a mutual form of insurance to provide a mutual fund out of which some amount might be obtained in respect of damage from aircraft. The words "Why not guard" are significant. The word "guard" is really a misleading word. It implies that the provisions made by this group of people will be an ample guard to protect anybody against damage to their property. When we talk about ordinary guards, such as a guard round a fireplace, we know that we must provide a guard high enough and substantial enough to prevent the children from falling into the fire. Here is one glaring instance where no indication is given on the front page that there may be only a small amount of money available from the money paid into the fund in order to provide for damage from aircraft. The document states:In response to a large demand of property owners a mutual fund has been formed.484 No one knows where that fund is. No one knows whether it has been formed or not. No one knows where it lies; in whose hands it is held. I notice that the Westminster Bank is cited as bankers for these people, whose names are not mentioned, and whose addresses are not given. A firm of solicitors which I do not know has allowed its name to be included, and there is also an auditor. This is a sort of advertisement which is a mixture of assurance and expression of hope that there will be an ample amount of money available for compensation. One paragraph says:The damage which would be caused by an air raid would, in these days of modern weapons, be so extensive that it has hitherto been impossible for owners to obtain any cover against risks of this nature. It is anticipated that the response from the property-owning public will be so great that the proceeds will be sufficient to recompense those subscribing owners who might suffer damage.
The rate of premium is a very high one—one shilling per cent. per annum. The advertisement goes on to say:It is hoped"—it may be noted that that is just the expression of a hope—and expected that the fund will become large enough to entirely reinstate, as the chances are that the properties of only a few of the members would be affected. To prevent expensive administration, no cover will be given for the first £5 worth of damage.The management expenses are set down as 10 per cent. on the total income of the whole of the fund, "after the deduction of proper expenses," but there is no attempt to define what "proper expenses" are. I commend the Bill to the House, and I think the case for it is overwhelming.
§ 5.35 p.m.
§ Mr. Lewis
The President of the Board of Trade has reminded us that the Government, after giving very careful consideration to the matter, came to a decision some time ago not to promote a scheme of insurance against war risks. I regretted that decision at the time, although I appreciated that the difficulties in the way of any scheme were exceedingly formidable. This afternoon the 485 President of the Board of Trade comes before us with a Bill the effect of which, if passed, will be that the Government will be in a position, if they so desire, to prevent anybody else from attempting to fill the gap they have left. It is true that the right hon. Gentleman, in his speech, intimated that that was not the intention, and that this Bill is an endeavour to separate the sheep from the goats, to allow the sheep to proceed and to drive the goats away. But when one comes to read the phraseology of the Bill, one must feel that, unless it is sympathetically administered, or unless it is to some extent amended in Committee, it will place almost insuperable difficulties in the way of anybody who does attempt, even partially, to fill the gap.
It is obvious that no man can attempt to frame any estimate of the possible extent of damage to buildings which may be incurred during the course of the war. Therefore, there is no basis for ordinary, commercial insurance principles in this matter. I do not, however, think that it follows that the Government, or if the Government do not feel inclined, the public, should throw up their hands and say, "This is a thing in which we cannot do anything to help ourselves." Although it is true that there is no basis for ordinary, commercial insurance principles here, there is nothing to prevent the widespread use of mutual assurance. Suppose a society were formed, not trading for profit, but for the purpose of enabling property owners to get the benefit of mutual insurance against these risks, with proper trustees and management to look after the property and to manage the business. Suppose it was run on that basis and the premiums were paid. I agree with the President of the Board of Trade that it would have to be a very high premium. I imagine that nothing less than I per cent. would serve the purpose.
Suppose the premium were fixed on this understanding, that if damage was sustained, the effect and the extent of the damage would be recorded, and at the end of the war, if the total amount collected by way of premiums less expenses was sufficient, then the damage that had been incurred could be paid for in full and the balance, if any, could be returned in proportion to the subscribers. On the other hand, if the damage exceeded the fund accumulated, then compensation could be 486 paid in proportion. There is nothing inherently unsound in such a scheme. On the contrary, if it were developed on a large scale, it seems to me that it might be very effective. In strict theory it is possible that every building in the United Kingdom might be destroyed by the end of the war, but nobody assumes that that is probable, and if a large number, a widespread number, of property owners came into a mutual scheme of this kind, it seems to me that they would get very considerable protection thereby.
The Government have taken the view that it is better, so far as they are concerned, to make a necessarily vague promise of a method of compensation after the war. The fault of that is twofold. It may involve a very heavy charge on public funds, and at the same time it fails in its principal object, which is to give confidence to the property owners, and as a consequence the building trade—
§ Mr. Deputy-Speaker
On this Bill the general policy of the Government on war risks insurance should not be discussed.
§ Mr, Lewis
I am sorry. I only wanted to mention that point. The Bill seeks to restrict efforts on the part of private persons and companies to fill the gap left. No doubt a strong case can be made out for regulation, which will enable the Board of Trade to prevent fraudulent or misleading statements being made to people who are induced to part with their money, but, as I have endeavoured to indicate, there is still the possibility of mutual action on the part of property owners to provide protection which would not be open to those objections. There is a grave risk that any such efforts will be prevented by this Bill. If we look at Subsection (3) of Clause 3—I do not know whether I have interpreted the meaning of that Sub-section aright, but it says:The committee shall not recommend the granting of any such permission as aforesaid unless, having regard to all relevant circumstances, and, in particular, to the nature and situation of the property.and so on. It would appear from those words that if anybody endeavours to run a scheme of mutual insurance against war risks, whenever anybody comes forward and says that he wants to insure his house, the association will have to go to the Advisory Committee and say, "Please, is this property of such a nature 487 and situation that we might include it in our scheme?" If that be the true meaning of the Sub-section, it would make such business utterly impossible. Perhaps whoever replies for the Government will say whether I am in error in assuming that to be the true reading. I have no doubt that such is not the intention of the Government, and if the wording is wrong, perhaps they will be willing to consider it. My point is that there is the possibility of property owners, as time goes on, finding ways and means to protect themselves in this matter, and it is most desirable that nothing should be done to prevent such an effort on the part of property owners. If this Bill be passed, I hope the President of the Board of Trade will bear these points in mind in administration and that such action as I have suggested on the part of property owners, which is of a highly desirable character, may still be possible.
§ 5.43 p.m.
§ Mr. Garro Jones
I certainly do not desire to withhold from the right hon. Gentleman a measure of credit for bringing forward this Bill, although in proportion and scope it is obviously not very large, as I think he would be the first to admit. It would be out of order to pursue too far the general Government policy on war risks insurance, but this Bill is in some respects inextricably related to the Government policy on war risks insurance in a manner to which I wish to draw attention. I have always thought that insurance was in a certain sphere peculiarly within the province of the Government. I know the right hon. Gentleman thinks that that frame of mind is a general weakness on the part of those who sit on these benches, but if a case can be made out for any Government form of insurance by means of the spread of risk as its fundamental basis, that is peculiarly a sphere for Government operations. If that is so in respect of general insurance, it is particularly the case where war risks insurance are concerned. If this war takes a course in any way comparable with the magnitude of the armaments which exist, we shall be confronted with war damage obviously far beyond the scope of any enterprise to meet. The time may come when we shall look back on this Bill and realise, what apparently the right hon. Gentleman does not realise now, the small contribution that it is 488 going to make if the war takes a course which some people believe it will certainly take.
What is going to be the operation of the Bill? The companies which will be established on the recommendation of the Advisory Committee and with the permission of the Government will be entitled to make a selection of risks; they will be entitled to make their own rules for the selection of risks, and, therefore, they are certain to select only the better risks and leave to the attention of the Government the less good risks. These companies will certainly reduce the proportion of extremely dangerous risks in such places as the Port of London and in the aircraft factories, or will charge such premiums for these risks as will render the insurance of such property impossible. If the war lasts for two or three years and there is tremendous destruction, the Government will have to be prepared to bring in some war risks insurance scheme and will find that they will have an unduly high proportion of unfavourable war risks to insure. I think it is lamentable that this little, piecemeal measure has been allowed to blind a wider view of the whole problem.
There is another small point. The Bill is going to operate, not so much to prevent the establishment of new insurance companies, because, obviously, those companies which are not likely to obtain permission of the Government are not going to put forward a scheme. The Bill is for the suppression by refusal to renew permission to circularise of existing unsatisfactory companies. There is one respect in which the Government have not completed that job. These companies will have large funds in their possession without a completed range of insurance; they will not have completed their books.
§ Mr. Stanley
The hon. Member is under a misapprehension. He thinks that some of these societies are run on a scientific basis, with a selection of risks spread all over the country. Many of these companies do not do anything of the kind. They get subscriptions wherever they can get them. They are not as scientific as bookmakers.
§ Mr. Garro Jones
The right hon. Gentleman is not entirely free from misunderstanding, because some of the companies engaged in these operations are some of 489 the largest and most powerful in the insurance world. The Eagle Star has placarded railway stations, with obviously hurriedly drafted and hurriedly printed posters, in an endeavour to corner as much business as they can before other companies get into the field. But I am not referring to that company or to any other company. All that I am saying is that such companies, whether they are scientifically run or not, will have their operations brought to an end by the Bill, and we shall find companies with large liabilities and diminishing assets. We all know that the assets which diminish most rapidly in these companies are those which are devoted to the payment of the salaries of directors and personnel. In fact, the last dying breath of the average company is utilised in order to stop the salaries of the directors before it goes into liquidation. I think something should be done to bring these companies to a compulsory end and to secure a return of premiums in the case of any company which fails to satisfy the standards of integrity and sound financial administration required by the Advisory Committee of the Board of Trade. What is the use of allowing such companies slowly to fritter away their assets instead of returning premiums to their subscribers? That is the only practical suggestion that I want to make in regard to the Bill. My main purpose in rising was to express my regret that the Government have not taken a wider view on the whole problem.
§ 5.52 p.m.
§ Mr. Spens
I want to say a word or two in support of the closing remarks of the speech of the hon. Member for North Aberdeen (Mr. Garro Jones). I do not desire to give the impression that there may not be a very good case for the Bill, but I want the House to realise what it is going to mean. Where an existing mutual association goes to the Committee and gets the consent of the Committee to the form of the circular and as to the conditions on which it is to be allowed to continue business, permission will be forthcoming, but there will be a number of cases in which permission is not going to be forthcoming, because those in authority, rightly or wrongly, will think that this is a form of business which ought not to have been permitted, although in fact it is a business started by responsible persons, is within the law and is perfectly 490 permissible in every way, if run honestly. If run dishonestly, the hand of the law can always reach people who are dishonest.
The Bill is going to have this effect. It is going to turn these associations, as the last speaker pointed out, into something like broody hens. They will have a certain amount of money in their coffers, but they will not be able to send out another advertisement or another circular. Whether they are going to be able to hold a meeting of their members and ask for a. renewal of their subscriptions for next year, I am not quite sure, but to all intents and purposes they are not going to get another penny in the till. That money they hold on a definite trust. Some of them may be in general terms, but they cannot part with the money they have; they have to hold it on the terms of the document governing the transaction, and will have to hold that money until the end of the war and then deal with it as the trust lays it down. It is quite true that it may be frittered away. I want the House to look at it from the point of view of persons who have contributed already to these trust funds. The whole basis is that the persons running these trusts are able to invite subscribers from different parts of the country to put in properties in different parts of the country; to spread the risks and accumulate a fund which, on the basis that only a small percentage of the property will be destroyed or damaged at the end of the war, will be sufficient to pay the subscribers who, in fact, have had their individual properties damaged. By stultifying these activities, you are cutting away the whole basis of this business, and you are not enabling them to do what I think is very desirable, that is, to return at once to the persons who have subscribed it what is in the till to-day.
As far as I know, it will be quite impossible to get a business wound up and the money returned if the Bill becomes law. In the theory of law, you are just as capable of carrying on your business with £2,000 in the till as if you had £250,000 in the till. The Bill, therefore, either goes too far in this respect or not far enough. I hope that the Advisory Committee will not administer the Bill generously. There may be matters connected with the running of some of these businesses which should be put right, 491 but I suggest that the proper thing is, as far as possible, to enable these societies to go on in order that those who have put their money in may get the benefit of such mutual assistance as these societies give. As far as I know, not a single representative of any one of these societies was ever asked to appear before the Weir Committee to explain how their business was carried on. I have not the slightest doubt that the Weir Committee were furnished with the full facts, but, at the same time, I think it is only right that those who put their money into these concerns, and who are responsible for them, should have had an opportunity of putting before the Committee a scheme by which these societies could be properly carried on. I hope that the administration of the Bill will not reduce them to what I have called the condition of broody hens, useless to nobody, when they might possibly be useful for carrying on the purpose for which they have been formed.
§ 5.59 p.m.
Mr. David Adams
I do not think any hon. Member will deny the necessity for an examination, which the Bill provides, for various forms of insurance. In this case the Bill will examine the position so far as war risks of property are concerned. There is very little doubt that the average member of the working class is not liable to insure in any concern which he knows has no sound foundation. However, it is not to be asserted that because premiums are low, there is necessarily something in the nature of a fraud associated with those concerned. The whole thing depends upon the view of those associated with these societies as to what degree of damage may be done in the event of war. I take it that none of them was established subsequent to the outbreak of hostilities. Marine war-risk insurance, prior to hostilities, is quite a negligible affair. Therefore it ought not to follow that persons taking advantage of these low premiums are associated with concerns that may not give, in the process of time, adequate value for the premiums invested in them. In the case of the Government's war-risk insurance scheme for commodities, it was found that a premium of £6 per cent. was probably equitable. As the Government came to that conclusion, could they not have carried their good work further and 492 agreed to some form of protection against war risks for real property?
§ The results of the operation of this Measure may be satisfactory inasmuch as, on the one hand, they may induce the Government to engage in some form of protection for the community, and, on the other hand, they may lead to the creation of sounder, but still speculative, mutual assurance concerns with appropriate premiums incidental thereto. In either case, there will be an advantage to the community as a result of the operation of the Measure. During the last war the Government undertook marine war-risk insurance and certain forms of insurance incidental thereto. It is true that the premiums rose from £2 per cent. to as much as £6 per cent., but I would remind hon. Members that the Government's engagement in this was a highly lucrative procedure. Are the Government certain that the protection of real property against air attack is to be so indifferent that we are to have premiums so high as to be out of all reason? I think the probability is that the fears which undoubtedly the Government have at the present time—
§ Mr. Deputy-Speaker
The hon. Member is now arguing on lines which I previously ruled out of order as not being within the ambit of the Bill.
The point I was making was that the result of the introduction of this Measure for the closing and, to a certain extent, the destruction of certain mutual associations, may be that the Government will give further consideration, particularly in the light of our experience as the war proceeds, to the question whether it is not possible, in the general interests of the community, to engage in this form of speculation. I should like to ask whether the mutual associations could continue business through their agents. Perhaps the Parliamentary Secretary will be able to answer that question. It is a question that was put to me by a very reputable concern, which stated that it would be possible for them to continue their business without circularising and without making newspaper advertisements, merely by their agents making house-to-house calls on those who participate in these schemes. If we could have an answer to that question, certainly it would relieve the feeling that 493 a good deal of unnecessary damage is to be inflicted on concerns of this character, which, after all, may prove to be based upon a reasonable, though a somewhat speculative, prospect of what may ensue as far as real property is concerned. We are indebted to the Government for the introduction of this Measure, which will afford adequate protection, but arising out of it, we hope that the Government will display more courage and give the country the benefit of their experience and of the Debates on the Measure in the House.
§ 6.6 p.m.
§ Sir Herbert Williams
I do not know whether it has any connection with the Government's attitude towards the whole question of insurance, but it is strange that in this Debate, for the first time in my recollection, the two clocks in the Chamber and the big clock outside, whose booms we hear, are all different. I do not know whether the Debate will be brought to an end before 11 o'clock tonight, but having regard to the very serious discrepancy which exists, I hope there may be a correction in due course.
I think it is some two or three years ago that I asked the first question that has been asked in recent times on the subject of war-risk insurance, and I do not believe that at that time a single one of these mutual societies had come into being. From what has been said in the Debate, it is evident that some of these mutual bodies are open to criticism, not on the question of principle as to whether it is possible to do this kind of insurance, but because of the way some of them are pretending to do it. Quite properly, if there are organisations of a kind that are undesirable because of their methods of business, obviously there is a case for this Bill; but let it be remembered that, to some extent, the Bill is a measure of abdication of responsibility on the part of the Government. If the Government had applied their mind to finding out, not what they could not do, but what they could do, these bodies would not have come into being.
I do not think anyone would suggest that, so far, any scheme in existence is a completely satisfactory scheme, but certainly, if I decided to join in one of them —and I imagine that I shall still be free to do so after the Bill becomes law, provided I am not invited to do so—at least 494 I should have possibly a better chance of getting more compensation if any of my property were damaged than I should have if I left myself in the hands of the Government, whatever the Government might be, some years hence, when the war is ended, the damage has been evaluated, and the Government have found out how much they can afford to pay. That is really the proposal of the Government—an undefined amount; whereas, in the case of these mutual bodies, they have at any rate so much in the kitty, that will be known, the amount of damage will be known at a very early stage, and the share-out will be known. There is in that some measure of security. I think there is something we might borrow from that. Therefore, I hope the Bill will not have the effect of suppressing entirely those who try to fill a gap which the Government have failed to fill. That is the issue before us. I have not the slightest doubt that the document which was quoted from the Liberal benches was not a nice document. That is the kind of circular that ought to be suppressed. On the other hand, there are organisations which have made some kind of effort to deal with the situation, and I hope my right hon. Friend will give us some assurance that the object of this Bill is not to destroy those mutual bodies which are trying to do a job honestly, even if they cannot do it with 1oo per cent. efficiency.
§ Sir H. Williams
I apologise if I missed that part of my hon. Friend's speech, but I had to leave the Chamber to see some of my constituents. Although on this Bill we cannot discuss the whole subject matter of the Weir Report, we can express an opinion that the whole purpose of that report seemed to be negative rather than positive, which was a great disappointment to many of us. There seemed to be no attempt to solve the problem, but merely an attempt to restrict the activities of some people, whether misguided or not, who have tried to solve it.
In discussing the Bill, there is one thing we must remember. I believe that the first air raid which involves serious damage will completely destroy the Government's policy in this matter, because there will come from the people who are injured an immediate demand for immediate assistance of a kind that cannot 495 be resisted. That is a problem which neither these societies nor the Government can solve. This is not the last Debate that we shall have on this matter, and there are some of us who may seek by Amendments to leave out some of the doubtful points in this Bill. A very important point was raised by my hon. and learned Friend the Member for Ashford (Mr. Spens). It seems possible that, under Clause 1, Sub-section 1 (ii), almost any kind of circular sent out by an existing mutual society to its members, whatever might be the subject matter of the circular, and merely because it was a circular from the society to its members, would involve a prosecution under the Bill. Therefore, I imagine that the society would be debarred from summoning a general meeting or taking the views of its members on any subject pertaining to the business. That is carrying things rather far. The provision had not struck me in that light until my hon. and learned Friend mentioned it, but having regard to his high authority as an interpreter of Statutes, I hope the Government will pay very great attention to what he said.
I think that other questions will arise with regard to mutual societies which are associated with the societies for certain general purposes affecting certain industries. I understand that my hon. Friend the Member for Stone (Sir J. Lamb), who wishes to speak later, may be able to give an example of a rather striking case. For example, if a trade association forms, in connection with its trade, a mutual association, and is debarred from drawing attention to it, a very grave situation will arise, because the person who makes the comments will not be the society, but an associated society, not even directly employed by the mutual society. I happen to be connected with an industry of very considerable magnitude. I have a close connection with a certain group of public utilities. They are perturbed about this whole question of the insurance of their properties, which are carried on not only for their benefit, but for the benefit of the public.
The hon. and gallant Member for South-East Leeds is interested in the gas industry as far as the Leeds Corporation is concerned, as he showed by certain questions the other day. Suppose that the gas undertakers of the country decide to form 496 a mutual association for the purpose of dealing with the problems which would arise if any of their undertakings were bombed. Is it the case that unless they get the permission of the Board of Trade, a great industry is to be debarred from making such arrangements as may be necessary to enable its members promptly to restore their buildings to a condition in which they can carry on a necessary service to the public?
It is not merely a question of a number of small mutual societies associated with farmers, property-owners and others. It is a question with a much wider implication and I want the President of the Board of Trade to realise that though this Bill will become law, it is by no means going to solve the problem. He will hear, again and again, about this problem from many hon. Members, from many different angles. Until the demand which exists is met in some satisfactory way, the agitation is bound to continue. I was agitating on this subject long before any of these societies came into being and I shall continue to agitate upon it until we secure what we consider to be a satisfactory scheme.
§ 6.17 p.m.
§ Sir Joseph Lamb
I support what has been said by previous speakers who expressed doubt as to the effect of this Bill on existing organisations. I believe that when the history of this period comes to be written, one of the greatest surprises in it will be the effect on legitimate business of a great deal of the hurried legislation which is now being passed. I know that it has been necessary to do these things in a great hurry, but the effect upon legitimate business in this country has not always been clearly foreseen. Sub-section (1) of Clause 1 deals with the restriction of circulars and advertisements. It is true that permission for such advertisements can be granted by the Board of Trade, but I am not sure whether that will be adequate for the purposes which I have in mind.
My problem is this. In agriculture we have various associations, one of which is the National Farmers' Union. That is a trade union which exists for the benefit of its members and is precluded from actual trading. Consequently, although it may desire to have insurance for its members, it is not possible for the union 497 itself to do insurance business. The desire for mutual assurance among the members, however, was so great that an insurance society was set up, which confines its business to the members of the association but is kept separate for the purpose of complying with the articles of association. Under the Bill as I read it that society will be precluded from using as it has done in the past, the publications sent out to the members of the association, for the purpose of advertising the advantages of the mutual insurance scheme.
That is not a work which was started for the special purpose of dealing with war risks. It has been going on for a long period very successfully. It was seen, when the War Risks Bill came out, that it was absolutely impossible for agriculture in its present condition, to comply with the tremendous rates that were proposed. Consequently, this society was set up specially for agricultural purposes and a voluntary scheme has been evolved which is doing good work. My problem is whether there is anything in the Bill which will interfere with the legitimate work which the members of the association are asking that mutual insurance society to do for them. I have grave doubts about whether the Bill will not limit that work, and I hope it is the intention of the Government to accept Amendments later which will make it clear in the Bill that the work which the society has been carrying on with such benefit, can be continued. I hope that will be stated definitely in the Bill, because I do not want the matter left subject to permission being granted by any board, even the Board of Trade.
§ 6.21 p.m.
§ Mr. A. V. Alexander
It has been interesting to note during this Debate the number of criticisms of the Measure which have come from the other side. I hope that when we reach the Committee stage those hon. Members who have criticised the Measure, if they still disagree with the Government, will give us the opportunity of finding ourselves, for a change, in the same Division Lobby with them.
§ Mr. Alexander
It has been notable in the last few years that on a number of occasions there has been severe criticism 498 of the Government by hon. Members opposite, who have nevertheless always voted with the Government, but that is by the way.
§ Mr. Alexander
I was only "pulling the legs" of hon. Members opposite. The position as I see it, and as was to some extent stated by the hon. Member for South Croydon (Sir H. Williams), is that, however much it may have been the intention of the Government to try to implement paragraph 14 of the Weir Report, what will happen in fact is this. Under Clause 3 anyone who wishes to continue in this war risks mutual insurance will have to apply for permission, and no doubt in some cases permission will be given. That class of business will be carried on in every one of those cases right against the terms of the Weir Report. The Weir Committee pointed out that they had examined all kinds of voluntary schemes but had come to the firm conclusion that those schemes would not work unless they were on a national basis. In fact, the measurability of the risk of war damage is such a difficult matter, that unless you had a national scheme you could not get any satisfactory fund upon which to draw.
The Bill will mean that provided the Advisory Committee carries out the terms of the right hon. Gentleman's speech, in which he said that they would be able to deal sympathetically with reasonably sound schemes, then those schemes will be able to advertise. Those concerned will be in a position to announce to the world, "Our scheme has received the approval of the Board of Trade Advisory Committee." Of course, according to the particular standards which are laid down you may be able to exercise control on such matters as the proper conditions of the fund and the expenses to be allowed in administration, and so forth. Those conditions will be approved, but, in fact, although you may intervene as regards the use of large or small type in prospectuses, you will still have large sections of the public who will believe that a scheme which has received the approval of the Advisory Committee will give them real cover against damage caused by war. I believe that to be impossible.
499 That, I think, is the serious criticism of the Government's policy in this matter —that it is not enough for them to come here with a Bill to implement as far as they can paragraph 14 of the Weir Report. It means as the hon. Member for South Croydon said, that directly you get any damage of a substantial character you will also get such an outcry from the community because you have not made provision against it, that you will have to deal with this matter all over again. I listened carefully to the speech of the hon. Member for Colchester (Mr. Lewis) and I see that if the Government make no provision at once of a widespread character, as satisfactory as it can be made, there must be lots of people especially in the Eastern counties who will want to try to do something themselves. But, of course, the fact that any such effort would be geographically restricted, would almost, of necessity, mean that when the damage was incurred, it would probably be impossible to provide anything like adequate funds to meet the situation.
I submit that the Government are, therefore, bound to look at the situation afresh. We have never had an opportunity for a Debate on the wider aspects of the Weir Report. That is not entirely the fault of the Government, because the Opposition has also a responsibility for submitting, through the usual channels, the subjects for Debate. But I regard with grave apprehension the possible effect of a number of mutual schemes being launched with the approval of an advisory committee as to the conditions which are contained in their advertising. No doubt the society to which the hon. Member for Stone (Sir J. Lamb) referred, has done great service to the members of that agricultural organisation in the sphere of general insurance. But directly one comes to the question of war risks one comes to something in regard to which it is not possible to measure actuarial risk in relation to premiums in the ordinary way. Then are the Government to say, "We can exempt the departmental publications of a general insurance organisation dealing with this matter"— although they are no more able than anybody else to give actuarial cover—and not to exempt anybody else? That is the real difficulty in dealing with a Bill of this nature.
500 I am bound to come back to the submission which I, with others, made in evidence before the Weir Committee, that there is no basis for an approach to these matters except that of a contribution of the whole of the property owners in the country to a fund, at such a rate as the Government may settle and to be continued for such a period—even after the war, if necessary—as will enable the Government, whatever the economic circumstances of the country may be, to have at least a substantial nucleus to meet the claims which will inevitably arise.
§ 6.30 p.m.
The Parliamentary Secretary to the Board of Trade (Major Lloyd Georģe)
The Debate has, to a large extent, followed a course which is outside the scope of this Bill. We have had a great deal of discussion which you, Sir, ruled out of order with regard to the whole question of property insurance. The right hon. Gentleman, however, said that by this Bill we were preventing anybody filling in the gap which is left by the Government, and my hon. Friend the Member for South Croydon (Sir H. Williams) said that at least with these schemes there was some measure of security. My right hon. Fried, in introducing the Bill, pointed out that in one case the securities were a sum of £25,000 against property of £25,000,000, a proposition not many people would jump at. The Bill is based on the recommendations of the Weir Committee, and the purpose of the Bill is not to discourage insurance where there is an element of real security. That is the answer to the points raised by hon. Members on both sides of the House.
The administration of the Bill with regard to associations of genuine mutuality will receive generous treatment. The Bill is designed to prevent the public being misled to subscribe to schemes where, as the Weir Committee points out in its report, there is complete inadequacy of the contributions for the purpose of affording any really effective cover. That is the purpose of the Bill, and while the right hon. Gentleman opposite pointed out that this Bill might not effect that purpose, at any rate we can go as far as is humanly possible to prevent people subscribing to schemes of insurance where the funds are totally inadequate and other safeguards are missing. It may be that it is impossible to make it perfect, as there 501 is always somebody who will get rid of his money, no matter what safeguards are put in. But at least we shall be able, while not discouraging schemes where there is real mutuality, to prevent schemes which are totally inadequate being carried through.
The hon. Member for Consett (Mr. David Adams) asked a question with regard to mutual associations, whether they would still act through their agents. The answer is, "Yes," but such an agent would come under the Bill, under Clause 1, if he left any circular. I do not, however, think it would be of much advantage to the agent unless he could leave some particulars of his association's scheme. With regard to the question put by my hon. and learned Friend the Member for Ashford (Mr. Spens) with regard to winding up, I will look into the point.
§ Mr. Spens
With regard to the question of winding up where they have not enough money to carry on, there are cases where under certain circumstances a company can be wound up, and I suggest that it might be desirable to have some such powers in this Bill as are contained, I think, in the Companies Act.
§ Sir J. Lamb
May I have an assurance that the point that I raised with regard to existing societies will be considered by the hon. and gallant Gentleman?
Major Lloyd Georģe
Yes, Sir, certainly. Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the Whole House for Tuesday next.—[Lieut.-Colonel Kerr.]
§ The remaining Orders were read, and postponed.