WAR SAVINGS (DETERMINATION OF NEEDS) BILL.

HC Deb 14 August 1940 vol 364 cc789-863

Order for Second Reading read.

3.48 p.m.

The Financial Secretary to the Treasury (Captain Crookshank)

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

I should point out, in the first place, that this is only a machinery Bill. It is true that it deals with a matter of considerable importance, but its object is to give legislative form to a pledge given by the previous Government in the Budget speech of my Noble Friend Lord Simon, which pledge, of course, the present Government are only too anxious to implement. I think the best way that I can serve the House is to explain just what the Bill does, how it does it, and why it does it. I will start with the matter of why it does it. It is necessary for hon. Members to cast back their minds to the early part of this year. Last November Sir Robert Kindersley and those associated with him in the great voluntary work of stimulating the campaign for National Savings brought to the attention of the Government the fact that there might be some reluctance, or hesitancy, on the part of a great number of people, who would otherwise be willing to save their money during the war, to put it into the various forms of Government savings, because they feared that if they did that and at some future time they fell into bad circumstances, and required assistance owing to the exhaustion of their unemployment benefit rights, the Government, having first stimulated them to put the money into Government funds, would then be benefiting as a result of the application of the test of needs.

This question was raised at a number of public meetings. I met with it myself at a number of meetings that I addressed, dealing with war savings, and I have no doubt that a number of other hon. Members did so, too. Also it was brought to our attention by representatives of organised labour, and the Joint Industrial Council of employers and employed entered into some conversations with the then Chancellor of the Exchequer about it. That led my right hon. Friend to make the pronouncement which he did in the main Budget speech of the year, that is to say, the April Budget. Perhaps I had better remind hon. Gentlemen, because I do not suppose that they have all got their OFFICIAL REPORT with them, of exactly what he said. It will be found in column 83 of the OFFICIAL REPORT Of 23rd April. He said that legislation would be required, and that: The general effect of the legislation will be to withdraw from the calculation of means-for purposes of unemployment assistance the new money lent to the nation during the war up to a total of £375. I have taken £375 because it is the cost of purchasing 500 National Savings Certificates, which is the maximum that any individual can purchase. The provision must be equally applied whether the new money is in fact invested in National Savings Certificates, in Defence Bonds, in subscriptions to War Loans on the Post Office Register, or deposited in the Post Office Savings Bank, or in the Trustee Savings Banks. But, of course, the total amount excluded under the arrangement must not exceed £375 in the case of any one person. It will be necessary in the legislation to make provision to secure that the investment really is of new money and is not a transfer of money from previous funds of the same sort, since the object of the arrangement is to help to gather in the largest possible amount of additional savings for the war,"—[OFFICIAL REPORT, 23rd April, 1940; col. 83, Vol. 360.] That is the promise that was made. It is very explicit in language, and, I hope, when I have described the Bill, hon. Members will agree with me that we have carried it out, and indeed more than carried it out, in the Clauses which are before us to-day. The object, hon. Members will therefore see, is to attract new savings to the war effort, and one of the various purposes is not only the receiving of cash by the Exchequer, but, it was thought, to the extent to which people save out of their current Earnings, it checks consumption, and is therefore, as has been so Often mentioned in the purely financial Debates in this House, one of the means of checking inflation.

Mr. Gordon Macdonald (Ince)

Will the right hon. and gallant Gentleman define new savings?

Captain Crookshank

I have tried to put this in most simple language, and I am coming to that question. It is a complicated little Bill, and I hope, if hon. Gentlemen will allow me to proceed, to explain everything they have in mind. That is the why of the Bill—to carry out a pledge which was based on a policy universally approved by everybody concerned. In order to be able to deal with war savings, what have you to do? The first thing is, taking the whole war, to fix the dates. What is a saving which is a war saving? When you have identified what a war saving is, the dates are comparatively easy. We all know when the war started; that is the beginning. The end will be a date after the war, and that is pretty obvious too; it would have to be, as the Bill says, "the appointed day," because hon. Members will recall that technically, though hostilities ceased in the last war on the day of the Armistice, for legislative purposes, the end of the war was not until a long time afterwards. Therefore you have to fix a day, and we make provision to do that by making an "appointed day."

When it comes to identifying what a war saving is, it is quite likely that some hon. Members will not have realised the vastness in time of the pledge which has been given. What we have to do here is to try and identify war savings, not just because of some unemployment which might come reasonably or unreasonably soon after the war, but you have to give a cover to carry out the pledge for the whole lifetime of those who are saving now. That is our interpretation of it. A "war-saver," if I may use the phrase, might be out of work two or three years after the war, and, falling on really bad times, he might require to call this provision in aid. On the other hand, if he were a young man, or even a child today, he might not come within the scope of old age pensions or supplementary pensions, even within this century. The time might not come till 1980, 1990 or even some date after the year 2,000. One has to assume for the sake of the supposition that the existing law remains unchanged. It is a big assumption, but we have to assume that, otherwise, you could not put it into legislative terms at all. I do not think that everybody has quite realised the difficulty of our problem of trying to identify what is saved during the war in such a way that people who might take advantage of it may be able to do so years and years hence.

If you took the very simplest form of identifying a war saving, it would be the case of a man who had saved, for example, in the Post Office Savings Bank something before war started, something during the war, and no more afterwards. It is perfectly simple, as anyone could see from entries in the book the actual time that the war saving was made, and as the maximum is £375, you could see whether or not he had reached that maximum. That is quite an easy case. But take an extreme case the other way, that of a man, for example, who had saved some money before the war, again in the Post Office Savings Bank. He also saved some money during the war, and then saved some money after the war. In, say, 1942 and 1943 he takes it all out of the account and buys a small bicycle shop, and emulating some other people who have done that, perhaps, when we come to the 'fifties or 'sixties of the century, he may be another Morris. Time might go on and circumstances change with him, and he might become much poorer but he might start saving again in the Post Office Savings Bank, and by the time that he was old, in the 'nineties of this century, he would have accumulated, say, some £400 or £500. In order to carry out the pledge you would have to find some way of saying, "What you were saving during the war was really covered by Lord Simon's pledge in 1940 and should be excluded from the assessment." That is an extreme case the other way.

Hon. Gentlemen will see it is by no means a simple thing to put into a Bill in the widest sense the pledge which was given, and which at the time it was given seemed to be a perfectly simple proposition. In fact, we are trying in this Bill to give for life a free policy for the amount saved during the war. That is probably the easy way of explaining it. The only way that we could think of doing that was to devise some method of a certificate when the war was over, showing the moment of time when the calculation could be made as to what was the actual war saving. That is provided for in Clause 1, Sub-section (2). It is a method by which calculation can be made by anybody. If any of us made a saving of £375 during the war, we could make an application and give the evidence, and that would be, so to say, our free policy for life.

The considerations which arise in respect of applicants during the war are comparatively simple and I shall not complicate the argument by dealing with them. As I say, what you set out to do first is to choose an appointed day. This, as hon. Members will see, has been provided for and then at that date, you have to measure what the war saving is. What exactly is it that has to be measured? The pledge made clear what was the list of investments or list of accounts—it is, partly, one and partly the other—which the pledge was intended to cover. I have read the words of my Noble Friend's speech and hon. Members will find the list set out in paragraphs (a), (b), (c) and (d) of Clause 2 (2). Hon. Members who understand its implications will note the extra item which has been put in paragraph (c) and which was not in the pledge. This paragraph will cover the case, which I think hon. Members will agree is only right, of any amount which a person has On loan to the Treasury without interest. That therefore is the list of the investments concerned.

To come to the method of measurement, I will take the simplest case, namely, that of a man who at the appointed day had £300 in the Post Office Savings Bank, £200 of which was saved before the war and £100 of which was saved during the war. The answer is arrived at by a simple sum in subtraction. But this Bill covers more than merely Post Office Savings Bank accounts. There are also National Savings Certificates and there is Government stock and therefore the matter is not quite so simple in all cases. I think it probable that the small savers with whom we are concerned, do not, as a general rule, save simultaneously in several different ways. The experience of savings committees, I think, is that they concentrate on one thing until they have the maximum which they can hold in that particular form and then they may turn to something else. But there may well be cases in which savers will have something in Government stock, something in Savings Certificates, and something in the Post Office Savings Bank. Therefore, you have to add all these together and consider the aggregate and then, as is made clear in Sub-section (4) of Clause 2, you have to deduct from the aggregate amount, on the appointed day, the amount which represents prewar savings in those various accounts. Thus by a subtraction sum you get at the figure which will be shown on the certificate.

Mr. S. O. Davies (Merthyr) rose—

Captain Crookshank

If hon. Members will allow me to proceed, I think I know the points which they have in mind and if I fail to explain those points clearly in the course of my opening speech, perhaps I can speak again with the leave of the House. I am trying now to explain how one arrived at the figure and as I say it is reached by deducting, on the appointed day, the amount in these various accounts which was there before the war, from the amount put into them after the war began and the difference between the two represents the war savings. Within that broad definition, however, there are two reservations, one minor and one important, to which I must call the attention of the House. The minor one, which may have escaped the notice of those who have not studied and appreciated exactly what is proposed, is dealt with in Clause 2 (2, a) and refers to Government stock held on the Post Office register. It will be seen there that what we are dealing with is the aggregate. This is the one investment which is eligible and hon. Members will notice the words: The amount of Government stock … to which he is entitled either by reason of having subscribed therefore at the time of the issue thereof, or by inheritance. The two last words rather imply that something may be excluded. That is so, and what is excluded is Government stock which has been purchased. It is excluded for this reason—that a purchase involves a sale and the first party sold the stock, presumably, in order to realise it and to do something with it. One thing which he is obviously not going to do is to buy the same stock again or put the money straight away into some similar investment. Presumably, he wants the money for some other purpose. Therefore, that transaction does not add a penny to the total amount of new money lent to the Government for the war. Nor indeed from the point of view of the purchaser, is there any particular point in his doing that because he can subscribe direct for the stock and there is no reason why he should go out of his way to buy from someone else.

As regards the question of inheritance, it may be said that if a man inherits money he has not saved it, but that it represents the savings of somebody else. That is true and this provision represents an extension of the pledge which was given by my Noble Friend. It is done for this reason. It is true, that if I inherit £100, that sum has not been saved by me, yet; having got it, what are my alternatives? I can use that money to buy pianos, or in some other form of expenditure, or I can save it. If I save it, instead of spending it, then to that extent it represents new savings because at that moment I have the opportunity of dissipating it rather than saving it. For that reason I think hon. Gentlemen will see that it is reasonable to give the general protection of this Measure to inherited money. The larger reservation is to be found in Sub-section (3) of Clause 2. Here I go back to the words of my Noble Friend in his Budget Speech: It will be necessary in the legislation to make provision to secure that the investment really is of new money and is not a transfer of money from previous funds of the same sort, since the object of the arrangement is to help to gather in the largest possible amount of additional savings for the war. I think on reflection it will be appreciated that if one had money in a savings arrangement connected, say, with a works, or with one's parish, or with some kind of thrift organisation, and if that money had been saved before the war, a transfer of that money into one of the four kinds of savings enumerated in Clause 2 (2) would not represent new savings at all. It is a new holding. It is an investment in something else. It means having the money in the Post Office Savings Bank instead of somewhere else or holding National Savings Certificates, for example, instead of shares. It would be a change but it would not be new money—it would not be new savings. As my Noble Friend pointed out it is simply transferring a saving already made before the war and therefore is not covered by the pledge which he gave.

Several Hon. Members rose

Captain Crookshank

Perhaps hon. Members will allow me to complete my explanation before answering any questions.

Mr. George Griffiths (Hemsworth)

This is a very important matter. Suppose a person has £375 in a co-operative society or a building society and that money had been transferred already—since 3rd September—would not that count as new money?

Captain Crookshank

No, I thought I had made that clear. I have given various examples but it does not matter what the money is in, if it was money saved before the war.

Mr. S. O. Davies

Unless it was saved by someone else.

Captain Crookshank

An exception has been made in the case of inheritance for the reason which I have already explained. It is a different matter where money, which was saved before the war and was then an investment, has been simply taken out of one thing and put into another. At first blush, it would appear that the money is available for Government securities but I do not know, any more than anybody else, that it was not in Government securities before, and whether the transfer is not really a mere re-entry. I think it likely that a great deal of money in thrift and savings societies would, in the natural course, be held in just those corresponding securities, because they are Government securities. Therefore probably if this transaction were traced out to the furthest limit, it would be found that there was no advantage to the Government at all in the form of new savings and that it would merely be a matter of a bookkeeping entry. Therefore anything which was saved before the war and which is transferred in the way I have indicated, is not new money saved in the war. I thought I had made that clear already. It is a change of investment.

Mr. Ellis Smith (Stoke)

It is a repudiation of the spirit of the pledge.

Captain Crookshank

Not at all. I am sorry if hon. Members do not agree with me, but I must point out that this is exactly in the spirit of the pledge. Money such as I have described is in no sense a new saving. Hon. Members may think that this is not a right thing to do, but I cannot accept the suggestion that it is not in line with what was stated by my Noble Friend. What my Noble Friend said is absolutely clear, and what hon. Members have in mind is only a transfer from one thing to another. The whole background of this matter, the whole reason why the pledge was ever made and why this problem ever arose, is to be found in the fact that unless something of this kind could be done there would be a stumbling-block in the way of the campaign directed at getting new savings—not transfers from other securities, but new savings throughout the country during the war. [Interruption.] I do not want any misunderstanding about this matter. [HON. MEMBERS: "There has been."] If there has been I cannot help that, but may I put this consideration to hon. Members? If their suggestion is that money transferred from some existing form of savings into, say, the Post Office Savings Bank, ought to count, even though it represents pre-war saving, that would be a most unfair procedure as between one kind of saver and another.

That particular saver's friend might have held a similar amount of pre-war savings already in the Post Office Savings Bank. He might have in the Savings Bank £300, of which £200 was represented by entries dated before 3rd September, while £100 had been lodged during the war. He is not going to say that the £200 which was in the Post Office Savings Bank before 3rd September is a war saving. Would it not, then, be the height of unfairness to say, "Oh, yes, but this other man happened to hold £200 before the war in another equally good and equally deserving thrift organisation, and because he has been able to move it from that into the Post Office Savings Bank and there make a new entry that man should get benefit to the extent of £300, while the other man's benefit is only £100 when the circumstances are exactly the same.

Mr. G. Griffiths

It is new money for the Government.

Captain Crookshank

I thought I had made that clear, and I will leave that point so that hon. Members can think it over.

Mr. Stephen (Glasgow, Camlachie)

Suppose after this Bill becomes an Act a person who has, say, £375 in railway stock sells it and puts it into a savings bank. Will that be counted as new war savings?

Mr. James Hall (Whitechapel)

Was not this offer made by the then Chancellor of the Exchequer as an inducement to get people to transfer their money?

Captain Crookshank

The whole theme and force of the savings campaign, in which I have taken a humble part and with which I have been in touch all the time, have been directed to the one purpose of getting in new money and new savings, and to check consumption. This brings in more money to the Exchequer and is also one of the means by which it can check inflation.

Mr. Silverman (Nelson and Colne)

Does the right hon. and gallant Gentleman really say that the Government have not made tremendous efforts since the beginning of the war to induce all kinds and all sorts of persons to transfer their savings to the Government in order to assist the war effort? Have not we all been invited to take part in savings campaigns up and down the country?

Captain Crookshank

I am frying to make a Second Reading speech, but we are rapidly getting to the stage of cross-examination. I will try in the course of the day to answer all the questions put to me, but I will just say to the hon. Member for Camlachie (Mr. Stephen) that that amount would not be war savings under the definition of this paragraph.

Mr. Silverman

The right hon. and gallant Gentleman has not answered my question.

Captain Crookshank

I will not go further than what I said before.

Mr. Silverman

Is it because there is no answer?

Captain Crookshank

No, it is because I have already answered it, and I will leave that point so that hon. Gentlemen can think of the unfairness of the case I put to them. That is how we are identifying what is war savings. After the appointed day all those who have said they will apply for a certificate, as laid down in the second paragraph of the first Clause, will bring evidence about their holdings. A certificate will be granted and the work for that will be done by the Post Offices, and I think that at this stage that is probably all I need say with reference to that particular Clause of the Bill.

There is, however, one further point which has been a source of considerable difficulty, and I wish to put everything before the House as openly as I can. The difficulty is that the pledge was given in April and the Supplementary Pensions Act came into force at the beginning of this month. I do not know how many or how few cases there might be, but I think anybody who might have been saving and hoped to get the advantage of this, should it come into force before that Act is passed, would have accepted the view that there was a long time between April and August when these provisions would exist before supplementary payments came to be made. The Government, as everybody knows, have been preoccupied with many other things since April, and judging by the questions which have already been addressed to me it has not been easy to devise a Bill which would be fair to everybody concerned. Time has gone along, and the Bill which is now before Parliament cannot become law before next week, when, possibly, two or three payments will have been made. I want to deal with this point. Up to this Bill becoming law there is, of course, no statutory definition of war savings, and there has been no power to disregard anything which may be considered war savings in application for supplementary pension which had to be granted or refused on the basis of the existing law. That is not a satisfactory position, and I propose it should be dealt with in this way.

There are two classes of case which will be affected when the Bill becomes law. There is the first case in which a supplementary pension of some kind is being paid but the amount of it has been, or may have been, reduced by reference to capital assets which will now, as the result of this legislation, be disregarded. In that case all these cases will be reviewed in due course, and the amount of supplementary pension will be adjusted to the date on which the first payment was made. There is the other class of case, and that is those whose applications have been turned down owing to the possession of more than £300 capital. Some of these applicants may qualify under the Bill, but it does not require a very big saving to make a difference of a shilling or two. Therefore, the way to deal with that is to try and make good the effect there has been through the delay in introducing this Bill. The only practicable way in which that can be done is for applicants for supplementary pension who have been rejected on grounds of capital assets, if they have such savings as would be disregarded as the result of this Bill, to apply within a reasonable time after the passage of this Bill. If on examination they were found to be entitled to supplementary pension, then, of course, any necessary adjustment would be made as from the date on which the first supplementary pensions were issued.

Mr. Stephen

It has to be done within the next fortnight?

Capt. Crookshank

People know whether they have some of these savings, and the quicker they apply the quicker they will be able to get the back payment. That brings me to the end of what I have to say. I feel sure the House will agree with me that the Bill which I have explained does give full effect to Lord Simon's pledge. [HON. MEMBERS: "No."] Whether or not there has been any doubt about it, we have put the most favourable interpretation upon it. [AN HON. MEMBER: "It is a miserable and disgraceful Bill."] It seems that hon. Members could not be quite clear, when the statement was made, whether the limit of £375 referred to was an individual limit and not a household limit. It was not absolutely clear in the pledge, but we have taken it to apply to everybody concerned.

If there is a father and son living together and both have saved £375, it would be £750 in the case of application and not 375. We have brought in a class which was not mentioned at all before—blind persons' pensions—and by the provisions for certifying on the appointed day we have obviated any possibilty in the future of any need for troublesome investigation. Because this Bill is urgent in the view of those who may be applying for these allowances and pensions in the future, it is imperative that it should be put on the Statute Book as soon as possible. I commend it to the House and I hope they will assist me to get it there.

Mr. E. Smith

Great concern has been expressed about the interpretation of new money. Do I understand the right hon. and gallant Gentleman to say that new money is only money saved since the beginning of the war and that any transfer will not come into that category?

Captain Crookshank

I thought I had made it clear. The words of Clause 2, paragraph 3, say that it is not savings which were made before the day the war opened.

4.28 p.m.

Mr. James Griffiths (Llanelly)

The first part of the right hon. and gallant Gentleman's speech explained why the Bill has been brought forward, and he gave two reasons about which I want to say a few words. The first was that the Chancellor and the Government had discovered that the application of the household means test at the time of unemployment assistance and now on a far wider scale in the country through supplementary allowances, was discouraging the campaign for war savings. I know I speak for every Member of this House when I say that it is our very keen desire indeed to do everything we can to support the movement for war savings. We realise that if we are to finance this war in the way which will be the least harmful to the people of this country, particularly the working classes, we must make every legitimate effort we can to fill the gap about which we have heard so much in Budget discussions during the last few weeks. I have been very much perturbed by the fact that this gap between revenue and expenditure is widening. Unless it is filled, the people we represent will pay a heavy price.

I have joined my colleagues in their objections to the taxes which have been imposed. I fear very much more the effects of inflation than any tax I have seen yet. We trade union and Labour Members will support every effort that is made to induce our people to invest their savings in War Savings Certificates and the other kinds of investments which have been mentioned to-day. What is discouraging the workers is the impression which is gaining ground that the big fish are holding out for larger bait. There are suggestions in the financial columns of the Press that the Excess Profits Tax might be reduced from 100 to 90 and the rate of interest increased. That is not encouraging the working class to put their savings into War Savings Certificates. It is to us refreshing to get an admission on that side of the House that at last there is general recognition that the means test hits the best people in the working classes. The right hon. and gallant Gentleman's speech is a complete justification for that. We have been saying it for very many years without carrying conviction, at least in the Division Lobby, when we have discussed the means test. It hits the most thrifty and the most careful people, who look after themselves and save their pennies and live decent lives. In the old days unfortunately it only affected in large numbers the people who lived in the distressed areas. Now it is experienced in every part of the country where supplemental old age pensions are being administered. I venture to prophesy that there will grow up a very widespread demand for the abolition of the household means test.

As far as the Bill goes, we welcome it. The right hon. Gentleman gave, as the second reason why it has been produced, the desire to encourage savings and to remove anything which discourages savings. He said it was being introduced in fulfilment of a pledge given by the late Chancellor of the Exchequer. It is obvious that there will be much contention as to what this pledge was. It is very unfortunate that, when the pledge was given, it was not stated more specifically and in much clearer terms. When we make promises which affect the lives of the common people we owe it to them to speak in language which they understand, because there are. I believe, thousands of people who have not accepted the interpretation of the ex-Chancellor's pledge which the Financial Secretary puts upon it to-day. His words were: It will be necessary in the legislation to make provision to secure that the investment really is new money and is net a transfer of money from previous funds of the same sort."—[OFFICIAL REPORT, 23rd April, 1940; col. 83; Vol. 360.] The right hon. and gallant Gentleman has given the interpretation that the phrase "new money" means new savings. If so, why was not the phrase "new savings" used? It is very unfortunate that the general impression has gone out, because thousands of people will be disappointed who have done something in conformity with what they thought was the pledge and will now discover that they have made a mistake. The interpretation which the average man and woman have given to it finds some justification in the words used by the Chancellor—"new money," and not the transfer of money from previous funds of the same sort. The interpretation is that money transferred from one form of Government security to another would be included, because those are savings of the same sort—that moneys taken from another kind of savings, for example, industrial, provident and Co-operative societies, other kinds of organisation into which investments are put, houses and so on, money transferred to the Government from securities which are not Government securities, would qualify for this benefit. Let me quote from a letter that I have received from someone who actually wrote about his old age pension supplementation and the way his case has been handled: When the Bill was before the House of Commons, the newspapers stated that new war savings would be disregarded. On this information I at once transferred £200 from the Co-operative Society to war savings certificates. By this transference I actually lost in interest £3 per annum, but I did it because I thought I should be bringing myself within the Chancellor's pledge. That letter clearly indicates what the general impression in the country was. When we are dealing with working men and women, let us use language that they understand. One of the worst things that can happen, which might be fatal at a time like this, is for the impression to go abroad that Governments play fast and loose with their pledges.

Mr. Marcus Samuel (Putney)

Did not the writer of that letter admit that he was doing it simply to take advantage of the Government's offer?

Mr. Griffiths

He gained that impression from the newspaper reports of the ex-Chancellor's speech. He generally chooses his words carefully, and it is very unfortunate that the words he used on this occasion are capable of misinterpretation. He thought that any money given to the Government was new money. Very large numbers of people, when they read the Financial Secretary's statement to-morrow, will feel that they have been let down. It is a very difficult situation. The only thing I am afraid of is people wondering whether the Government and the House of Commons are playing a straight game. That impression exists, and it is very widespread. People have been acting upon it and are now being penalised for acting on a pledge given by the Government.

As for the machinery of the Bill, I gather from the Financial Memorandum that disregard for the purposes of the means test will apply, not only to the money saved, but to the increments from that money. I would like the Financial Secretary to make this clear. The late Chancellor of the Exchequer fixed the amount at £375, because that was the amount which would purchase 500 Savings Certificates, and in 10 years the sum would have grown to £500. I understand that at the appointed date a certificate will be given to those who 'have invested their savings, and, once it is given, as I understand it, it will be a free policy, and, if at any time afterwards the person has received unemployment assistance or a supplementary old age pension, he can produce this certificate and get the amount disregarded. If he has paid £375, and in 10 years has £500, will the £500 be disregarded?

The Financial Secretary made one point of very great importance. One of the things that come before us in the operation of the household means test is the question, what is a household? It is a problem which is causing a great deal of dissatisfaction in the country. It is being interpreted in a very mean fashion. I urge on the Government that they must look at the problem, because it is causing no end of concern. I gather that, if there are in a household several persons who might at some time have to apply for unemployment assistance or a supplemental pension, the £375 maximum or, as I think it should be, £500—whatever the maximum is—that is for each person in the household. I gather that that is right. I gather that it is not a question of £375 being disregarded for the total members of the household. For instance, suppose that a father and a son each had £200 invested in this way and that at the end of the war one was unemployed and the other in work, and the unemployed one sought unemployment assistance, I gather that £400 would be disregarded in such a case. That is a matter which has been causing a great deal of concern.

There is one thing which the right hon. and gallant Gentleman has not made clear. It has reference to the appointed day, 3rd September. After 3rd September, it will be a fairly simple matter, as I understand a person will get a certificate to say how much he has; but if a man applies now for a supplementary old age pension, how is the amount of Savings Certificates which he has to be determined? There are in my town 160 Savings Groups and in a period of seven months they have subscribed £372,000 by means of weekly deductions from their wages. On 3rd September, there will be large numbers of people who will be half-way through subscribing for a certificate. How will the amount which a man has be calculated? Will it be the number of certificates issued to him since 3rd September, so that, therefore, there will be no benefit in respect of the certificates that were partly contributed before 3rd September? I would remind the right hon. and gallant Gentleman that there were savings schemes before the war, and what has happened since the war began is that there has been an enormous expansion. I hope the right hon. and gallant Gentleman will look into this point.

In conclusion, let me say that the speech of the right hon. and gallant Gentleman and the interjections that were made from this side made one thing quite clear. It is that we can never get fairness while there is a household means test. People do not like all these inquiries. The other day there was a heated Debate about what were called "Cooper's snoopers." I hope that hon. Members will get heated about the "snoopers" that have been about for a very long time in connection with unemployment and supplementary old age pensions. There is nothing which the best type of citizens hate as much as the operation of this means test. As a supporter of the Government and as one who desires to see the maximum unity in this country in the testing time which is ahead of us, and out of which I am sure we shall emerge successfully, I appeal to the Government to make a big, bold gesture to the workers; and there is no gesture that they could make which would evoke such a response in the hearts and minds of the working men and women of this country as would the abolition of the household means test, with all that it implies. Until that means test is abolished, there are bound to be anomalies in Bills of this sort. The value of the unity which they would achieve would be infinitely greater than the trivial amount of money that is saved by the means test. The supplementary old age pensions are beginning to operate, and already people are resenting their niggardly operation. Now is a good opportunity for the Government to make a fine gesture, and one that would be fully justified, by announcing the abolition of the household means test.

4.51 p.m.

Mr. Buchanan (Glasgow, Gorbals)

Yesterday evening a number of hon. Members divided against the Government on the Purchase Tax, and I have no doubt that those who voted against the Government felt bitterly on the subject. I feel much more bitter about this Measure than I did about the Purchase Tax, and I should have no hesitation in voting against this Bill. I think its value is grossly exaggerated, for it is a petty and contemptible Measure, and I dislike it immensely. The Financial Secretary to the Treasury sought to justify the Bill and his main argument was that if we were to do certain things, it would cause inequalities between one man and another. When hon. Members on this side made interjections and said that the Bill was not in accord with the pledge that was given, and particularly when they said that money which was saved before the war in co-operative societies and then put into War Savings Certificates should be covered, the right hon. and gallant Gentleman said that if that were done, it would create inequalities between one saver and another.

But this Bill creates the gravest of all inequalities. I have in my pocket a letter from a member of my trade union; this man has been a member of the union for 50 years, and he has saved £200, which he invested in the local Cooperative society, and also £100 which he invested in the Post Office before the war. This money will not be disregarded. A man who has saved £100 since the war is to be treated more favourably than a man who saved before the war. The only justification that has been made for that situation is that the Chancellor has appealed for new money. I would remind the right hon. and gallant Gentleman that appeals to people to save money did not start with the beginning of the war. There were constant appeals to people to put money into the Post Office Savings Bank. For many years a National Savings Committee constantly appealed for savings. May I at this point say to my hon. Friend the Member for Llanelly (Mr. J. Griffiths) that even the suggestion which he made would be unfair? He suggested that a person who takes his money from the co-operative society and puts it into Government loans should be exempt. Surely, nobody in his senses would defend such a proposition.

The truth of the matter is that people who saved before the war are just as good citizens as those who have saved since the war. People who saved in co-operative societies or in the Post Office before the war and those who have done so since the war ought to be treated equally. If that is not done, there will be all kinds of evasions. For instance, if I have £100 in a Co-operative society or £100 in some other thing, and I lift it, then I do not put it into the Post Office at one fell swoop. I put it in £1 at a time or £2 at a time. Who will be able to trace it, unless Scotland Yard and Lord Swinton's Committee are put on to the job? Moreover, I know people who have saved £100 and not put it in the Post Office or into any other investment, but have kept it locked up in a private drawer. People who have £100 or £200 saved and locked up in their house and who now invest it will get the benefit of this Bill; but if they had £300 saved in a Post Office, as the Government wanted them to do, they will not get the benefit of the Bill. The whole thing is petty and ridiculous, and ought not to be continued. Does the right hon. and gallant Gentleman say that a person who saved before the war was not rendering a service to the country just as much as a person who has saved since the war? I say that a person who saved before the war was rendering an equal service to the country.

I do not want to argue about the pledge that was given; to tell the truth, that pledge can be interpreted as the right hon. and gallant Gentleman interprets it, or as hon. Members on this side interpret it. The truth is that there is no logic or fairness in differentiating between those who saved before the war and those who have saved since the war began. My hon. Friend the Member for Lianelly said that the household means test and the investigations under it are creating a terrible amount of ill feeling. Now, under this Bill, there is to be a further investigation into what kind of money a person had or whether he made a transfer. Questions will be put to a co-operative society, for instance, as to whether a certain person had £100 invested in it, whether he lifted it and put it into war savings, and at what particular date that happened. This Bill is one of the most unequal Measures that I have ever known. I will say this for it, that it does not mislead the House. In cold, clear terms the Bill explains what it means. Anyone who knows anything about the administration of Unemployment Insurance knows that this Measure applies to them as well as to the old age pensioners. The figures of unemployment assistance are down at the present time. But what does this Bill mean? It is, in fact, giving notice to them that after the war the Government expects them to become chargeable again to unemployment assistance. That cannot be denied, and the only real effect of part of this Bill comes into operation after the war.

There ought to be a protest in regard to the last sentence of the Financial Secretary to the Treasury, in which he said that the Government were in a hurry to get this Measure through, and hoped that the House of Commons would get it through quickly. The Government have taken five months to introduce this Bill, and now that we have an opportunity to discuss its details, we find that they want it passed hurriedly through all its stages before the House of Commons adjourns next week. That is all the consideration we are to have on an important human Measure affecting the lives of the people. It is just flung at us to-day, and next week it must have passed not only through this House but also through another place. As the Bill is drawn, it is almost impossible to amend it to any extent, because any Amendment will increase the money charge due to the Exchequer. I cannot imagine anyone defending it, because it penalises decent people who saved before the war. In many cases it was more difficult to save before the war than after. I can speak for the trade with which I am best acquainted, and those who saved before the war are geniuses, and, far from being penalised, should have a medal. Imagine the position where a man, receiving a wage of £3 a week, who is not very sure of his job, has been putting a little by week by week in the Post Office. I have seen sailors coming off the boats before the war putting their shillings and pounds into the Post Office Savings Bank. Why should these people be penalised now, and told that they are inferior to those who saved before the war? The right hon. Gentleman talked about inequalities. The inequalities are that the Government are differentiating between the savers before September and the savers after September, and between savers in co-operative societies and those in other organisations. If money in the co-operative was in a wife's name, are we to take it that a man is to be penalised because it happened to be put in the husband's name? Looking at it from every angle, I have never known a Measure with less equality, and one which will create more feeling among decent folk. I resent the Measure, and hope never again to see a Government capable of introducing such a mean and contemptible Bill as this.

5.5 p.m.

Sir Irving Albery (Gravesend)

The right hon. and gallant Gentleman in introducing this Bill told us it was a machinery Bill. I fear that he has had handed to him a very difficult task. It certainly is a machinery Bill in the sense that it attempts to carry out the pledge given by the Chancellor of the Exchequer, but I am afraid it will raise a good many difficulties. One of the difficulties which is already in dispute is in regard to the Chancellor's exact pledge. Unfortunately I have not in my possession a copy of the OFFICIAL REPORT, but the Chancellor's words have been quoted twice to me, and they conveyed to me the impression that any money subscribed for this war, which did not come out of subscriptions which had already been made to Government funds, would be new money. One has to consider what is the definition of "new money." I know only two ways in which I can interpret that. Firstly, if the Bank of England increases its issue by another bundle of notes, that is new money. The only other definition of new money I can give is when a party succeeds in attracting to itself money from some other party or parties. In that case the money which has been attracted is new money, or, in other words, money which comes to the Government for the purposes of this war which was in some way not in the Government's possession before.

Then there is the question of certificates. I know that it is very easy to criticise and more difficult to say what should be done, but I cannot help feeling that the people who are to benefit by the special advantages offered to them in this Bill would have been better advised if their investments lent to the Government had remained in the Government's hands. I cannot see any advantage in almost inducing a person who has made a safe investment in a gilt-edged security to take it out and put it into something else, and then, at a later date, to say that it will be treated as if it were still there. I do not wish in any way to lessen any benefit which may be derived by those who are willing to lend money to the State at the present time, but in their own interest it would be better that they should keep it in Government securities, and that their record of holdings in Government securities should show what they have done. Some Members have referred to certain inequalities which will be created by this Bill. There is one very serious inequality to which I wish to draw the attention of the House. Unfortunately, it is one which occurs only too often when we are at war, and it relates to those at present fighting in the Armed Forces of the Crown. I can best explain what I mean by giving the House two examples.

Let us take first the case of a war worker who is now earning better wages, and as a result of thrift lends to the State £300. At the end of the war he has a certificate, and if he is unfortunate enough to apply for unemployment assistance benefit he will have the benefit conferred by that certificate, which, so far as I can understand it, is about 1s. for every £25 which will not be counted. Now let me take the case of a man in the Armed Forces. Let us take the case of a Reservist who at a time when wages were not too high succeeded in saving £300. That man is then called up for service in the Army, Navy or Air Force, as the case may be, and the possibility of saving and lending to the State no longer exists. He is doing all he can by giving his whole service and his life to the country. When the war is over, he may go back to employment, and then, at a later stage, along with the other man who has also saved £300, they both may fall out of employment, and apply for unemployment assistance. In that case the man who serves his country in the field will receive some 10s. a week less in unemployment benefit than the man who lent money to the State during two or three years of war. That seems to me to be an absolutely impossible situation and one which probably was not realised. I do not imagine for one moment that when this Bill was drawn up that point came to light. I cannot believe that anyone in this House would be willing to pass legislation which would penalise those men serving their country at the present time.

5.13 p.m.

Mr. Mander (Wolverhampton, East)

This Bill is to carry out a pledge made on the introduction of the Budget, and to encourage the War Savings Movement. I should like to join in paying a tribute to the splendid voluntary work which is being done by the War Savings associations throughout the country, and to express a hope that in some magical way by their work they will successfully bridge the gap, although it is very difficult to see how that can be done. Nevertheless, tremendous efforts are being made from one end of the country to the other in every kind of association where people are joining together, and the movement has met with a great deal of success. I do not know that the Government are meeting with quite the same universal success with their appeals to possessors of larger sums of money to subscribe to the War Loans. I remember listening to a broadcast the other night by Sir Robert Kindersley, in which he called attention to the fact that certain boards of directors were considering whether it was in the interests of shareholders that they should make subscriptions of this kind. Quite rightly, he said that what they must think of is their duty to the country, which came before any question of whether shareholders should receive 1 per cent. or ½ per cent. more. I do not think it has been an encouragement to the movement for saving when, as we heard yesterday, the Directorate of the Bank of England voted to themselves another £30,000 by way of remuneration. It is exceedingly unhealthy at a time when appeals are being made for subscriptions for war purposes. Then there is the question of loans made to the Government free of interest. A number of these loans free of interest have been made by trade unions. There is a case, in my own constituency, of 10,000 being lent free of interest by the Lock Latch and Key Industries Trade Union and there is a number of other cases elsewhere. But I am not aware of anything being done on the employers' side, and I hope that they will respond to the good example set by the trade unions. The right hon. and gallant Gentleman explained this Bill in his usual exceedingly lucid way. It was a difficult Bill to explain in some respects, particularly in reference to the pledge made by Lord Simon on 23rd April and the discussion which then took place.

I venture to call attention to a request made in the subsequent Debate by the Secretary of State for Air, who asked whether attention had been given to this matter, and what the view of the Government was with regard to it. He asked: I wonder whether the Chancellor of the Exchequer intends that concession to apply also to those people on public assistance, to those who come under the Poor Law. It may happen that a man who is under the Unemployment Assistance Board this week falls ill and is declared to he unemployable. He will then have to go to the public assistance committee. Indeed, a man who may be saving at the present time may fall on bad times or a member of his household may fall on bad times, and his war savings may come to be taken into account when calculating the amount of assistance which is due to the household from the public assistance committee. I would ask the Chancellor of the Exchequer to make it clear whether the exemption will apply to Poor Law cases as well."—[OFFICIAL REPORT, 23rd April, 1940; cols. 93 and 94, Vol. 360.] According to the terms of this Bill, it does not apply to such cases, and I ask the Minister to be good enough to say why the proposal of the Secretary of State for Air has not met with the success it deserves. The supplementary old age pensions scheme recently came into operation. No doubt a certain number of recipients are pleased with it, but at the same time I find there is great disappointment among large numbers of people because they find that its terms are quite different from those they expected. I have received many letters from my constituents, as no doubt have other hon. Members, in which it is pointed out that they would have preferred an all round increase. They resent particularly the introduction of this new means test. There is no doubt about that. I hope that the appeal which has been made just now will be listened to.

I should now like to say a word about the actual terms of the pledge of the Chancellor of the Exchequer. He referred to a transfer of money from previous savings of the same sort. That is very specific, and it does not seem to me that the terms of this Bill carry out that pledge. The hon. Member for Gravesend (Sir I. Albery) pointed out that in savings of the same sort there cannot be a very great difference of interpretation. Let me take various different alternatives. Suppose a man has ordinary shares, and he sells them—perhaps he would be very well advised to do so—and invests them in War Savings Certificates. That would not be taken into consideration, and would not come, I gather, within the terms of the Bill. Surely these are not savings of the same sort, but of quite a different kind. I should like to know how the Minister can say that the holding of ordinary shares is of the same sort as the holding of War Savings Certificates. This scheme is a compulsory savings scheme. For the first time certain individuals in this country are to be induced by a compulsory scheme to invest their savings in a certain way. I should like to see that applied on a much wider scale to people with much larger sums of money, and I am inclined to think that we shall come to something of that kind before we have finished with the financing of this war. Suppose a man sells some furniture and invests the money in Savings Certificates. That is not a saving of any kind. Or he may sell a piano or a motor car, and use the money to buy certificates. Is that a new investment or not? I gather that it does not come within the terms of the Bill, and that it is only when an individual has some surplus income, some cash coming to him, and invests it in Government savings that the Bill comes into operation. That is how I understand it, and if it is not so I shall be glad to have the matter put right.

Those are the main points I want to make. I feel that this Bill does not carry out the pledge given by the Chancellor of the Exchequer. It is a very serious thing to lead people all over the country, by the use of perfectly clear language, to believe one thing, and then to come down to the House of Commons many months afterwards with a Bill which, I submit, bears a quite different interpretation in the mind of any unbiased person. I think we ought to press the Government on this matter—in a friendly way, of course, because I certainly am a very devoted supporter of the present Government, and do not desire to embarrass them in any way, as I am sure the Patronage Secretary appreciates. But I do feel that we are entitled, indeed, that it is our duty, by peaceful persuasion, by the use of the Parliamentary machine, to persuade the Government that they have taken a wrong view in this matter, that their action will be wrongly regarded in the country and will not redound to their credit or assist us in getting the national unity which we are trying to obtain. I would ask the Government to review the matter and, on the Committee stage, to extend the scope of the Bill. As an hon. Member has said, the best thing would be to abolish the means test at an early date and give a general rise in old age pensions, and then we should give satisfaction from one end of the country to the other.

5.24 p.m.

Mr. Magnay (Gateshead)

I owe it to the House to explain why it was that I was not present at the beginning of this Debate. A deputation of the Mayor and Corporation of Gateshead came to the Ministry of Health, and I was there from a quarter to four until 20 minutes or so ago. I think too highly of the House and of the importance of this Debate to-day to treat it lightly by coming in at any old time, and I am sorry that I had not the opportunity of hearing the Financial Secretary to the Treasury explaining the Bill and the reply from the opposite side. Therefore, I come with, so to speak, a fresh mind to the consideration of the implications of this Bill. It seems to me that we are the queerest nation on earth. I have come, as I said, from the Ministry of Health, and I saw all sorts of war placards displayed and placards talking about the morale of the people. The best evidence of the morale of our people is that we are talking about old age pensions in this cool manner this afternoon. We are thinking ahead, and I am sure that the hopes of those who wish well to old age pensioners will gain fulfilment. When we discussed this proposal some months ago some of us said there would be a very large number of applicants for supplementary pensions. We were told from the Front Bench that there might probably be 300,000, but it happens that the number is already beyond the million mark. In my own constituency of Gateshead there were 1,500 old age pensioners receiving public assistance, and there have been 1,100 other applicants for these supplementary pensions. That shows that generous treatment—and I want the House to mark that word "generous"—for old age pensioners was very much needed. I would remind the House that from this very spot I pleaded for a personal means test instead of a household means test. I think that is quite enough to impose upon the old people.

Mr. Deputy-Speaker (Colonel Clifton Brown)

I must remind the hon. Member that we are not discussing the Old Age Pensions Act but this War Savings Bill.

Mr. Magnay

I am sorry that I went too far back, but I was going to the genesis of the matter. With all respect I feel that what I was saying was germane to this discussion, for the reason that there was no definition then of a household and there is not one to-day.

Mr. Deputy-Speaker

The hon. Member mist leave that question out of the Debate. Otherwise we shall be discussing this subject all night.

Mr. Magnay

My answer to that, with all respect, is that the officers who have to administer the Old Age Pensions Act and who will have to administer this Measure do not know what is the proper definition of a household, nor do they know what is the meaning of "new money," and surely we have a right to try to discover in the High Court of Parliament what "household" means. I will read the Regulations dealing with supplementary pensions. If the House will turn to page 2 it will find under the heading of "outgoings"—

Mr. Deputy-Speaker

Again the hon. Member is going back to supplementary pensions, which are not the subject of this Bill.

Mr. Stephen

Surely the hon. Member is in order in referring to the determination of need. If we are to talk about the determination of need, surely we ought to be in a position to refer to the figures dealing with need.

Mr. Mathers (Linlithgow)

May I point out to the hon. Member for Gateshead (Mr. Magnay), who on his own admission was not present when the Financial Secretary to the Treasury made his statement, that we have had the assurance to-day that there will be no question of a household means test because it is to be a test which is to apply to the individual?

Mr. Magnay

I hope that is correct, because, if so, it is all I need trouble the House about. I can only say again, if I am not again out of Order, that the officers in Gateshead, where we are fortunate in our officers, do not know what "household" means; but if that is the Ruling which has been given to-day, it is quite sufficient for me.

As regards this "new money" definition, I remember the late Chancellor of the Exchequer, then Sir John Simon, making a statement in which he said that it would be necessary by legislation to make provision to secure that the investment is really of new money and is not a transfer of money from previous funds. It seemed to me then, as it seems to me now, that the clear definition was that so long as it was within the stock enumerated on page 3 of the Bill, it was Government stock, from the Government point of view—and that is the only thing that matters—and must obviously be new money to them. It had never been in their hands before. That was what I understood when the Chancellor of the Exchequer made his statement, and that is what I now think the meaning to be. That is the sensible and logical reason to be given for it. It is obvious that old age pensioners cannot have saved any money since September, 1939. From where can they have got the money? Why do they want the old age pension? Because they have not the wherewithal with which to keep themselves. Obviously, it must be something that they have realised, or a windfall, an asset of theirs, commutation of their pensions or a thousand-and-one other things, but it is new money for the purposes of the statement made by the late Chancellor of the Exchequer. I suggest that that is the meaning now.

You have ruled out of Order the best part of my speech, Mr. Deputy-Speaker, and I must obey you. I do so with great reluctance, although with all respect to you, Sir. It would have been of the greatest assistance to officers, throughout their administration of the scheme, if they knew beyond a peradventure what the position is to be. The household is not a legal entity. No one can describe what a household is. Anyone who is within the four corners of a house at any time makes a household, within the meaning of these Regulations. That is sheer nonsense.

5.33 p.m.

Mr. Pritt (Hammersmith, North)

I would like to make two points upon this Bill. I say frankly that, on the words used by the late Chancellor of the Exchequer, it was plain, when one read the OFFICIAL REPORT On the following day, or on the subsequent day, that the conception of new money was intelligible to a certain number of people engaged in finance and to a certain number of people not so engaged. There is some justification for what has been brought forward now. That Debate was extremely well attended, and the concession was welcomed. I believe that everybody in the House and in the country thought that the poorer sections of the public were being told: "You put money into War Savings Certificates and one or two similar things. When we have won this war for freedom, as a result of which you will be unemployed and seeking public relief—because that is what happens with modern wars for freedom—you will not be told that we cannot help you and that you cannot have your dole. You must proceed to unload your money and to feed yourself." I am sure that everybody in the country affected by this sort of thing will feel that they are being cheated by the Bill of something which they clearly thought they were getting. I can see that, on the words which were used. There is a good deal of talk about the genesis of the Bill, but the only thing that will really interest those people is its speedy exodus.

I want to consider the provisions of the Bill in detail, as it might appear that I do not understand them, whereas I think I do. I understand that lawyers and people concerned with finance have approached this problem and dealt with it with great accuracy, and with their usual inhumanity. They have said: "Yes, new money. We have the words of the Chancellor that humanity does not matter, and we are justified in limiting this thing as much as possible. We are justified in saying that it is only if you are bringing to the Government money which you have not previously brought that you are to have this relief, in the happy times of unemployment after the war." Consequently you create, in effect, a small deprivileged class, and you say to the ordinary citizen: "If you have sold your previous investments in Morris Motors or any other commercial enterprise and brought money to the Government during the war, all that money will be new money and treated in accordance with the Chancellor of the Exchequer's pledge."[HON. MEMBERS: "No."] Well, that is what I understand.

Mr. Stephen

The hon. and learned Member was not here at the beginning of the Debate.

Mr. Pritt

I am reading Sub-section (4). I am very willing to be told if I am wrong. Sub-section (4) of Clause 2 deals with money which has to be deducted. You there get, so to speak, the advantages of the Bill: The aggregate amount of National Savings Certificates, Ulster Savings Certificates and amounts standing to … credit … in any savings bank as aforesaid. The "said savings bank as aforesaid" is any account in the Post Office Savings Bank or a specified trustee savings bank. The vast bulk of the money covered by Sub-section (4) is money which the Government have already got. It seems to me that you are creating a special de-privileged class of people who have previously lent money to the Government instead of putting it into furniture or some purely private firm, or invested it, or kept it in their stockings, and the result is the typical inhumanity that you always get from legislators, financiers and others. You will have two people living in adjoining cottages, both rejoicing over a victory which has brought them unemployment and both applying for relief. One cottager will be told: "Because you saved money before the war and put it into a Government savings bank you cannot have the benefit of this Statute." The other will be told that because he was earning good money during the war and put his savings not into a Government savings bank before the war but into some private enterprpise, and he took it out and put it into the Government's hands, he will be differently treated.

All the people affected by this matter will say: "We were told by Sir John Simon that we were to be allowed to keep the benefit of our war savings but we find ourselves not allowed to do so, while neighbours whose position is not very different from our own are allowed to keep them." This procedure creates the maximum amount of suspicion and bad faith in the Government. It must stop a great many people giving or lending their money to the Government when the Government are anxious to have it. There is the usual justification, which has all the appearance of the typical, niggardly and inhuman meanness which the public have been made to expect from Governments. I earnestly ask the Government to see that this is not the way to deal with this mater, which should be treated more broadly and simply.

5.41 p.m.

Mr. Stephen (Glasgow, Camlachie)

I join in the criticism of the Bill. Probably all the previous speakers have been devoted supporters of the Government, but I am not a supporter of the Government. I have no more faith in them than I had in the previous Government. I took action in the House when this Government came into office to show what my views were. I sympathise with the Financial Secretary to the Treasury in having to sponsor the present Bill. The position seems to have arisen because of a Government pledge given to us by Sir John Simon when he was Chancellor of the Exchequer. He probably gave the pledge without thoroughly examining the position beforehand; now the Government must try to carry out that pledge.

It is plain from the discussion which has taken place about the effect of the Bill that if the Bill becomes an Act of Parliament, it will add very seriously to the anomalies which already characterise the pensions and unemployment assistance schemes in this country. The Supplementary Pensions Act was passed and its administration is being carried out now. I suppose that my experience is similar to that of other Members of Parliament. I can assure the Government that there is very widespread dissatisfaction with the present position. It is plain that the present proposal will add greatly to that dissatisfaction and to the feeling of injustice in the country.

To the hon. and learned Member for North Hammersmith (Mr. Pritt) I should like to say that although I interrupted him on one point I had the justification of having asked the Financial Secretary to the Treasury to specify whether, if a person had an investment in, say, railway stocks, and sold it, and put it into, say, National Savings Certificates, this would be counted as new money. The Financial Secretary told him that it would not be new money. It would be the same as if it had been in the Co-operative Society or the Post Office Savings Bank or in anything else. Consequently, many of the comments of the hon. and learned Member for North Hammersmith were irrelevant to the discussion. I can, however, understand the hon. and learned Member putting those comments to the Government because what he said appeared to be the rational interpretation of the Measure. It is an irrational Bill, and one would naturally be misled into thinking that the case instanced by the hon. and learned Member would lead to the person getting a benefit which a person who put his money into the savings bank would not get.

I want to ask how it is proposed to distinguish this new money. If a person has £300 in shares in a motor company, sells them and puts the money into Government securities, how is it proposed to ascertain where the money came from? Does it mean that in future, whenever an investment is made in one of these four categories, an investigator will go to the person and ask him where he got the money? Or will the question as to where the money came from not arise until the person becomes an applicant for his old age pension? The Parliamentary Secretary to the Ministry of Health shakes her head. Evidently, therefore, it is not proposed to wait until the individual becomes an applicant for a pension. I want to know, then, how it is proposed to ascertain whether the £300 which the person is claiming should be exempt from calculation in the determination of need was new money or not. The ascertainment must be made when the investment is made or at some subsequent date. Which of these two is it? If the ascertainment is to be made immediately an investment is made, it appears that everybody who takes out a Savings Certificate will have to inform some investigator, possibly a snooper. The Financial Secretary shakes his head, so that I appear to be wrong again. Possibly the person who takes out a Savings Certificate will have to fill in a questionnaire saying where the money came from. It appears to me to be a mysterious business. If some such procedure is contemplated—I understand from the Parliamentary Secretary that I am wrong again, or perhaps there is some physical weakness that makes heads on the Front Bench shake, and that I am being misled.

The whole point of the Bill is that when a person applies for unemployment assistance or a pension, £375 of his savings may be disregarded in the determination of need if it is what is described as war savings. They have to be savings that were made during a certain period. One must then have a test of what savings are. The hon. Member for East Wolverhampton (Mr. Mander) instanced the case of a person selling furniture and investing the money in Savings Certificates, and he asked whether that would be regarded as savings. Obviously there must be some test, and I would like the Government to say what it will be and when it will be made. Money invested in motor shares or railway stock, and taken out and put into Government securities is not, we have been told, savings. Suppose a person has £300 invested in an industrial company, sells the investment and buys Savings Certificates, and he is asked, "Is not this the £300 that you had in such and such a company?" He replies, "No, I lost that at the races. I took it out, went to the races and had a bad patch. This £300 is money that I made when I had a good patch at the races." How is it proposed to trace the money and decide whether it was previously in an investment or not?

I want to emphasise what was said by my hon. Friend the Member for Gorbals (Mr. Buchanan), that while it is true that the Bill is an attempt to carry out a pledge by Lord Simon, it will inflict a great injustice on the people who were thrifty before the war as compared with those who have exercised their thrift only during the war. An hon. Member opposite gave the case of the man who is in the Services and is denied the opportunity of saving because he is getting only 2s. a day. That man, who saved some money before the war and then gave his service to the country, will be subjected to a loss of income if he applies for unemployment assistance or a pension, as compared with the person who does not do service during the war, but is working and is able to save. It is shameful treatment of the men in the Services. I wonder what the men in the Army, Navy and Air Force will think about it. I sometimes wonder, when I see the way in which the Government are carrying on the war, whether they are trying specifically to lose it, or whether it is simply a case of mental defectives having got into Government positions. Things have often happened during the war that could only be justified on the basis of the mental deficiency of the people responsible or else because of some sinister, evil purpose in seeking to lose the war. The effect that this Measure will have on the millions of people who are put into this rotten position, as compared with other people who are in industry and not in the Services, shows that it is a Measure for which only feeble mindedness or worse could be responsible.

The Financial Secretary should recognise the opinion in the House about this Bill. Not a voice has been raised in support of it. If every voice on all sides has been critical of a Measure, it is usually regarded as an impossible Measure. I suggest, therefore, that the Financial Secretary should withdraw the Bill and consult with the Leader of the House with a view to the department of the Cabinet that deals with these questions reconsidering the whole position. This is an unreasonable Bill and simply an injudicious attempt to carry out a silly pledge given by Lord Simon who had not possibly any knowledge of the working of the means test. It was a promise given by him in a moment of excitement when he thought he was giving some aid to the propaganda in favour of more money being invested in War Loan. The Government are not justified in wasting the time of the House in continuing discussion on the Bill. It has been shown by previous speakers to be impossible in working. The Financial Secretary should put it to the Government, since the pledge of Lord Simon has been shown to lead to the silly results that this Bill will lead to, that the real way to fulfil the pledge is to abolish the means test altogether, and in that way give encouragement to the people to give what assistance they can to the State in carrying on the administration for the good of the community.

6.0 p.m.

Mr. Lewis (Colchester)

My right hon. and gallant Friend the Financial Secretary began his speech in moving the Second Reading of the Bill by telling us that the matter was a complicated one, and that in consequence the Bill, although short, was very complicated. I entirely agree that the Bill is very complicated. I think that that fact completely damns the Bill, for this reason: What is the purpose of the Bill and of the pledge? It is simply to encourage people to lend money to the Government. What sort of people are to be encouraged? Not wealthy people who can employ legal advice, but ordinary, simple people who have made small savings in the past or even. perhaps, who have not saved at all in the past. Those are the people whom it is desired to encourage to lend money to the Government. Surely, anything that is vital to that movement must be simple, so that ordinary people can understand it. What is the use of producing a Bill the purpose of which is to encourage humble people to do something if it is so complicated that they cannot understand it?

The reason why this Bill is so complicated is that its framers have taken an arbitrary view of what in their opinion is new money, and they have tried to translate that into the language of the Bill. We have had only one commonsense description of new money in this House this afternoon, and that was the description given by the hon. Member for Gravesend (Sir I. Albery), who pointed out that for everybody new money could be created only by the Bank of England, and that, as regards the individual, new money was money that he acquired and that he had not got before. That definition completely holds the field, and no one has attempted to challenge it. If we follow that out, new money for the Government is money which the Government acquire and which they had not had before. That is a definition which anybody should be able to understand and which might reasonably be followed. Let me give an example of how the idea which is enshrined in this Bill will work. Supposing there are two men who have each saved £100 before the war started. One man puts his £100 away in a drawer and locks it up. The other puts his £100 into the Post Office Savings Bank. They both hear appeals on the wireless to lend money to the Government and each decides to lend his £100. My right hon. Friend the Financial Secretary to the Treasury says that the man who takes his money out of the drawer and lends it to the Government is lending the Government new money, but that the man who takes his money out of the Savings Bank is lending the Government old money.

Captain Crookshank

That is so.

Mr. Lewis

With all respect, it appears to me to be absolute nonsense. In both cases the money was earned before the war—[An HON. MEMBER: "And saved."]—and saved before the war. Supposing I borrow £100 from my bank and buy some Savings Certificates, is that new money? Or suppose I have £100 already in one of these investments, placed there before the war, and after the war has broken out I sell the securities. According to my right hon. and gallant Friend, if I lend the money to the Government it is not new money. Supposing I use that money to pay some workmen who, having got it by way of wages, lend it to the Government. Why should that process make it new money? It seems to me that the more we follow this line of argument the more absurd we find in practice is this underlying idea with regard to new money. As regards the fairness or unfairness between individuals, I thought that a particularly good example was that of the man who, having served in the war, had savings that he had made before the war and who would not be able to plead this Bill, as compared with the man working in a munitions factory during the war and who, having made savings during the war, would be able to plead the Bill.

I have ventured to criticise the Bill, as have some other hon. Members, but in fairness to my right hon. and gallant Friend I should not leave the matter there, because it is no use criticising something unless one has an alternative to suggest. The present Chancellor of the Exchequer clearly has to make good the pledge that his predecessor gave. This Bill is not a satisfactory way of doing it. Having gone as far as they have in giving the pledge, there is really only one way out of it for the Government, and that is to say that in future all savings up to the value of £375 will not be taken into account for purposes of public assistance. I cannot see any reasonable point at which we could stop between the pledge and that point. Otherwise it would be open to the extremely grave objection of being very complicated and, therefore, liable to give rise to a suspicion of doubt and a check to everything which we desire to encourage, namely, the lending of money to the Government. After all, the pledge should never have been made, and if there is to be a lot of feeling about the way in which it has been redeemed, there will be doubt and anxiety as to the effect of saving after the war. The only way is to go further and not to mind if it does result in a certain amount of money being spent on public assistance which otherwise would not have been; it will, at any rate, have the advantage that there will be a marked encouragement for people to save money, not only now when the Government are appealing to them to do so, but at all times.

I understand that there is not to be a Division on this Second Reading; at any rate, I do not understand that there will be one. [An HON. MEMBER: "Why not?"] I did not gather that there would be. I hope that the Government will not take that to mean that although the House does not like the Bill, hon. Members will not do any more about it and that they need not worry. I have no doubt that my right hon. Friend will appreciate, at least, some of the criticisms which have been put forward this afternoon, and therefore I hope he will see whether he cannot do something to get over the difficulty even if it should necessitate withdrawing the Bill.

6.9 p.m.

Mr. Tinker (Leigh)

Anyone reading this Bill would find it highly complicated. Since it came out last Thursday I have read it half a dozen times in order to find out what it means. I tried to get into my mind the impression that it conformed to what I thought was the intention of the House of Commons and that it meant to give to the old age pensioners some little benefit which they had not already got under the previous Act of Parliament. That was my intention when I read the Bill. When I got to the date of it, 3rd September, 1939, I again tried to bring that fact into conformity with the fact that all savings after that date would be regarded as standing to the credit of the man or woman who had it in his or her name at that particular date. I thought it was the intention that money which had been saved up prior to that date would be regarded as coming within the terms of this Bill. I do not know whether the Financial Secretary had some doubt in his mind, but anyone listening to his statement must have felt that he was trying to keep back as long as possible the unpopular part of this Measure. It was difficult to understand from him what new money meant and what were the implications of this Bill. We are all smarting under it. He has come to tell us that what we expected from the pledge is not forthcoming.

I look upon the present House of Commons as a reflection of the thoughts of the Members when they discuss a Measure. Everybody has spoken against this provision, and one would have expected the Government to say, "If that is the expression of opinion of the House, we must conform to it." I am getting tired of being pledged to a Government which does not consult the opinions of the House. I have given my pledge to do all I can to support the Government in this war situation, but it is only on the understanding that they consult and obtain the opinion of the House of Commons, and not come to us and say, "This is what a few people think." The Chancellor gave this pledge, under the last Government, mind you, when we had no power to shift the Chancellor, and when he was backed up by the whole of the Tory party. Now we have a different Government, and one which ought to take into consideration all the opinions in the House. That is not being done. I say to the Financial Secretary that there is keen disappointment, among the old age pensioners particularly, about what is happening. On Saturday I went to a meeting called for the purpose of examining what has happened in regard to old age pensioners. There were many expressions of thanks for what had been done in getting some supplementary pensions for a number of people, but there is one case which I must relate to the House. A man and woman came to me after the meeting, and the man said, "I have worked in a mine all my life and brought up 10 children. They have now married and have gone out into the world. In that period I saved £120, which had in the Co-operative Society. I understood the Government to mean that if I put that money in War Savings, I should get the benefit of it and they would not penalise me." He transferred that money to War Savings at 3 per cent., whereas I think he was getting 4 per cent. in the Co-operative Society. He asked me for my opinion. He had been before the determinations committee, and they said that it would be assessed against him. I said to the man, "There is a Bill before the House of Commons which, if I am correct, will put that money right in your case." Evidently I did not read correctly, or the understanding which I had has not been borne out. That is the opinion throughout the country in regard to this Determination of Needs Bil.

The Financial Secretary has some kind of humour, but it was with a grim humour that he said to-day that there may be before the tribunal cases which may have to be re-examined. The Financial Secretary says that some money may have been saved by such people since they came under the provisions of the Supplementary Pensions Act, and that that may have to be reviewed. Has he thought out this Bill properly, or is he trying to delude us? Nobody who has been able to save a penny under the provisions of that Act will get any benefit. It is an impossible situation. Some good m Ay have been done for people receiving unemployment assistance, but for the old age pensioners there is no benefit at all. I do not want to vote against the Government, but if this goes to a Division I shall know which way to vote.

I want the Government to make the House of Commons a consulting Chamber. This is not merely a "talking shop" now; it might have been in the past, when there were two hostile parties, but now, for the good of the country, we have got down to fundamentals; and the free expression of opinion of the House of Commons ought to provide the Government with the guiding principle of any Measure. With all respect to Members who have spoken from this side, I would say that probably two of the best speeches against this Bill have come from the other side of the House—the most critical and the most substantial speeches. The two Members who have made those speeches were supporters of the old règime, particularly the hon. Member who spoke last. There is only one course that the Government can take with credit to themselves, and that is to withdraw this Measure, and bring in something on the lines of what we think ought to be done. There will be no satisfaction in the House of Commons or in the country until something better than this is done for our aged people.

6.18 p.m.

Mr. Silverman (Nelson and Colne)

I would like to add my appeal to the Financial Secretary to accept what has now become the unanimous feeling of the House about this Bill. I agree with the hon. Member opposite, that the Bill is far too complicated and that its machinery is cumbrous; but I do not think that that is the all-important matter. I am sure the Financial Secretary will agree that the real test of the Bill is: Does it or does it not carry out the pledge which was given? If he could convince the House—which is not unwilling to be convinced—that the Bill carried out that pledge, none of us would have a word to say, except on technical or verbal points in Committee. But if, after sitting through this Debate—and I am glad to say that he has sat through the Debate and heard practically every word of it—he can remain of the opinion, which, no doubt, he held when he started, that this Bill gives effect to the pledge of the late Chancellor of the Exchequer, I should despair of his capacity for understanding what the Bill is about.

It has been said that for the genesis of this Bill we have to go back to a speech by Lord Simon on 23rd April. I do not think that that is the true genesis. I think that when the late Lord Chancellor made that speech he had in mind the Debates that had taken place previously on the Second Reading, and, I think, on one subsequent stage, of the Old Age Pensions supplementation Bill. If he did not refer to those Debates, I am quite certain that he had them in mind. During those Debates Members on all sides of the House said, not to the Chancellor, but to those in charge of the Bill, that here were the Government, for the first time in the history of pensions legislation, introducing a means test. The whole gravamen of our opposition to that Bill was that it introduced a retrograde policy by applying a means test—and, indeed, a household means test—to social insurance. We said, "If you feel bound to introduce a means test, at any rate modify it; do not penalise thrift." Many of us made speeches—I made innumerable speeches—on just that point. We were told, in reply, that the Government would concede that point, at any rate to some extent. It is true that that was connected up with the other appeal which had been made in connection with the War Savings Campaign, and that the two things converged on that point.

Captain Crookshank

indicated dissent.

Mr. Silverman

I hope that the Financial Secretary will not be too dogmatic about it. I know that he has one speech in front of him, but it is not to that speech that I am referring. I remember when the hon. Member for West Fife (Mr. Gallacher) said during, I think, the Committee stage, with reference to this exemption of savings, that the Government were postponing it until after the war, and the right hon. Member who was then Minister of Labour and who is now Secretary of State for Scotland replied that the hon. Member was quite mistaken, and that it was to come into operation then. What was to come into operation then? The exemption of the war savings of old age pensioners from the application of this new principle of the means test in social insurance. It was said, time after time, on behalf of the Government, "We cannot introduce it into this Bill; it will have to be done in a special Bill. Something will be said about it in reference to the Finance Bill."

What everybody had in mind was the question of benefit for those old age pensioners who were to apply for supplemental pensions under this latest Act. I do not think that that can be denied. The evidence for it is that every one of us, in any part of the House, who keeps in touch with his constituency has been since that date overwhelmed with inquiries from old age pensioners who have some savings, and who ask, "When are we going to get the Bill? When are we going to understand what is the new money, so that we may make our arrangements accordingly?" The whole thing was done with reference to those persons who were, here and now, to get supplementary benefit. That is what the pledge was about. I ask the Financial Secretary to tell us how can any old age pensioner to-day who is applying now for a supplementary pension, conceivably benefit under this Bill? What provision is there in this Bill, which is said to be the fulfilment of a pledge to these old age pensioners, to give them any advantage?

My hon. and learned Friend the Member for North Hammersmith (Mr. Pritt) was under the impression that if people had saved money before the war and had not lent it to the Government, they could, by lending it now, obtain an advantage over people who had lent it then. That is wrong: the hon. and learned Member had overlooked Sub-section (3) of Clause 2. But it would have been much better if the hon. and learned Member had been right, because then some people who are now applying for supplementary benefit, and who have been thrifty, in the past, would be benefiting to that extent under this Measure. But the Measure has been carefully drafted to prevent any pre-war savings being exempted at all. The inference is irresistible, therefore, that no old age pensioner now applying for supplementary pension can derive any benefit whatever from the Bill, because he cannot have saved anything since 3rd September, 1939. If he were in a position to save anything and lend it to the Government, he could not have qualified for a supplementary pension. The supplementary pension is based on a subsistence level—with some modifications, no doubt; but deliberately imposed so that anybody in a position to save shall not be entitled to a supplementary pension. It becomes obvious that this Bill is of no benefit whatever to the old age pensioners of to-day.

I do not say that it may not be of some benefit to somebody some day. The time may come when people who are not old enough to be old age pensioners now will become old age pensioners, and if during this war they have saved money and lent it to the Government, they may benefit under the Bill. But that indicates exactly what my hon. Friend was rather laughed at by the then Minister of Labour for suggesting—that after the war is over we shall still have a household means test applied to old people in the assessment of their pensions. In those circumstances, this Bill may be of some benefit to them; but it is perfectly clear that it is of no benefit—and that it is deliberately designed to be of no benefit—to any old age pensioner to-day. I am very ready to be convinced that I am mistaken about that, but I do not see how I can be mistaken. It is not merely my own view; it is the view of everybody, on either side of the House, who has taken part in this Debate.

If there had been a case that no old age pensioner could profit by a single farthing from the provisions of this Bill, how in the world could it be the fulfilment of the pledge to these people? I would like to echo what was said by my hon. Friend the Member for Leigh (Mr. Tinker). This criticism, this bitterness, because undoubtedly there is bitterness in this House—it is not merely the bitterness that will be felt by every old age pensioner to-morrow—is reluctant. Certainly, nobody wants to embarrass the Government. What we are seeking to do in appealing to them to withdraw this Measure is to relieve them from embarrassment of their own creating. If there had been anybody in this House prepared to support them in debate, the position might have been different, but there has not been a single voice raised in support of this Measure. Nobody in this House who has heard the Debate, and certainly nobody who has contributed to it, believes that the Measure is the fulfilment of that pledge which it was designed to fulfil. Can we all be wrong? Can we all be out of step but the Financial Secretary?

Mr. Quibell (Brigg)

Yes, he said so.

Mr. Silverman

Then I would rather be out of step than in step. Does he expect that he is going to be a one-man army? Let him be it by all means, if he thinks he can win the war. Let him try. I believe that the aim is to get as much unity as possible and for us all to march in step together. I am reminded of an old saying that used to amuse me: "If everybody in the room says you are drunk and you know you are not drunk, go to bed, anyhow." If everybody in this House says that this is not the fulfilment of the pledge, then withdraw it, anyhow, and bring in a Measure which will enable the House to agree that the pledge is being redeemed. If that appeal is rejected, we can only assume that it is deliberately rejected and that the Bill has been deliberately designed not to fulfil the pledge. That would mean that these old people, waiting to see how the pledge was to be redeemed, had been deliberately tricked and trapped. It is necessary that the Government should not only not commit such a mean act of deception, but that they should make it clear to this House and to the country that they are not committing such an action, and the only way that they can convince us of that is to withdraw this Measure.

6.34 p.m.

Mr. Marcus Samuel (Putney)

Hon. Members on this side of the House—I have mentioned this in Debate before—hate the means test as much as any Member opposite, and we have always regretted that there should have been the necessity for it. I have always been worried to see a man who has worked very hard and made savings in no better position—in fact, often in a worse position—than the man who has made, perhaps, more and has spent everything. The late Chancellor of the Exchequer gave some explanation of this matter, on a recent Measure, and to a certain extent it was satisfactory, but the proposal did not wipe out the means test. This test, I believe, was first instituted on account of something which was known as Poplarism, which might very conceivably again occur. I was very anxious that men should make savings right from the very beginning of the war; that workmen and others should have opportunities, as they had during the last war, to earn money from regular employment—opportunities such as they had not had perhaps for some years—and should be able to make savings. I asked the Minister of Labour a question in this connection in January last as follows: whether he will consider the advisability of introducing provisions whereby all savings invested during the war in Defence Loans and War Savings Certificates will in the future not be taken into account under any means test for unemployment allowances? The reply was— As my hon. Friend will be aware, the existing provisions make substantial allowances for savings. The question of whether savings of the two classes referred to should be accorded further allowances is receiving consideration."—[OFFICIAL REPORT, 18th January, 1940; col. 194. Vol. 356.] I spoke to the Minister, and he told me exactly what the Financial Secretary said to-day, that certain negotiations were then in progress. I asked him when I could repeat the Question, and he said "presently." I watched the thing very carefully. In April the negotiations had come to a head and it was announced that savings of £375, which was equivalent, with the rate of interest, to £500, would be exempt. I was satisfied that the savings would be the equivalent of £500 and that men who were unfortunate enough to become unemployed and subjected to the means test, would be allowed to leave that sum out of account. I have always held that it is a good thing for people to have savings. That has been recognised already in the case of old age pensioners and in other respects, and substantial amounts are allowed before the holders are called upon to pay anything at all.

Afterwards, I also approached the late Chancellor of the Exchequer because I had an idea that it might be a good thing for the people if we did what we were forced to do in the last war, and which we all hated at the beginning, namely, to borrow on securities and to borrow for loan after loan. I asked him whether in order to help workmen who had not the money available, they were allowed to borrow from their employers and so subscribe larger sums to Government loans, repaying their employers by degrees, instead of having so much a week deducted for smaller amounts. I understood that the Treasury said—and I believe they were right from their point of view—that this would be inflation, so the matter went no further. There is no doubt that, if one could do that, people would subscribe perhaps more than they are doing, but that would be inflation. It may be necessary to have inflation. I cannot conceive myself how we are to bridge this enormous gap without some sort of controlled inflation, if such a thing is possible. But I did wish to make it easier for working people to subscribe more largely than they otherwise might have done. The idea was turned down for the reason I have stated.

I am very pleased to see the introduction of the present Measure. I think the Chancellor of the Exchequer has gone as far as possible. I am hopeful that the £375 actually means £500, although I am not quite sure about that yet. There is another point about the Income Tax. Those who, during this war, have the good fortune to be able to come within the clutches of the Income Tax collector, not having done so before, will also have the pleasure, no doubt, of paying Income Tax on savings lent to the Government in addition to paying it on their wages. The Chancellor of the Exchequer, will, I hope, also benefit later on, as he generally does. If we can get hundreds of thousands and perhaps millions of people making savings during the war, he will also benefit in the form of Death Duty. The family or successors of anyone dying with £101 in savings, will have the pleasure of paying 1 per cent. on that sum in Death Duty.

Mr. Speaker

I am afraid that the hon. Member is going beyond the provisions of the Bill.

Mr. Samuel

I cannot see why old age pensioners who lend anything to-day should expect special privileges, but if they can make savings there is no reason why they should not be exempt. As far as the general run of people who, during the war, are able to make savings are concerned, I think they are being amply repaid for anything that they may entrust to the Government, and I think that they can, rightly, trust the Government.

6.44 p.m.

Mr. G. Macdonald

I want to add to the appeal already made to the Financial Secretary to the Treasury. This question of new money seems to be the only contention between us to-night. If his definition of new money is money which has been invested in war savings since 3rd September, we have a feeling that it will be very unfair to a great number of people in this country. I do not quarrel with him on the question of whether he has carried out, in this Bill, the words used by the Chancellor of the Exchequer in April last. Maybe he has, but I am certain that he has not carried out what we on this side of the House expected when that pledge was given. In any case, he is doing a very serious injustice to many people in this country. I am thinking of the cases of two "partial compensation" men, who accepted lump sums in settlement, one before 3rd September and one after that date. The one who accepted settlement before 3rd September received £300 and as he was in work he had no need to spend it. He invested it in War Loan as did the other man who received his settlement subsequent to 3rd September. Now the Financial Secretary has told us that when this war is over, if both men happen to be unemployed, one will get benefit and the other will not. Surely he cannot expect the House of Commons to stand for that? We had decided not to oppose this Bill because we interpreted this Clause ourselves, in a certain way, but I want to tell the Financial Secretary, quite frankly, that although I do not as a rule make a practice of voting against this Government—I try to be loyal—I shall feel compelled to assist those who want to force a Division if I am told that a differentiation is to be made between these two men.

At the same time, I do not think there is any need for a Division. The Financial Memorandum is drawn in very wide language so that the right hon. and gallant Gentleman ought to be able to accept an Amendment on the Committee stage. I do not know whether the hon. Member for Westhoughton (Mr. Rhys Davies) wants to take the attention of the Financial Secretary away from me, but I would say to the right hon. and gallant Gentleman that I think he could accept an Amendment which would not mean a great deal to the Exchequer. We must visualise a time when the war is over, when a number of people may be unemployed, and we say that those who invested money which they saved before 3rd September and those who did the same after that date, ought to be treated alike. I cannot see this country or the House of Commons standing for anything short of this and I would ask the Financial Secretary to give sympathetic consideration to an Amendment on those lines. There are many old age pensioners who have been refused supplementary pensions because they happened to have invested money, which they saved before 3rd September, in War Savings. I cannot believe that the Chancellor or the Financial Secretary would want to penalise these people. I thought that the case made by the hon. Member for Gravesend (Sir I. Albery) would have brought a concession from the Front Bench. He told us of a man who saved a little money before 3rd September and who was now in the Army. This soldier, who is anxious to fight and risk his life, put his money into War Savings. A munition worker has, perhaps, invested in War Savings since 3rd September, yet when the war is over, and they are both, perhaps, unemployed, the Bill says that these two men shall be treated differently. The Financial Secretary has heard the Debate, during which there has not been one speech in favour of the Bill. I hope he will give sympathetic consideration to the case we have put before him.

6.50 p.m.

Major Procter (Accrington)

This afternoon, in reply to a constituent regarding the War Savings that would be disregarded in fixing the amount of supplementary pensions, I said that if anyone had invested £375 in War Savings that sum would be disregarded. Later, I came into the Chamber and listened to my right hon. and gallant Friend trying to explain what this Bill meant. Now I am given to understand that if a person invested £375 in War Loan before the war, such an investment would be taken into account and the old age pensioner would be penalised for his or her thrift. This policy seems to me to be foolish and to lack the generosity one would expect from my right hon. and gallant Friend. It will make for a great deal of bitterness among aged people, who will feel that the Government has been niggardly in trying to save a few pounds at their expense. I would ask the Financial Secretary a question. Can he tell the House what would be the cost to the Government, if he were to make this concession to the old age pensioner? Is it worth while producing such disappointment for such a small amount as this concession would mean? I would also ask what is the principle whereby a person who has invested £375 is not permitted to sell old loan and buy new loan, and thus get the benefits to which his patriotism and thrift entitle him? Am I right in stating that if a man has £375 and has invested it in building shares or railroad stock he could sell his shares and buy war saving stock and thus be included among the beneficiaries of this Bill? [HON. MEMBERS: "No."] Then I hope my right hon. and gallant Friend will take note of the arguments put forward so forcibly by hon. Gentlemen opposite with whom I do not often agree. On this issue, however, I am entirely with them, and if they force a Division I am prepared to vote with them for I want our aged people to get the maximum benefit from the new Pensions Act. To spoil such a grand Measure by penalising thrift and patriotism not only does a great disservice to old people, but to the National Government itself.

6.55 p.m.

Mr. Kenneth Lindsay (Kilmarnock)

I rise to make an appeal. The hon. Member for Ince (Mr. G. Macdonald) put the matter clearly. In the course of three and a half hours' debate there has not been a single speech in favour of this Bill. My right hon. and gallant Friend is, usually, very clear, but there was difficulty in following him this afternoon—

Captain Crookshank

Because I was interrupted.

Mr. Lindsay

My hon. Friend the Member for Gravesend (Sir I. Albery) put a point which must be answered. He and the hon. Member for Ince said that when we talk of new money we do not exclude money which was previously invested in some other form of savings and has been transferred to one of these four categories. I speak for a constituency in which there is a great problem with regard to supplementary payments. The object of this Measure is to help to gather in the largest possible amount of additional savings for the war. That is good on paper, but when you come to the point that a person who saves before 3rd September, and another who saves after that date are to be put in different positions, you create a differential class. That was never the intention of Lord Simon's pledge, and I would ask my right hon. and gallant Friend either to move an Amendment or to agree to one providing that where money is in National Savings Certificates under any of the four categories, whether it is new or old, that money shall not be taken into account. Otherwise, you will create grave injustice for those who are unemployed and those who are old. We, in this House, are not devoted to old-fashioned parties. We are all supporting the Government, but from time to time we have what is known as a council of war. The hon. Member for Leigh (Mr. Tinker) put it as well as anybody could. When the whole House has seen the light, is it not time that my right hon. and gallant Friend gave in and agreed with the majority opinion, unless there is good reason to the contrary? I, therefore, appeal to my right hon. and gallant Friend to make some form of concession.

6.59 p.m.

Mr. George Griffiths (Hemsworth)

I do not desire to prolong this Debate, because I know there are others who desire to say something on another subject which, to them, may be more important. But to many of us in the House this is a very important question, and if the Press could only give a full report to what the Financial Secretary has said I am sure there would be more consternation in the country to-morrow morning than I have known for years. I do not believe that anybody who listened to the statement made by the Chancellor of the Exchequer on 23rd April felt any doubt that "new money" meant new money to the Government, from any source other than Government stocks or Savings Certificates, whenever it was lent. I know of a widow in my division who transferred some savings made by her husband in the last war. She has scraped to save a bit of money and three weeks ago put £375 into new Savings Certificates, because I said to her, "If you transfer this money from the Barnsley British Building Society to War Savings, it will not be taken into account." That £375 was supposed to be new money. I know he did not say so definitely, but everybody who listened to Sir John Simon, now Lord Simon had the impression that money that was transferred into War Savings Certificates, from whatever source other than Government stock, would be new money. This lady will lose not less than £3 10s. per annum, having transferred the money out of the Barnsley British Building Society into War Savings Certificates. Now she is, naturally, as keen as mustard, and not only she but the majority of people who have been looking forward to getting a supplementary pension, when they read tomorrow morning the published statement of the Financial Secretary, will be bitterly disappointed, and they will not have much joy about winning this war.

This week I could hardly walk down the street of the little town in which I live without this, that or the other man or woman coming to me about the supplementary pension, and I said to them, "Well, we are discussing this matter in the House next Wednesday, and perhaps I shall be able to bring a little hope to you next week-end." There is no hope in this, only bitter disappointment. We want to be loyal to the Government in the effort to win the war. There is not a man in this House, there is not a man or woman in the country who does not want to crush Hitler. The Minister of Information talks about the morale of the race. This Bill, I say, will help to depress the morale of those people who were looking forward to their supplementary pension. It means such a lot, not only to the old people but to their sons and daughters. It affects not only 2,000,000 old age pensioners. I should say it affects at least 12,000,000 people indirectly. Surely the interests of those 12,000,000 people should he taken into consideration. I hope that the Financial Secretary will say, "In the last three hours I have had my eyes opened, and I am prepared to withdraw this Bill and, irrespective of where the money comes from, if it is invested in War Loan or War Savings Certificates up to £375, it will not count in future."

7.5 p.m.

Mr. Gallacher (Fife, West)

I shall occupy only a few minutes, but it is important that attention should be drawn to what was actually stated in this House by the ex-Chancellor of the Exchequer and by other Cabinet Ministers. When the ex-Chancellor made his speech and referred to this question of new money, a Member on the Front Bench on this side of the House—I believe it was the hon. Member for Don Valley (Mr. T. Williams)—asked him how that applied, not to the future, but the present old age pension; and the ex-Chancellor of the Exchequer said it would be arranged so that old age pensioners would get the benefit. At a later stage, I rose to express my opinion of the Chancellor and other Members of the Government. My actual opinion of the ex-Chancellor and other Members of the Government is not printable, but it is a correct estimate. Here this afternoon Members of this House, honest, well-meaning supporters of the present Coalition Government, have told us that they received such-and-such an impression from the ex-Chancellor's speech, and as a consequence went to their constituents and made such-and-such observations. I never at any time was taken in by the ex-Chancellor or by any Members of the Government.

Mr. G. Griffiths

I was.

Mr. Gallacher

I know a lot of us were, but I have had more experience. I spoke here, and said there was not an old age pensioner who would get any advantage from the proposal; that the scheme would only come into operation after the war, and would apply only to those who had contributed during the war. The present Secretary of State for Scotland, who was then Minister of Labour, interrupted me and said I was misrepresenting the Chancellor of the Exchequer, and in order to prove it he quoted what the Chancellor had said and the observation made by the hon. Member for Don Valley, I believe, on the question of how the old age pensioner was affected, and the reply that the Chancellor made. After that, is it any wonder that Members on this side of the House were deceived and were led to believe that the old age pensioners of to-day were to get some advantage from this Bill? I say that there has been a deliberate deception of Members by the Chancellor and by the then Minister of Labour when he said that I was misrepresenting the Chancellor. I ask any Member of the House, in view of the speech made by the Financial Secretary to-day, whether I misrepresented the Chancellor in the statement I made, and whether any honest representative of the people of this country can, in any circumstances, support a Bill of this kind.

7.10 p.m.

Mr. Mathers (Linlithgow)

My experience is like that of a good many other Members, and our opinion has been forcibly expressed by my hon. Friend the Member for Hemsworth (Mr. G. Griffiths). I am certain that all of us have, by letter and by personal contact, knowledge of how old age pensioners have been looking forward to this Bill. I have been waiting for it to be produced in order to be able to explain this matter to old age pensioners who have been asking me for advice about the withdrawal of money from other savings, in order to put it into War Loan and clearly and definitely to inform them that the position as far as the first £375 of their savings is concerned, will be quite secure, in accordance, as I understood it, with the statement of the late Chancellor of the Exchequer.

I think the position is that we do not find this Bill attempting to carry out Lord Simon's pledge. My opinion is that it is an attempt to whittle down what he said. Finding that many people were withdrawing their funds from such organisations as those which have been referred to, relying upon the obvious intention of the late Chancellor's statement, those who were affected by the withdrawals have obviously made appeals to the Treasury. The result is that a Bill of this kind has been brought in, which destroys the hopes that the old age pensioners had of the Measure. It is absolutely useless for immediate application. It is true that, later on, perhaps after the war is over, some benefits will come from the terms of the Bill, but for immediate application to the old age pensioners' case, as far as I can see, it is absolutely worthless, and I join with those who say that the Bill should be withdrawn. As far as any immediate benefit is concerned, it will not make any difference to them. The Treasury should reconsider the position in the light of the very strong opinion that is held in the House, and when we come back from our very short Recess, we can get down to a very much simpler Bill than this. I could not send this complicated Bill to the old age pensioners. It would only give them what the reading of it has nearly given me—a headache. I should not be giving them any clear information at all. I therefore think it would be a wise thing to withdraw the Bill and bring in another later on which could be made retrospective to the same date, and which would, more definitely, give effect, if not to the actual wording of Lord Simon's statement, at least to its spirit, and to what I firmly believe was his intention when he made his speech.

7.15 p.m.

Sir Percy Harris (South-West Bethnal Green)

We are to have a discussion later on the very important statement made the other day on India, and I suggest that it might be wise not to press the Bill at the moment. It is a very complicated Bill. It aims at doing a very simple thing, but it upsets many preconceived ideas of Members and of the public outside. I have read the speech of the late Chancellor of the Exchequer, and I agree that, on a strict interpretation, the Bill might be justified. [HON. MEMBERS: "No."] That is a matter of opinion. The House, however, has taken a different line. It was generally understood by the House and by the public outside that if a man had invested in war savings whenever he got his money, either before or after the war, it would be exempt when his claim to a supplementary allowance was being considered. I ask the Government not to press the Bill at the moment, and when the Chancellor of the Exchequer has been consulted—he has not been present, I suppose for a very good reason—he will perhaps consider redrafting or altering the Measure.

7.16 p.m.

Captain Crookshank

I am prepared to give an answer to the Debate now, if it suits the House. We have covered a great deal of the field, and at least it is right to give an answer. I will do my best to deal with the points. First of all, I should like to disabuse Members, some of whom talked rather as if this was almost a small private affair of my own. Of course, this is an important Government Measure, agreed by all Members of the Government, several of whose names are on the back of the Bill. The Lord Chancellor is, after all, still a Member of the Government, though he does not now adorn this House. He has a perfectly clear recollection of what was intended by his words, and, reading them, there is not any question as to the interpretation which I put upon them and which I explained was the right one. While we have heard a great deal on the subject of old age pensioners—I take no exception to that—the Bill is not, of course, as might be thought from some of the speeches that we have heard, a scheme in itself to assist old age pensioners. It is not a supplementary old age pensions improvement Bill, but a Bill designed to carry out a pledge the object of which was to increase savings in war-time, which is quite another thing. It may or may not be the case that a supplementary pensions Bill or any other enactment should be amended for a good reason of its own. That is not what I was concerned to argue. What I had to put before the House was that the late Chancellor of the Exchequer, who opened the Budget on 23rd April, gave a pledge on behalf of the Government. That pledge, and the interpretation of it, has been endorsed by the present Government, and, in order to put that pledge into an Act of Parliament, this Bill is introduced. I should have thought that anyone reading the pledge itself would have no doubt as to what was meant, but it appears that some Members have apparently advised their constituents in another sense. The words are perfectly clear. In opening the Debate this afternoon, I went out of my way to remind the House of the general context, and I think the House agreed with me in my description of the back-ground and the events leading up to the Bill. If we go back to the beginning, this matter had nothing to do with supplementary old age pensions, because they had not yet been introduced; it will be seen from the former Chancellor's speech that it concerned primarily unemployment assistance.

Mr. G. Griffiths

No.

Captain Crookshank

It is no good the hon. Member saying "No." This matter was raised in November, and all the questions affected dealt with unemployment assistance. On 23rd April, 1940, my Noble Friend said: I am informed that in some quarters there has been a hesitation in making full use of the opportunities for small savings on the ground that, in the event of the individual hereafter losing his employment, and continuing unemployed until he is obliged to apply for unemployment assistance, his war savings might be taken into account in determining the amount of assistance to which he would be entitled. Alter some further remarks, my Noble Friend was interrupted by the hon. Member for East Stirling (Mr. Woodburn), who asked: The old age pensioners, too? At the end of his remarks, my Noble Friend dealt with that interruption. He said: I explained about the supplementary old age pensions, that the pensioner applying for one was not to be treated worse than he would be treated under the Unemployment Assistance Board.

Mr. G. Griffiths

There you are.

Captain Crookshank

My Noble Friend continued: It follows that the new arrangement will also apply to the calculation of supplementary pensions."—[OFFICIAL REPORT, 23rd April, 1940; cols. 82.3, Vol. 360.]

Mr. Griffiths

Hear, hear.

Captain Crookshank

I am not denying that my Noble Friend said that. What I was saying was that originally the question had to do with the reluctance to make full use of the opportunities for small savings because of the effect of such saving on claims for unemployment assistance. At that time there was no such thing as supplementary old age pensions, because the Bill had not been brought before the House. Naturally, when the Act dealing with supplementary old age pensions was placed on the Statute Book, what was originally intended to deal with the problem of unemployment assistance was very properly extended to cover supplementary old age pensions. It also followed, although it was not stated in terms, that it ought to cover blind pensions as well. As the House wishes to discuss another subject, I cannot go into details about every question which has been put to me, but when the hon. Member for West Fife (Mr. Gallacher) says that the old age pensioners are being deceived—

Mr. Gallacher

I did not say that. I said that hon. Members on this side had been deceived.

Captain Crookshank

I am sorry if I have misinterpreted the hon. Member, but certainly it has been said by several hon. Members that no old age pensioners will get any benefit from the Bill. In reply to that, I would say that no one could make a categorical statement unless he could go into the case of every old age pensioner who applied for a supplementary pension, but the likelihood is that quite a number will benefit from this Bill, because I think hon. Members have overlooked the fact that the assessment of supplementary old age pensions covers the same principles as in the case of unemployment assistance namely that the question of the household comes in. Hon. Members may say that an old age pensioner could not have saved very much since the beginning of the war, but it does not follow that some of the members of his household, whose capital has to be taken into account in assessing the allowance to the old age pensioner, have not saved in that period.

Mr. Buchanan

The old age pensioner would get no allowance if he was capable of saving such a large sum.

Captain Crookshank

The hon. Member has not understood me. This is a household question. Somebody in the household may have saved sufficient to make all the difference.

Mr. Buchanan

The fact is that in making a claim for a supplementary old age pension, the household income is taken into account, and if the household income were so high as to allow a man to make these savings, his father would not qualify for a supplementary old age pension.

Mr. Magnay

On a point of Order, Mr. Speaker. Earlier in the Debate I raised the question of what constitutes a household and I was ruled out of Order, but hon. Members are now being allowed to discuss all the implications of it.

Mr. Speaker

As I was not in the Chair when the Ruling was given, I certainly cannot deal with it now.

Captain Crookshank

The point I was making was that the income taken into account is the income of the household, and the hon. Member said that some of the old age pensioners would have got no supplementary old age pension because the capital of some of the members of the household—

Mr. Buchanan

I did not say that. If an old age pensioner applies for a supplementary pension, what is taken into account is income and capital. What I said was that if one of the family had an income that would allow him to save this sum, then the father would get no supplementary old age pension.

Captain Crookshank

The person might have saved the money before.

Mr. Stephen

Savings before will not be taken into account, because they will not be new money.

Captain Crookshank

The money may have been saved since then.

Hon. Members

Withdraw the Bill.

Mr. Speaker

Hon. Members are wasting time. [Interruption.] Hon. Members ought not to cheer themselves for doing what is not right.

Captain Crookshank

It is by no means impossible that, in the case of some persons who have been denied supplementary old age pensions on the assessment of the capital which has been taken into account, if one now disregards war savings, they may very well get something which they are not getting to-day.

Mr. Silverman

It is quite impossible.

Captain Crookshank

The hon. Member says it is quite impossible, but that is a matter of fact which we cannot get round. Let hon. Members bear in mind that we are not merely dealing in this Bill with old age pensioners, but we are trying to produce a scheme by which the pledge of my Noble Friend will be put into legislative form, so that in future, and possibly in the very distant future, it will be possible to identify what are war savings. What we are trying to do is to make it possible, after the war—it may be 20 years, 40 years or even 60 years, and it must be remembered that it is possible to make savings on behalf of children—if they unfortunately ever have to make application, that there will be a method of distinguishing the amount of money they actually saved during the war. By the system of a certificate that can be done. Let us not be carried away too far in discussing the Bill in terms of the immediate present, because the pledge of my Noble Friend was not limited in time. We feel that in order to carry it out we have to devise some arrangement by which, in future, when the war is over and there is no question of war savings as such, money saved during the war can be identified.

The only other point I wish to make at this stage is in relation to what some hon. Members have sought to show, namely, that we are making a very serious distinction between those who saved during the war and those who happened to save before the war, and that we are trying to make out that those who saved during the war are better citizens than those who saved before the war. Of course, we are not making that distinction at all. While it is quite true that before the war there was a good deal of propaganda for saving, it was propaganda on general social grounds that thrift was a good thing in itself. It extended not only to National Savings Certificates, but to saving groups which existed up and down the country since they were instituted during the last war. It was part of a good social movement that people should try to save money when earning in order that they should have something to fall back upon in their old age, or something to draw upon on special occasions or for wiser spending at some later date in their lives. But that is not the kind of savings we are dealing with here. The propaganda here is not on the general basis that thrift, as such, is a good thing, although we agree that it is, but that it is highly desirable from the financial point of view that the maximum amount of savings should be made now out of present earnings, and that these savings should be put into the hands of the Government in order that they may have the money to help carry on the war. And the result of the savings campaign has been very remarkable in that direction.

Our other object was that there should be a check on consumption at a time when some of the public may be receiving higher earnings than before. If that is not checked, there is the ever-increasing risk of inflation, and hon. Members opposite, whatever they may have said, will agree with me when I say that. When they cast their minds back to the many Debates we have had in this House, they will remember that they were just as anxious as anyone to see that whatever could be done to check inflation should be done, because they saw the dangers and risks of it. That is why saving in war-time, which is not only highly desirable, takes on a different aspect from the normal thrift propaganda in times of peace. When hon. Members go on to take exception to my interpretation of what is "new money," I would refer again to what was said by my Noble Friend: It will be necessary in the legislation to make provision to secure that the investment really is of new money and not a transfer of money from previous funds of the same sort. … [Interruption.] One really must read the sentence to its conclusion, and except for one hon. Member, so far as I know no Member has quoted the rest of the sentence: since the object of the arrangement is to help to gather in the largest possible amount of additional savings for the war. That second part of the sentence must be given equal weight, and additional savings does not mean, and cannot by any stretch of imagination mean, the transfer of pre-war savings into a particular form of holding. If hon. Members will look at it dispassionately—and I know they feel very heated on this subject—they will know that the last thing in the world this Government or any other Government wish to be accused of doing, is the breaking of a solemn pledge. It is really a matter of interpretation.

Mr. A. Bevan (Ebbw Vale)

If an ordinary person raises money against collateral in a bank and invests it in war stocks, is that new money or old money?

Captain Crookshank

Prima facie, I should call that old money. There is no merit or advantage from the Government point of view in merely transferring old savings. The point is to try and gather in new savings.

Mr. Mander

On a point of Order. Cannot representations be made to the Chancellor to withdraw the Bill in view of the opinions held on this side of the House? Otherwise, the Debate may go on all night.

Mr. Speaker

The Financial Secretary to the Treasury is responsible for the Bill and speaks for the Government.

Mr. Mander

The Financial Secretary is not in a position to take a decision. Only the Chancellor can take a decision with regard to the withdrawal of the Bill.

Hon. Members

Or the Leader of the House.

Captain Crookshank

Whether the Leader of the House wishes to intervene when I have done will be for him to decide, but I hope that hon. Gentlemen will do me the courtesy of listening to the end to what I have to say. If hon. Gentlemen do not agree with the interpretation we have placed on the pledge, the Debate might go on to the end of time. As I have pointed out, my noble Friend in his Budget Speech said: The statement that I have just made is in line with the advice that I have received from the two sides—(employers and Trades Union Congress); I was fortunate to see both sides—of the National Joint Advisory Council."—[OFFICIAL REPORT, 23rd April, 1940; col. 83, Vol. 360.] I am sure hon. Members will realise we are not in this Bill departing from the understanding reached after full con- sultation with important people who have been concerned with this matter. I would remind them that the Minister of Labour was one of those who had conversations with the previous Minister of Labour on the subject. Therefore, it is really not a matter of any difference of opinion in the Government as to what was meant by the pledge or as to whether this Bill carries out absolutely what was intended and understood. Not only that, but we go further in the instances which I quoted than anything that could have been read into my noble Friend's statement at the time. I hope that on reflection hon. Gentlemen will try and see the best that there is in other people and will not ascribe to me and the Government any of those base thoughts which seem, unfortunately, to have flowed through their minds this evening.

7.42 p.m.

The Lord Privy Seal (Mr. Attlee)

I beg to move, "That the Debate be now adjourned."

This is a very complicated subject. A pledge was given. It is not easy to see exactly how that pledge can best be carried out. Although I have not been present during all the Debate, I have not heard any suggestions as to how it can be carried out in view of the difficulties. I think that the House should have time to consider the Debate and to think out the subject as well as the Debate. It is very important that that we should discuss India, and I, therefore, move the Adjournment in order that Members may have further time to consider the whole matter.

Question put, and agreed to; Debate to be resumed To-morrow.