HC Deb 21 April 1944 vol 399 cc587-98

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Pym.]

Commander King-Hall (Ormskirk)

We have just listened to a speech by the Prime Minister about the Empire which may become a classic. It was worthy of the great tradition of the stage on which it was made. By the accident of Parliamentary Business and procedure it now falls to my lot as a humble back-bench Member to come on the stage and deal with a matter which I think is related to the Prime Minister's theme as a few stones in a mosaic are related to the whole picture. Since there is a relation between the two subjects I make no apology for proceeding in this matter which I am raising today on the Adjournment. Some weeks ago I put a Question to my right hon. Friend the Chancellor of the Exchequer relating to the practice whereby banks, insurance companies and large commercial concerns contribute through their local branches to the local Savings Association in a manner which artificially swells the savings reported from the district. My second Question drew attention to the fact that some firms say to their employees, "If you will buy Savings Certificates, we will make a contribution to the cost." That is not quite so generous as it sounds, because the firms are allowed to put down those contributions under the head of "Welfare" and they can be set off against Excess Profits Tax. I asked the Chancellor of the Exchequer whether he did not feel that in that case he was losing revenue, but he did not agree. When I heard the remarks which fell from his lips I thought I ought to raise this and similar matters on the Adjournment.

I should like to begin by repudiating any suggestion that I am in any way hostile to the War Savings Movement unless it he considered that there is hostility in trying to expose certain practices which I think are preventing the War Savings Movement from being as effective an instrument of saving and of national policy as it might be. When I sit down, I hope the representative of the Treasury will admit that the facts I have put before the House are indisputable, and that the constructive suggestions which I propose to make are worthy of the consideration of the Government and the War Savings Movement. I assert that some of the propaganda which is used by the War Savings Movement is tendentious, and that the explanation given is that we have to get all the savings we can as quickly as we can and really cannot be too particular as to how we do it. I hope to persuade the House and the War Savings Movement that that is not the best way to get all the savings we can. It is a psychological error to approach the question of savings from that angle. Indeed, it may build up a rather dangerous situation which, if created, will be regretted by no-one more than the thousands of devoted men and women working for this Savings Movement.

Now I will give the House one or two examples of the kind of thing I mean. The public have definitely been told—not quite so much lately as in the not very distant past—that there is an actual connection between their savings and the production of weapons of war, that if you save £10,000, for example, a tank will be built.

It being the hour appointed for the interruption of Business, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."— [Captain McEwen.]

Commander King-Hall

The inference is that if you do not save £10,000, the tank will not be built. That, of course, is quite untrue, because I am sure that my right hon. Friend on the Front Bench will agree that the number of tanks built depends upon the amount of material, labour and the machine tools available, and the State in war has complete control over those matters.

My second point is about the target figure. A town is told what the target figure is—so many thousands of pounds. The local Mayor, or the local Member of Parliament—not, I may say, this Member of Parliament—gets up on the opening day and says "We have done very well indeed, ladies and gentlemen. A sum of £70,000 has already been subscribed towards the target"—sometimes the word "given" is used. There is then a pause for the loud applause which naturally ac- companies the announcement that, at the very outset of the campaign, 70 per cent. of the target has been achieved. I submit that that statement is really quite incorrect. What is that money which has been subscribed towards 70 per cent, of the target before the actual campaign opens? In fact, a large amount of it is money which boards of directors of large concerns, probably with head offices in London, have authorised their branches to subscribe; or else it is money, possibly, from a local firm which, of course, would have been put into Government bonds in any case. Sometimes, indeed, it may be money already in medium or long-term Government securities which is sold in order to reinvest it again and make it show in the local Week. I notice, for instance, that a certain large concern in London has just advertised that it has made a contribution of £5,000,000 to the "Salute the Soldier" campaign. Frankly, I find difficulty in believing that that large concern had £5,000,000 of idle money lying on deposit at the bank. I do not propose to enter into the controversial question, the arguable question, as to whether or not it might have been more patriotic for that concern to have left the £5,000,000 in the bank, when the Government could have borrowed it at one and one-eighth per cent. on short-term, instead of having to pay three per cent. There is, of course, the argument there that the length of the loan has been extended.

The evil of these inflated contributions to local War Savings Weeks arises from the fact that the man in the street believes that his task is half done before it has even begun, and the ordinary man—and he is the chap whose savings we are really trying to get—naturally says, "Well, I hear before we even start that £70,000 out of £100,000 have been subscribed. What on earth is the good of my fussing and worrying about some sacrifice which will perhaps produce a pound or two from me?" I remember one place, not in my constituency, where I went as the principal speaker to open one of these Weeks. I will call the place B. The target was £100,000 and a gathering of about 1,500 people assembled in the main hall. I made my speech appealing for savings, and then the Mayor got up and said that £70,000 had been subscribed. He read out a long list of firms who had made these subscriptions, £5,000 from this firm, £10,000 from that firm, and so on, and each announcement was naturally received with loud applause by this audience, who did not understand what was really happening. Then he added, "Finally, I must tell you that the Mayor and Corporation have subscribed £25,000." There was very loud applause when that happened, and the Mayor and Corporation sat back with a look on their faces of duty nobly undertaken and well done. The ghastly thing about it was that they really believed they had done something of importance.

That was really more than I could stand, I told his Worship that, with his permission, I would like to address the audience a second time. I said to them, "Ladies and gentlemen, you have just been led up the garden path. You think your task is half done; in fact, it has not started. You have just heard from the Mayor and Corporation that £25,000 has been put up. Well, after all, that is ratepayers' money. What else could they have done with it except put it into Government stock? You would hardly expect his Worship to get up and tell you that he had put your money into dog-racing shares even if he was legally allowed to do so." Then I said to these ordinary folk, who were mystified at the attack which was being made on this great contribution: "There is only one true test as to whether you people will have done your job properly by the end of this week and that is if shopkeepers and the people who own the pubs and the cinemas say at the end of the week that this has been the worst week's business in their history. Then, and then only, will you have done your duty." This particular audience saw the truth of that observation and members of the local chamber of commerce, rather feebly perhaps, gave some applause to what was perhaps their death warrant so far as that week was concerned.

Here is another example which I think may interest the House. At a certain place, which I will call X, the savings were so tremendous that the place was "boosted" by the B.B.C. on the National Programme as that which had the record savings per head in the whole country. The figures completely astonished the local inhabitants. How was that miracle achieved? I happened to discover how it came about. It was achieved by the chairman of the local Savings Association writing to hundreds of firms all over the country a letter which read as follows: As President of the forthcoming Warship Week in this town, in which township you have a valuable connection, I beg to make the suggestion that it would be well worth your while to ally yourself still more closely with the town, and thereby strengthen your position in the minds of its people, by making a considerable contribution to our Warship Week. As you will, no doubt, remember this town was last year the national record breaker with a contribution of £56 per head of its population, and that it therefore received, and will receive again, heavy local and national publicity. Important contributions to the effort are most widely reported, and I feel therefore that even from an advertising point of view it would be a wise gesture to make an outstanding contribution to the Week. I trust that you will be good enough to bring this suggestion before your directors, and in anticipation, I thank them for a most favourable response. One firm wrote to me asking whether it was right, instead of urging the local people honestly to invest their savings in a local campaign, that there should be this waste of paper and postage on people in other parts of the country. They said they had no special business connections in this town, and that the town had no claim whatever on them to invest their savings in that district.

Then we have the "boloney" of auction sales where a patriotic man pays perhaps £1,000 for a case of whisky and gets his publicity. Some person, or a commercial concern which puts the cost down to prestige advertising, puts up the article to be sold; the buyer makes an investment of £1,000 at 3 per cent, and gets his whisky for nothing, and thousands of deluded people are under the impression that £1,000 has been saved. Probably the buyer sold a security or Government stock to get the £1,000. I have had indignant letters from chairmen of local savings' associations telling me that I am wicked because I have been saying that it does not help the country at all to sell £1,000 worth of shares and invest the money in War Bonds. Of course it does a good turn to the broker, who perhaps needs help, but that is all there is to it.

The fact is that the vast majority of people in this country have only the most elementary knowledge of these economic matters. They do not understand that money is not wealth, or what bank money is, or the difference between genuine savings, new money, and these fictitious savings of which I have given an example. They only think in totals. I am sorry to say they have been encouraged to think in totals by the War Savings Group. They do not understand that a greater service is done to the country by a child who gives up its consumption of sweets, of 6d. a week, than is done by a constituent of mine who proudly told me she had taken £100 out of the Post Office to buy guns by investing the money in War Savings Certificates.

I expect it will be said that, though these examples are true, they do not bear much reality to the total effort and that they are rather like the girl who had a baby in rather unfortunate circumstances and said it was only a little one. It is impossible to prove statistically what the real effect of this deception is on the genuine small saver. The authorities tell us that it actually stimulates the small saver to be told that the target is practically already achieved when in fact nothing of the kind has happened. Why this should be so I have never understood, and in my experience it does nothing of the sort. The fundamental objection to these practices is deeper than the mere question whether it stimulates the saver. They do harm to the root of an important and delicate plant which has its root in Government and whose branches extend over public opinion. The question of the public relations aspect of Government and Parliament in the broadest sense is one of the great and important questions which face us at present. It is of the utmost importance for the future of the democratic method that the Government, and bodies allied to the Government, should never be open to the charge that they have misled public opinion. It is essential that the public should be forced to understand the facts of these problems, and in no aspect of our national life are these facts more important than in the economic sphere. They are problems of great complexity and we are going to be confronted with them for many years.

In the particular case of saving, the important point to get across to the public is that the object of this campaign is to reduce consumption, and that is the only object, and it has not necessarily the slightest connection between the reduction of consumption and the grand total. That is the fact which the public do not understand, and I intend to do my utmost to get it across. But they are quite capable of understanding the point if it is put in a direct and simple manner. The public are not allergic to these facts. They want to know all about them if only they are put up to them in a simple straightforward manner. "The Economist" commented last week on the "Salute the Soldier" Campaign. It said: The object of the whole proceeding cannot be insisted upon too often. It is to persuade people to consume less, and the degree of success attained will have no ascertainable relation to the £165,000,000 collected. It is impossible to avoid the reflection that this result would be better attained by methods more direct, less ambiguous and less charged with pure illusion. I have raised this matter not only in order to draw attention to certain abuses but also in order to make constructive suggestions for the future. I do not believe it is enough to point out a defect. One has to suggest some remedy and some improvement. I suggest that it may very well be that the peak of the war effort and the National Savings Movement has been reached. The national savings movement has done its most important work. It has had its second front but it certainly cannot relax. A greater and harder task is awaiting it. It has to face up to the problem of persuading people not to cash in all their savings directly the last shot is fired. Its task is so important that I deplore that thousands of people have been led to believe that their savings will buy weapons of war, I emphasise the word "buy." I hope my right hon. Friend will not tell me that only a very few people believe it, because you need not go far from Westminster to find people who are still under that delusion.

Obviously, if people think that tanks, guns and aircraft are no longer needed, they will say, "What is the use of any more savings?" With the end of hostilities there will be great pressure from ignorant people, some from cunning and selfish people, for the removal of controls. There will be chaos if this removal is not carried out with circumspection, and an inflationary situation already endemic will burst into an epidemic. As controls are removed the Savings Association can be one of our chief bulwarks against the uncontrolled spending of the people. The people who matter in the Savings Movement are the little people, the street groups and the factory groups. The big commercial concerns can always be influenced by the Governor of the Bank who has his own peculiar relationship with the Treasury.

How is the Savings Movement to set about this task? In my judgment it can only succeed if it makes up its mind that it will become the chief semi-official organ for the education of the public in the real meaning of the word "inflation," the Treasury and the Ministry of Information helping in every way they can. There must be talks on the B.B.C., films, posters, leaflets and pamphlets explaining in simple, accurate and imaginative terms exactly what is involved in the dangers of inflation and the relation between the supply of money, the supply of goods, the price level and the value of money. We must not be afraid to recognise that the only purpose of saving is for future spending, but we must also distinguish between foolish spending and wise spending in terms of time, quality and quantity. One of the great dangers which face democracy in this country is the fact that to an ever increasing extent our social and political problems must be studied, planned and judged within an economic framework. Yet the electorate is lamentably ignorant of the indisputable facts of the economic situation. I believe that the Treasury is beginning to recognise this fact and the importance of this aspect of education for citizenship at the higher level. But much more needs to be done. In this great work the men and women of the National Savings Movement have a great part to play, and I want it to go out from this House that Parliament will hold up their hands in this matter. Above all, I say to the National Savings Movement, "Do not be afraid of being brutally honest with the people. Always base the whole of your propaganda on the truth, and nothing but the truth, because the public can take it."

The Financial Secretary to the Treasury (Mr. Assheton)

When my hon. and gallant Friend gave notice that he was going to raise a question in connection with war savings, I assumed that he was going to ask me to deal specifically with the question of a certain abuse to which he referred in his Question. He has gone rather wider than that subject, and I will do my best in the limited time at my disposal to deal with some of the points he has raised.

I must in justice to the Treasury, to the Board of Inland Revenue and to the National Savings Groups deal with the particular abuse to which my hon. Friend referred in his Question. He suggested that since the employers made a contribution towards the savings made by their employees, there was in certain circumstances liable to be an abuse. It is true that an employer is allowed as an expense for tax purposes any reasonable expenditure which he incurred on the welfare of his employees. A contribution to the employees' own purchases of Savings Certificates counts as welfare expenditure. This practice has been criticised not only by my hon. and gallant Friend the Member for Ormskirk (Commander King-Hall) but also by hon. Members who have asked Questions about it and have written to the Chancellor and to myself. The main grounds of objection put forward were two. One was that there was a widespread abuse of this scheme, because employees were in the habit of cashing their certificates immediately. The second one which he made to-day was that, with the Excess Profits Tax at 100 per cent., the employer's contribution could be made, in effect and in certain circumstances, entirely at the expense of the Chancellor of the Exchequer.

In regard to the first objection we made some inquiries and, as a result, I am glad to be able to say that there is no good evidence that there is widespread abuse of this character. It may be that there are exceptions, and I regret them, but there is certainly no widespread abuse. We confirmed this conclusion by taking certain tests, with the collaboration of certain large firms, and they have confirmed what I believed, that the amount of cashing of these certificates for such purposes is in fact negligible. As regards the second objection, it is true that those contributions are made to some extent at the cost of the State, but one must not overlook the fact that the employer will be entitled at the end of the war to 20 per cent. of the Excess Profits Tax, and, therefore, it is not entirely at the cost of the State. None the less, it is a point which one must take into account. It is not reasonable to imagine that employers would, as a general rule, be indifferent to the amounts of their expenditure under schemes of this kind, since, after all, they will not wish to arouse unfounded expectations of what they will be prepared to do when the tax comes to an end, and, as they know quite well, the Savings Movement will not come to an end after the war but will be needed, just as it is needed to-day.

It was implied in the questions of my hon. Friend that in many cases the employers contribute as much as 50 per cent. of the cost of Savings Certificates bought by their employees. If that were true, it would be a serious matter, but, in fact, no case is known of continuing contributions by an employer on that scale. The facts, so far as I can make out, are these: Any contribution from the employer is the exception rather than the rule. I have some figures here which are not uninteresting. They show that there are 85,000 savings groups in places of employment. Of these, only 1½ per cent. provide for any financial assistance by employers for stimulating savings, and in many cases the assistance takes the form of prizes in savings competitions and not of continuing contributions at all. Secondly, when there is a contribution, it is generally confined to 6d. or 1s. per certificate, and the certificate costs 15s. There is on record one case of an employer paying half the cost of his employees' certificates, but that was limited to a maximum of five certificates per employee.

The war has seen a great development of these savings facilities made by employers, and we are glad to see them. Employers have been very good in giving their assistance, the time of their clerical staff and rooms on their premises for all this work. In some cases they even employ a full-time organiser. These are really the most important and useful ways in which employers are helping the cause of savings among their employees. Some of them offer financial assistance, though, as I have said, this is not a usual practice. Where it is found, the scale of contribution is generally modest. There is no question of interfering with bona fide measures of employers for the welfare of their workpeople, or of depriving them of any benefits as regards tax to which they may be entitled under the law.

On the other hand, from the point of view of savings policy, I recognise that it is undesirable that savings schemes should be encouraged which contain any substantial element of financial assistance by employers. I recognise that such schemes lead to invidious comparisons of the savings of the persons employed as between one firm and another, and that is undesirable. They also give an artificial stimulus to saving in wartime which will make it difficult to carry on savings in industry after the war. A hard-and-fast rule cannot be laid down, but in general I suggest that the employer's contribution, if made at all, should be kept as small as possible, and that it would be difficult to regard as reasonable a contribution in excess of 10 per cent. of the employee's outlay on savings, and I should like to tell my hon. and gallant Friend that the National Savings Committee entirely subscribe to this view. I hope he feels that that meets the criticism he has made on that score.

With regard to a number of the other points my hon. and gallant Friend has raised, I would like to say this to begin with. I quite agree that these savings weeks reflect subscriptions from big subscribers—from banks, insurance companies and so on—as well as from small subscribers. But the published results of the subscriptions in these weeks show that, in fact, small savings represent a very creditable proportion indeed of the total. The balance, of course, is made up by these big contributions made by banks, insurance companies, building societies and so on. But we want the subscriptions from the big subscriber as well as from the small subscriber. We want the banks, insurance companies, building societies, etc., to make their contribution. [An HON. MEMBER: "Why?"] And it is very reasonable that a bank that has branches in towns throughout the country should be in a position to make a contribution in the various towns in which it does its business and earns its profits. It will help the stability of our financial position after the war if we have as much money as possible put into loans which have not a short currency, which have a longer currency. My hon. and gallant Friend suggested there were some who thought it would be desirable for all the money to be left on deposit, and that then the Treasury might one way or other find means of using it at a lower rate of interest. Our problems immediately after the war will be very difficult, and we do not want to pile up a large floating debt, because that will mean a large volume of obligations repayable by the State at very short notice.

Mr. Moelwyn Hughes (Carmarthen)

The time is getting very near the end. The really major question put by my hon. and gallant Friend was, Is it not time that the country should be told that it does not matter what is collected in these savings weeks, and it makes no difference to the equipment provided for our Armed Forces?

Mr. Assheton

I do not think that is the way I should like to put it at all. Of course there is a great deal of truth in the economic argument which my hon. and gallant Friend put forward, and I entirely appreciate his point. We want to let the people of this country understand the real underlying significance of the Savings Movement. It may be that on various occasions speakers who have made speeches at war savings meetings and so on may have used arguments which I for one would not have used. It is a very large organisation. A very large number of people have been drawn into it, and we are all extremely grateful to them for the enormous and valuable assistance they have given us. I think the House recognises that as time has gone on the sort of propaganda which has been put out by the War Savings Movement has in fact improved throughout, and I suggest that the propaganda we are putting out today is probably better than it has ever been in the past. This is a matter of education and we have got to pursue the policy of educating the public on these financial matters, steadily, throughout the years. I agree that when the war comes to an end the need for savings will be as great as ever, and it will be valuable if the community can have been aroused to the necessity for these savings by the wisest possible propaganda during the period of the war.

It being the hour appointed for the Adjournment of the House, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order, till Tuesday next, Pursuant to the Resolution of the House this day.