CLAUSE 18.—(Provisions as to investment by registered societies and certain other bodies.) (Hansard, 9 April 1948)

§ Mr. Speaker
An Amendment similar to the next Amendment in page 14, line 29 was discussed in Committee. I do not know, but perhaps there is some slightly different point in this Amendment.

§ Sir D. Maxwell Fyfe
Perhaps I may say a word on the point that you have raised, Mr. Speaker. The Amendment which was discussed at some length in Committee had regard to investments with the National Debt Commissioners. The Amendment dealing with the Post Office Savings Bank was not called. It is the slightly different aspect of the matter dealing with savings banks that we wish to discuss today.

§ Mr. Molson
I beg to move, in page 14, line 29, at the end to insert: Provided always that any such sums so invested by any such society or body at the date of the passing of this Act in either the Post Office Savings Bank or any bank certified under the Trustees Savings Bank Act, 1863, may throughout remain so invested in any such bank or banks at the option of the said society or body at the rate of interest normally allowed by any such bank. Under the law as it exists at present, friendly societies are in a privileged position as regards the investment of their funds both with the National Debt Commissioners and with the trustee savings banks. It was decided by the Committee upstairs that the specially privileged position of the friendly societies must be brought to an end, but it seems to us that when these societies have enjoyed this privilege for a long period of time, and when there is no real reason for ending it completely, some licence should be granted to them. We are, therefore, moving this Amendment in order that friendly societies may continue to leave with the Post Office Savings Bank or any bank certified under the Trustee Savings Bank Act, 1863, such funds as they have there at the present time or any lesser amount, provided that they pay the rate of interest normally allowed by any such bank.
All we are asking is that these bodies, which in the past have been specially 563 encouraged by the legislation of this House, shall continue for the future to be entitled to use the Post Office Savings Bank and the Trustee Savings Banks as though they were ordinary customers, and that, provided that they do not expect to receive a rate of interest exceeding that normally allowed by any such bank, they shall continue to enjoy that privilege. We do not think there is any reason why these societies should suddenly be required to withdraw their balances from these banks provided that they do not expect to receive a higher rate of interest than that which is normally paid to customers.

§ Sir Arthur Salter (Oxford University)
I support this Amendment. All of us realised, after the argument on the general provisions with regard to these investments made by the Attorney-General on Second Reading, that the Government had an overwhelmingly strong case for terminating, the privileges of the friendly societies in the form in which they have hitherto existed, but what we are now proposing is a very modest concession and one which I should have thought every Member of this House would have realised was no more than justice, having regard to the past history of this business. We are not asking that the friendly societies should continue to have the privilege of investing new money as in the past under what would now be preferential conditions, nor that they should be able to run in and out, using these investments as investments on call and able to withdraw them and re-invest. This proposal is a modest one, and I very much hope that the Government will make this small concession.

§ Mr. Glenvil Hall
I must ask the House to resist this Amendment because it is possible that the hon. Member who moved it is not fully conversant with what has actually happened in regard to money deposited in the Post Office, principally in the Trustee Savings Bank. Under the statutory rule and order dealing with this matter, one can deposit £500 a year up to an aggregate limit of £2,000. In administering this order, the National Debt Commissioners have waived these limits in the case of deposits by friendly societies in savings banks to the extent of allowing such deposits up 564 to an aggregate of £20,000 by each society in a bank. Many societies have, however, more than £20,000 on deposit, and it is not the intention of this Bill, or of the National Debt Commissioners, to request any friendly society which has money deposited up to or above the limit, to withdraw it if that amount was deposited before the statutory rule and order came into operation.
What we do say, and what I think the House on reflection will think is fair, is that those who obeyed the law and did not put in any more after the statutory rule and order came into operation, should not be penalised as against those who disregarded the order and went on putting money into the Trustee Savings Bank afterwards. So the situation is this, that those who have deposited money, even if the amount is above the limit of £20,000, will be allowed to leave it there if they are so minded, provided that the money was put there before this order took effect. Those, however, who have put in money in excess of the permitted amount after the order came into operation, have been asked to withdraw it. Some have done so already, others have not, and we do not want to allow the delinquent to get away with it if we can help it. I hope, therefore, that the House will reject this Amendment.

§ Sir D. Maxwell Fyfe
We want to get this position clear and, as the right hon. Gentleman has mentioned the statutory rule and order I presume that he is referring to No. 1790 of 1946?

§ Sir D. Maxwell Fyfe
The difficulty I find in the argument there is that, under that statutory rule and order, it was provided that the limitation should not apply to deposits made with the approval of the National Debt Commissioners, and that in turn the National Debt Commissioners could look at deposits made by friendly societies or societies registered under the Industrial and Provident Societies Act, 1893. The effect of that is that the National Debt Commissioners could make a limitation and have, in fact, made a limitation with regard to the friendly societies, but they have not made any similar limitation on societies registered under the Industrial and Provident Societies Act, 1893, such as the Co-operative societies.
565 Therefore one is in the difficulty which, I suggest, it is easy to get into when these alterations are made by subsidiary legislation of this kind. I would ask the right hon. Gentleman to reconsider the limit that has been suggested, and to see whether he could not strike a limit which would be acceptable generally. I suggest £50,000 for an overall figure for a friendly society and £20,000 for any branch of that society. Here, as my right hon. Friend the Senior Burgess for Oxford University (Sir A. Salter) has pointed out, we have a right that has existed for 55 years. We are not asking that that right should continue, but merely that moneys invested in pursuance of that right should be allowed to continue.
The right hon. Gentleman's point simply comes to this, that, having inserted in the statutory rule and order the necessity for the approval of the National Debt Commissioners, he desires to make that the deadline of the permitted investments. I ask him once again to consider this on the broader line that these societies have not only been recognised, but encouraged by Parliament in the past, because they were voluntary associations which existed to encourage the people to save. We have tried, and failed, on the major point of the National Debt Commissioners. I ask the right hon. Gentleman to reconsider the matter, which affects savings banks only, and, as far as I can see, has not any resultant difficulty for His Majesty's Government or their financial policy such as he indicated in Committee. I ask him, in view of what I hope is the very reasonable line the Opposition have taken, whether he could not give this matter some further consideration to see whether a more liberal limit might be fixed.

§ Mr. O. Poole
Could the right hon. Gentleman enlighten me on a very important point which he raised in his speech? It was entirely new to me that some societies had actually deposited money in contravention of the statutory rule and order. Can the right hon. Gentleman explain how it was possible for that to be done? How was it possible that these payments could be made, if in fact it was illegal under this statutory rule and order? The right hon. Gentleman used the word "delinquents." No one on this side of the House would wish to encourage any society, or anyone else, to get away with something which was illegal. When he uses language as strong 566 as that, it would be helpful if he would explain the transaction which occurred.

§ Mr. Glenvil Hall
That is exactly what occurred. I have a high regard for the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) and I am astonished that he should want to give legal sanction to what was in fact a contravention of a statutory rule and order. In reply, I can only repeat what I have said. The National Debt Commissioners laid down rules that societies of this kind should be able to deposit sums up to an aggregate of £20,000. Some exceeded that amount and no one said anything about it.

§ Mr. Glenvil Hall
May I finish this point? In the past some deposited more than £20,000. It was not a very serious offence, and these people are to be allowed to leave what they have deposited up to a given date. In November, 1946, a new statutory rule and order was passed, and came into force, and the National Debt Commissioners are strictly enforcing it. Where more than £20,000 was deposited before November, 1946, it will be allowed to remain, but where more than £20,000 has been deposited since that date, we are asking for the excess to be withdrawn. In some cases it already has been done, in others we are asking those concerned that it should be done.

§ Mr. O. Poole
May I interrupt the right hon. Gentleman? He will appreciate that I must interrupt him, otherwise I shall have to ask leave to speak again. He said that nothing was said about it at the time. Surely that means that it was in fact accepted, and therefore it is not right for the right hon. Gentleman to say that these people are delinquents.

§ Mr. Glenvil Hall
I did not call them delinquents. The delinquents are those who have contrived to put money in after the statutory rule and order came into force. It is that money we are asking them to take out.

§ Mr. Molson
I would ask leave of the House to ask the Financial Secretary about something which I understood him to say in his last speech. We on this side of the House had no intention when we moved this Amendment to seek ex post facto to authorise and legalise the de- 567 positing of sums in excess of what was legally permitted to be deposited at that time. What the Financial Secretary said this afternoon was the first I knew of the point. Our purpose was merely to allow these friendly societies to continue to deposit at the normal rate of interest what they had legally deposited with the Trustee Savings Banks. Under this Bill as I understand it, when it becomes law, it will be possible for them to be called upon to withdraw what is at present legally deposited. I understood the Financial Secretary to give an assurance that they will not be required to withdraw anything which they are at present legally depositing with the Trustee Savings Banks, and that the withdrawals which they are being required to make apply only to what was in excess of the legal deposits at the present time?

§ Mr. Glenvil Hall
In excess of the £20,000, or such sum as they may have there, even though it was in excess of £20,000, on the date of the coming into force of Statutory Rule and Order 1790.

§ Mr. Molson
They are not to be required to withdraw that?

§ Sir A. Salter
They will not be required to withdraw anything at all if it has been legally deposited? Is that the present intention or is it the effect of the provision of that Act?

§ Mr. Glenvil Hall
We are using the word "legally" rather loosely because some may consider the limit was £20,000, and anything desposited in excess of that was illegal. I prefer to put it this way. Up to November, 1946, friendly societies were allowed to deposit in excess of the £20,000 limit which was laid down. In November, 1946, it was decided strictly to enforce the limit. Those who had more than £20,000 are to be allowed to leave it there, if they wish, but those who, after November, 1946, in spite of the fact that they knew that the limit was to be strictly enforced, put extra sums in, should, we think, be asked to withdraw them.

§ Mr. Marlowe
I do not think that the right hon. Gentleman has dealt quite fairly with the point. As I understand it, he is now insisting on resisting the Amendment, because of the persons he referred to as "delinquents." I gather 568 he means those who have deposited excessive sums since the statutory rule and order came into force in November, 1946. They are what he refers to as delinquents, and merely because there have been these delinquents he is going to penalise those who are not delinquents, and who deposited cash before 1946.

§ Mr. Glenvil Hall
Only the delinquents.

§ Mr. Marlowe
I do not think so. I think it requires the acceptance of this Amendment in order to protect what I would describe as non-delinquents. The right hon. Gentleman has referred to the statutory rule and order of 1946. Will the right hon. Gentleman tell us under what authority that statutory rule and order was made? I am not at all sure that there was proper authority for it. Perhaps the right hon. Gentleman could satisfy us on that point. My final word is that there is an unfair discrimination against the friendly societies as compared with the Co-operative societies. We are not unaccustomed to hon. and right hon. Gentlemen opposite breaking their pledges with regard to friendly societies. The Parliamentary Secretary to the Minister of Civil Aviation has done that—

§ Mr. Mack
On a point of Order. Hon. Members opposite are indulging, with irritating insistence, in the reiteration of trivialities. To stop this tautology, in view of the fact that we hope to get the Third Reading of this Bill before four o'clock, would it be possible for you to call them to Order?

§ Mr. Speaker
The hon. and learned Member for Brighton (Mr. Marlowe) was in Order.

§ Mr. Marlowe
I am trying to get some genuine information. This is only the second occasion today on which I have intervened in this Debate, and I cannot really understand why my remarks should be described at tautological. The position is that there is an unfair discrimination, as I see it, between friendly societies and Co-operative societies. Is the right hon. Gentleman prepared to say that the limitation which has been placed on friendly societies will be placed on Co-operative societies? If not, I am bound to reiterate that this amounts to unfair discrimination.

§ Mr. Glenvil Hall
I should have thought that it was evident that the Co-operative societies get no advantage whatever over any friendly society. Not only do they not get that, but I should imagine that they have very little reason to use the Post Office or Trustee Savings Bank at all They have their own bank. Apart from that, if they do use them, they get no advantage whatever. I can give a categorical denial to the assertion, if it is made, that they do.

§ Mr. Marlowe
Will the right lion Gentleman answer my point about the statutory rule and order?

§ Mr. Molson
Since I understand that the Financial Secretary has given an assurance that, broadly speaking, what was the purpose of my Amendment will be applied administratively, and that the power to compel these friendly societies to withdraw their deposits will apply only to what ought not to have been deposited, I beg to ask leave to withdraw the Amendment.