§ Order for Second Reading read.
§ 3.28 p.m.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
I beg to move, "That the Bill be now read a Second time."
The principal object of this Bill is to amend the law relating to the practice of collecting premiums for insurance against funeral expenses. This practice is, of course, a very old one and now a very extensive one. It is, I suppose, rooted in the fear which has overshadowed the lives of the poor for many generations that unless some sort of provision of this kind is made, they may be buried by the parish, which to thousands of people is the last and unforgivable disgrace. For many years, therefore, in fact for over a century, this kind of assurance, known as industrial assurance, has been carried on partly by companies and partly by friendly societies. I have here a few figures which show its extent. They are not, I am afraid, up-to-date figures but they are sufficiently up-to-date to give the House some idea of the size of the things with which this Bill deals.
In 1939 there were 103 million policies of industrial assurance in force—more than 2¼ policies for every man, woman and child in Britain. The sums assured amounted to £1,668 million and the assurance funds to £455 million. The amount paid in claims on death was £24 million, and the amount paid in claims on maturity was nearly £11½ million. The premiums received—and I would like the House to note this—were over £74 million, and this £74 million was built up of pennies, sixpences and shillings collected, for the most part, week by week from a large proportion of the households in Britain. The magnitude of this type of business, therefore, should not be underestimated.
Before I go any further, I should perhaps explain that what we mean by industrial assurance, as distinct from ordinary assurance, is that form of assurance in which the premiums are collected at intervals of less than two months. 1476 Normally they are collected weekly and often the amount that passes is little more than a few pence. It will be readily realised that freedom for any individual to insure another in this direction has its dangers, especially where the life covered is that of a small child. Parliament has therefore thought it necessary from time to time to regulate the work of those engaged in this type of activity, and the regulations are embodied in a number of Acts of Parliament. Some think that this regulation has not gone far enough, as those of us who were in the House with the late Sir Arnold Wilson and remember some of his speeches, or writings, will remember. He and others were stern critics of some of the methods employed by certain organisations engaged in this form of activity.
Be that as it may, I must make it clear that the main purpose of this Measure is not to meet the criticisms which have been made, although, incidentally, some of them, I hope, will be dealt with by some of the provisions of this Bill. Its chief object is to bring certain kinds of industrial assurance into line with the provisions of the National Insurance Act, 1946. Under that Measure, a death grant is among the benefits which will be paid to those who satisfy the necessary contribution conditions. That Act will not come into full operation yet. Some of its provisions will come into operation on 5th July next, and others, the payment of the death grant in particular, will not do so until a year later. The death benefit is a grant to meet funeral expenses, and the rules under which it can be paid are laid down in Section 22 of the Act.
In ordinary life assurance a man is not normally regarded as having an insurable interest in anyone but his own wife and, of course, himself. In industrial assurance, on the other hand, it is lawful to insure the funeral expenses of a parent, grandparent, child, or grandchild, or even a brother or sister. Offices concerned have construed this power as enabling them to insure any of those categories for an amount that would be reasonable to cover funeral expenses, and to pay that sum to the policyholder on proof of death of the life assured, without further inquiry as to whether the amount handed over would or would not be expended on funeral expenses. I am sure the, right hon. and learned Member for 1477 West Derby (Sir D. Maxwell Fyfe) will know that there are weighty grounds for doubting whether the offices in so proceeding are not exceeding their powers. Perhaps, unfortunately, the matter has never been tested in the courts, and it would not be profitable for me to go into the legal arguments for and against, upon which this doubt is based. I hope that it is sufficient for me to say that it exists, and has never been resolved. What is important is that, if the doubt does exist now, it will increase to a greater degree when the National Insurance Act, 1946, takes effect. It is time that Parliament took cognisance of this matter and put it right.
The second reason for legislation is to maintain the limits on the sums payable on the death of children under the age of 10. These amounts, for obvious reasons, have been strictly limited up to now, whether the insurance was taken out by a parent, or in the name of the child insured. The limits at present are £6 payable on the death of a child up to three, £10 on a child dying under the age of six, and £15 when a child dies under the age of TO. These ages and amounts are embodied in the Act of 1946. From 5th July, 1949, death grants up to those amounts will be payable under the Act, subject of course to the conditions governing the contributions, and they will be paid on the death of children born on or after 5th July this year. Consequently, there will no longer be room for a voluntary insurance in these cases, unless it is the will of Parliament that insurance of this kind should be allowed on a voluntary basis in order to bring in a higher amount than the maximum that Parliament has in the past thought allowable.
As to the form of approach which the Bill makes to this matter, Clause r terminates all existing powers of industrial assurance offices and friendly societies to insure for funeral expenses. We have wiped the slate clean in Clause r. The date when these powers cease will be 5th July, 1949. The cessation of these powers will not prejudice in any way any insurances effected while the powers are in force. Having wiped the slate clean, the question arises what powers, if any, should we give to friendly societies and offices engaged in this type of assurance for the future? What relatives, for example, should be insur- 1478 able, and for how much? The Government think that as only one death grant will be payable on a death, and as more than one person in a family may be involved in expenses connected with the funeral, it is reasonable that a limited amount of extra voluntary insurance shall be permissible. For example, although I am glad to think that mourning clothes as such are gradually going out of fashion, nevertheless, some people still desire to wear them, and even if they do not go into mourning in the old fashioned way, other expenses are incurred, such as travelling to the funeral, loss of wages for attending the funeral, and so on.
Therefore the Government feel that a certain amount of voluntary insurance should be allowed in addition to the one death grant, which is payable when a death occurs. That being so, it would be logical to restrict these insurances to the contingency of the policyholder surviving the life assured, but I am told that, if we tried to enact such a provision there would be considerable difficulties in carrying it out. We have cast about to see how we can achieve much the same effect in some other way. We hope to achieve the same result by restricting the "life of another" insurance, apart from that of husband and wife, to the relationships where the life assured belongs to an older generation than that of the proposer. We therefore propose that these policies should be confined to the insurance of parents, step-parents and grandparents. That wipes out the right which now exists to insure children, or brothers and sisters.
We also propose to limit the amount receivable under such insurance to £15 exclusive of bonuses, except, of course, of guaranteed bonuses. In order that there shall be no misunderstanding, I will give an example of what the Bill seeks to do—
§ Mr. Bowles (Nuneaton)
My right hon. Friend mentions step-parents. I do not see it clearly stated in the Clause. Is there some definition of a parent, including a step-parent?
§ Mr. Glenvil Hall
I understand that the Bill does include step-parents. That is a Committee point, and we will look into it again, but when we were discussing the measure in the Department I was 1479 given to understand that parent included step-parent.
May I give an example of how this will work? Supposing there are two brothers A and B, who have a father C. if A insures in two different offices the life of his father for £10 in each case, he would clearly be going outside the scope of this Bill. His total insurance money, which he would receive on the death of his father, would be £20, whereas we propose £15 as a limit. There is nothing in the Bill to prevent, and we do not propose to prevent, brother B from also insuring his father so long as neither of them insures above the limit of £15 which is laid down.
These policies are not to be assigned, but we make one proviso in that direction. It is possible that a man may take out a policy on the life of his parent and find that, through falling out of work or for some other reason, he cannot keep up the premiums. If he cannot do that and no provision is made to assist him, he will lose the premiums which he has already paid. Therefore we provide in the Bill that where a case of that kind occurs, although the policy may not be generally assignable, it shall be lawful for it to be assignable up to the limit of any premiums which have been paid by someone else on behalf of the policy holder.
In wiping the slate clean in Clause r, we also destroy the rights of a friendly society to insure a member's husband or wife for funeral expenses, but we have no desire to do that. Therefore, in Clause 3 we put this power back without limit, other than that applying generally to insurances by friendly societies. When my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) was Chancellor of the Exchequer, he was pressed to increase the gross sum for which a registered friendly society might insure. He then indicated that in his view a case had been made out, and that he would see what could be done. He thought, and I think the House will agree, that this was a reasonable request. The £300 which is now the limit was laid down in 1908, when the value of money was different from what it is now. It did appear to him, therefore, and I hope it will be agreed by the House, that some higher limit is desirable.
§ Sir Arthur Salter (Oxford University)
Does that change have any effect on the 1480 Income Tax liabilities of the societies in question?
§ Mr. Glenvil Hall
If the right hon. Gentleman had waited, I should have reached that point in a few minutes. The query is pertinent and I will deal with it. I was, about to say that the £300 limit has been increased to £500 in Clause 5 of the Bill. As the right hon. Gentleman has said, this change has its repercussions. A friendly society must be debarred, either by statute or by its own rules, from insuring for more than £300 if it desires to have exemption from Income Tax. Clause 5 of the Bill as drafted does nothing to increase the limit of that exemption. This has caused some misunderstanding, and I believe that circular letters have been sent to every Member of Parliament on the matter. It has been argued in that circular letter that the Government intend to rob friendly societies of the rights of exemption which they now enjoy. This, of course, is not true. The reason why the exemption has not been raised in this Bill is that this is not the place to do it. It has to be done in a Finance Bill. It has all along been the intention of the Chancellor of the Exchequer, when the next Finance Bill is put before the House, to include therein a provision to grant exemption from Income Tax up to the new limit of £500. Meanwhile, to set all doubts at rest I propose, when we reach the Committee stage of this Bill, to move an Amendment on behalf of the Government declaring that Clause 5 and the increase in the limits there set forth, shall not come into operation until the next Finance Bill containing the new limits also begins to operate.
Another provision of the Bill which has aroused some criticism is that which prevents the right of registered societies to invest with the National Debt Commissioners at 2¾ per cent., and provides for the repayment of the money so invested. Here again I believe that Members of Parliament have been circularised by certain organisations on the grounds that this is an unfair provision and one which will hit friendly societies very hard. The continuance of this right for money to be at call would be inconsistent with the cheap money policy of the Government. We had no desire whatever to injure friendly societies when we made this pro 1481 vision. As a matter of fact, the amount of money deposited in this way with the National Debt Commissioners is a relatively small sum. It amounts to little more than £7 million, and 90 per cent. of that is owned by one friendly society. As for the provision that this money will be repaid, the Government have no intention of being at all stringent or unreasonable, and the money will be repaid over a period of 3½ years. At the present moment those who have this money at call can withdraw it at very short notice, at the most three or four days. At 2¾ per cent. that represents an advantage to those who have invested their money in this way. There is no reason why the burden and expense of this should continue to be borne by the taxpayer at large.
The Bill also makes a number of minor changes which, with the permission of the House, I will not elaborate now. Some of them will undoubtedly be dealt with in the Committee, and also in the present Debate. If any of them are raised, the Attorney-General will be happy to deal with them. Power is taken in this Bill to regulate the form and use of premium receipt books, about which there has been, in the minds of some agents, a great deal of misunderstanding, much of it quite unfounded. The delivery of policies and rules by registered societies, the audit of accounts and the manner in which that should take place, the preservation of the rights of members who go into the Services, and warranties as to statements made in good faith about the health of the life proposed and other matters are dealt with in the Bill. No doubt they will be touched upon during the Debate. We think that our suggestions are reasonable. Some of them are long overdue and none of them is oppressive. I hope that they will commend themselves to the House.
§ 4.0 p.m.
§ Major Sir David Maxwell Fyfe (Liverpool, West Derby)
I am sure that everyone in the House is grateful to the right hon. Gentleman for his lucid explanation of this Measure. Although at first sight the subject does not appear to be one of primary political importance, I think that those of us who are here realise how important it is in the day to day life of a large section of the community. Speaking on this point for the right hon. and learned Gentleman the Attorney-General 1482 as well as for myself, I would say that it is particularly interesting to those who spent their early working years in Liverpool where these forms of insurance are very popular. We have a great personal interest not only in the people who are insured but in those who carry on from day to day the work of making this great system run. I myself, if I may admit it, have the additional personal sympathy in that I am one of those distressful people who find it very difficult to save unless they put themselves under some form of compulsion. Therefore, I feel the importance it has for those who share my state of mind.
I should like to take up one or two of the points which the right hon. Gentleman has shown to he of importance and on which there may be some conflict of view. The first point I ask the House to consider is the exclusion of brothers and sisters from the provisions of insurance. I hope that hon. Members will not think that I am treating the matter at too great length if I indicate very shortly the background as I see it, because it seems relevant in considering this point. As the right hon. Gentleman mentioned, it was in 1909 that the right to issue policies of insurance for the purpose of ensuring money to be paid in funeral expenses was first given a legal basis by Section 36 of the Assurance Company Act of that year. Of course, it was well known—I think that it has been stated several times in this House—that before that time there were in force a large number of policies which were in fact "life of another" policies. But the provision of that Act was that the policy was not to be deemed void by reason only of the fact that the person effecting it had not an insurable interest in the life of the person assured.
I think that the Attorney-General would agree with me that in this context "insurable interest" is simply the happening of the event which will cause the person insured to incur liability. That is the material aspect of "insurance interest" which comes into this problem. I should like the Attorney-General to note and to remember the effective conditions of legislation under the Act of 1909. There were two. First, there was the existence of a bona fide expectation that he would incur expenses in connection with the death or funeral of the assured. Second, there was the fact that the sum assured should not be unreasonable for 1483 the purpose of meeting those expenses. These conditions were kept in the further statutory provisions of 1923 and 1929.
My information about how it worked in practice, like the right hon. Gentleman's, is not quite up to date, but it is current information. It is that most of the companies made the limit of £25 for parents, sons and daughters, and £15 for other permitted relatives, and that the average amount paid was £17 where the policy holder was a parent, son or daughter, and £10 for other relatives. Those are the individual amounts. The further figure which ought to be remembered is that the average total amount for each death was in the region of £30 to £35. I do not think that there will be any serious dispute that that is the range of figures with which we are dealing.
I am sure that everyone perceives that, when the State is paying £20 as death benefit, there will not be the same burden in connection with the payment for the funeral. But, of course, there will be the expenses which the right hon. Gentleman mentioned—apart from mourning—of travelling and the loss of earnings which undoubtedly are occasioned in many cases by going to the funeral. The difficulty I see is in making any distinction between these expenses, and their rightness, in the case of the death of a brother or sister, and expenses in the case of the death of somebody of an anterior generation, such as a parent or grandparent. I ask the right hon. Gentleman and his colleagues if they will consider that point. I am trying to approach the matter dispassionately bearing in mind the history of how this legislation came into being. If we are to consider the realities of the matter—that is that people who can ill afford it are put to a certain amount of expense on these sorrowful occasions—then it seems to be right that there is a sound case for keeping in brothers and sisters.
I would like the Attorney-General to let us know the views which the Government have formed about how these limitations will work out in practice. One must try to envisage what will actually happen and what will be the circumstances of the people who are ex hypothesi not well off when they have to deal with this drawing of the amount limited to £15. If 1484 they have more than one policy in operation, which, as I understand it would take them over the £15, they would get their premiums back in respect of the other policies. That, of course, will require some machinery. What I am anxious about is that if—as I am sure they will—the offices found some clearing house machinery or some method of that kind for dealing with it, that will not be reflected on the insured in higher premiums, and equally that the insurer will not be met by delays. I am sure that all hon. Members will agree that there is nothing which is so worrying or so bad as people being met with delays just after a death in the house. They are mentally less fitted to deal with the matter at that time than they are at any other.
Therefore, I hoped that the Government might, by discussion with those administering this form of insurance, have found some system, like the death certificate system, which, as the right hon. Gentleman knows, is operated in the case of the limited child's policy which he put before us so clearly. Prior to that, the registrar put on the certificate the name of the company and the amount. I hoped something of that kind might be introduced in this case so that all that would happen is that the insured person would have to pay for the copy of the death certificate. It would then be very easy to work it out and prevent the very small number of cases—do not let us get them out of proportion, because it is a small number—where there is a possibility of fraud. I hope the right hon. and learned Gentleman may be able either to give us some guidance as to what would happen, or, at any rate, promise the House that that very practical point will receive consideration.
I hope that hon. Members will not consider my next point a Committee point, but it is one that has given me some worry. It is the question of the regulations under Clause 7, because there is power to make regulations. I hope again that the right hon. and learned Gentleman may be able to tell us either that these regulations will not apply, or that special provisions will be made to soften their application to existing policies. Otherwise, they may well provide very onerous, difficult and expensive administrative tasks for the 1485 offices, without any compensating advantage to the policy holder in the case of existing policies. In many cases they are working extremely well, and I view with certain apprehension the fact that they should not only be placed under statutory obligation, but be made criminally liable of creating an offence under Clause 13 (2) unless great alterations are made.
There is one other point which is complementary to the figures which the right hon. Gentleman has given, and I am sure he may like them to be before the House. He gave figures as to the quantity of insurance. My information, which is fairly recent, is that there has been a great reduction in the lapsing of policies during the last few years. In 1935 the percentage was 8.6; in 1940 that had come down to 5.2, and in 1945 to 2.4 I think that shows that one of the complaints which Sir William Beveridge and others have made with regard to this form of insurance has been met.
Sir D. Maxwell Fyfc
Obviously the hon. Lady has dealt with one aspect of it, but she will see that the figures I have given show a clear improvement from 1935. There is a clear improvement over a period of 10 years. In addition to the aspect which the hon. Lady mentioned, there is also the aspect that this form of insurance cannot now be said to be over-pushed at people, if the fact is taken into account that the lapsing is as low as 2.4 per cent.
§ Mr. Glenvil Hall
In order to help us, could the right hon. and learned Gentleman tell us whether the figures he gave cover the whole of this field, or only the policies issued by the friendly societies?
§ Sir D. Maxwell Fyfe
I understood the whole of the field. I will check that for the right hon. Gentleman, but that is my recollection.
§ Mr. Mack (Newcastle-under-Lyme)
The observation made by the hon. Member for the Exchange Division of Liverpool (Mrs. Braddock) was perfectly true. There has been an improvement, What I take it that the right hon. and learned Gentleman is trying to emphasise is that, over and above that, as a result of the efforts of all the offices to put their house in order, they 1486 have helped materially still further to reduce the lapses.
§ Sir D. Maxwell Fyfe
That was the point, and I think it is a fair one. Criticism of this form of insurance has been the number of lapses. It is when one finds a steady improvement in the number of lapses over a period of 10 years that one may fairly say that that particular criticism is much less well founded than it ever was. The other point which I think should, in fairness to those who conduct this form of insurance be placed before the House, is the question of the expense ratio. In 1920 it was 44.6 per cent.; in 1935, 33.2 per cent., and in 1945, 29.3 per cent. That is not taking into account the point which has so often been made that that is a very strict expense ratio in that it takes in Income Tax and dividends on the one side and does not take in the gross interest and add to it the premiums on the other side. That is the standard answer to it. Despite the fact of the greater service, we can see a very considerable and general reduction in the expense ratio.
§ Mr. Daines (East Ham, North)
The right hon. and learned Gentleman quoted the figure of 29.3 per cent. Is that for the whole of the industrial offices for expenses in 1945?
§ Sir D. Maxwell Fyfe
It is for a fair range of them. I am not sure it is every one, but it is at the same range in each case, and I think it is a pretty fair range. I will check that point and inform the hon. Gentleman.
§ Sir D. Maxwell Fyfe
That is my recollection. It may be taken as general. If it is not the absolute total, it is representative of the complete position.
With regard to the friendly societies, the main points which are for the consideration of the House are the increase in the benefit allowed to be paid on the death of a member, and the question of the investment. The right hon. Gentleman gave the friendly societies rather a fright by the original form of the Bill, because the fear was expressed, as he 1487 knows, that they were not going to apply Section 39 (1) of the Income Tax Act to the increased amount, but the Amendment which I see on the Order Paper deals with that position, and I am very glad to feel that the difficulty has been rectified. May I say this to the right hon. Gentleman? His former colleague, I understand, appreciated this problem and expressed his conversion to that view after lunching with one of the great societies which come from my part of the world, and the right hon. Gentleman was with him. May I only say that I hope that he, in turn, will lunch frequently and well, and that, every time he does so, there will be some improved result on the statute book?
Can the right hon. and learned Gentleman tell us the expense ratio of this particular office?
§ Sir D. Maxwell Fyfe
I could not tell the hon. Member that; I do not know how much it is, but I assure him that I was not suggesting that the lunch which the right hon. Gentleman obtained swelled the expense ratio so much that it brought it out of line.
The other point which I am afraid is not so satisfactory concerns Clause 16 and the question of the investments. I think it is only proper that the right hon. Gentleman should have this in mind. It is now a period of 52 years since this right was put in operation. Section 44 of the Act of 1896 gave them that right, and, as the Bill stands, it is possible for the National Debt Commissioners to force the friendly societies to withdraw at Short notice the £7 million which they have. There is also the position of the larger sums which they have with the Post Office and Trustee Saving Banks. The right hon. Gentleman has disclaimed any desire to hurt the friendly societies or to force them to any particular form of investment; at any rate, so I construe the speech which he has just delivered. In these circumstances, I have great difficulty in appreciating his argument why this right should be taken away. I could understand the argument—although, even put that way, I would not agree with it—that friendly societies should not be given the right to invest on a short-term basis at 2¼ per cent., or whatever it may be, when the 1488 Government can borrow elsewhere at a lesser amount, but I do not think that that is really the whole of the story.
These societies have been going for a number of years and have provided special encouragement to people to save and to let their thrift grow in this particular way. Therefore, even if it stood alone, the fact that they were on rare occasions given the chance to get 2¼ per cent. on short-term loans would not, in my view, be a matter which would worry me very much. As I understand the position, however, and it is certainly put quite clearly in the circular to which the right hon. Gentleman referred, the National Debt Commissioners are protected as regards withdrawals by societies, for, under Section 52 (6) of the Act of 1896, any society which withdraws money can be refused further investments by the Commissioners. In that case, it seems to me that the position of the National Debt Commissioners is secured, and the position is made quite clear that this cannot be utilised as a recurring practice.
I hope the right hon. Gentleman and his right hon. and learned Friend who is to reply will consider this matter again. The whole House appreciates that the case has been stated today with moderation, but, of course, it so very often happens that the case for a Bill is stated with moderation but the terms remain capable of immoderate use, and, therefore, I do not think we are being unreasonable if we ask for a reconsideration of that point. Generally, I am very glad that the position of the friendly societies has been dealt with, and that, on the Whole, subject to the point which I have made, their position has been maintained. When we look back into their history, we find that they are a unique institution in the world—unique to our own country. They have been copied in the Dominions, but, generally, it is our friendly societies which have shown this way to mutual assistance to many people with little money, and I believe that, looking back over their records, it is one of which they and the country can be proud.
I myself have never had the misgivings which some people have expressed with regard to this form of insurance, so long as there are these reasonable rules under which it operates. I have, all my life, known the agents who work it, both in my professional career, when I have sometimes acted for them and sometimes 1489 against them, and in the daily life of Liverpool, and I think they have done a good job over a long period. In saying that I shall advise my hon. Friends not to oppose this Bill. I would also like to send a message of good will to them and of good luck in their work.
§ 4.27 p.m.
§ Mr. Mack (Newcastle-under-Lyme)
It is quite a pleasure to follow two such moderate and closely-reasoned speeches, even though the two right hon. Gentlemen in question have not themselves the advantage of haying had practical personal experience of the business. As the House may know, I have been an insurance agent, as, indeed, have one or two of my hon. Friends, for a number of years, but, what is perhaps more pertinent, I speak now as the official representative of a considerable number of organised workers in the industry, and, I am sure, the House will be very anxious to know the reactions of the workers interested in this Bill.
While it is very difficult to give the exact number, there are about 65,000 of these workers, which is a fairly formidable figure, and my particular organisation, the National Amalgamated Union of Insurance Workers, has earned the reputation of being, perhaps, rather Left in its political attitude and somewhat vigorous in advocating for years the nationalisation of this business. I realise that this is not the subject under discussion now, but I want to say, in passing, to my right hon. Friend the Financial Secretary, greatly as I respect him—and he knows a great deal about this matter—that I will not be satisfied, nor will a great many people in this country be satisfied, unless and until the Government take over what is, after all, a very large business intimately affecting the whole population of this country.
§ Mr. Oliver Poole (Oswestry)
May I interrupt the hon. Gentleman on that point? He has claimed that there are 65,000 workers engaged in the industry, and he has claimed to represent a proportion of them. Would it not be right for him to make clear what is the approximate number of the 65,000 which he claims to represent?
§ Mr. Mack
I do not think that would have very much effect upon my argument, 1490 and I ought to say in answer to it that, unfortunately, the organised workers of this industry have been divided into quite a number of organisations, some of which, I regret to say, have been buttressed by the companies, and have been in the nature of house unions, but, from a strictly trade union point of view, I can claim to represent a fairly considerable proportion. I can even go further and say that, as far as my own sentiments in regard to this Bill are concerned, I represent a good number of those not actually in my own union, but who are in kindred organisations in the business.
I remember at one Labour Party Conference—I mention this because it shows that the party have never given much attention to this matter; they have been dismally and abysmally ignorant of its many aspects—a certain lady, the late Miss Mary Carlin, was asked to answer a case on behalf of the Executive. In a private conversation with that dear lady—and I hope I am saying nothing ungenerous or discourteous—she confessed to me that she knew very little about the subject. I took the opportunity to give her some advice, and offered to reconstruct her case, an offer which she readily accepted. Apparently, this alarming information got to the ears of other members of the Executive, and when I went into the conference chamber the following morning expecting to hear her make a case along the lines I had suggested, I found a very different point of view put up by the Labour Party. That showed that they were confused and divided on the subject.
What is the effect of this Bill on the organised worker? First, as my right hon. Friend said in his opening speech, it reduces the amount by which a child can insure a parent or a grandparent to £15. It prevents the insurance of children under 10. Of course, that is covered by the Bill of my right hon. Friend the Minister of National Insurance. It prevents the insurance of the brother by the sister, and vice versa. It takes away the right of the parent to insure the child, in the case of a child over 10, and the grandchild can no longer insure the grandparent. The agents in this business are already losing between 5s. and 20s. a week of the income they earn, as the result of operating the National Health part of the business. That is a very con- 1491 siderable loss to the agents, and for which they are to receive no compensation whatever.
Not only that; they have also to face the fact that when the Minister of National Insurance comes along in the middle of this year and asks for 4s., 5s., or 6s. a week from the average individual as a contribution to the great scheme which he is putting before the nation, that will reduce the amount that people would normally have available in tile ordinary way for additional insurance purposes, and will unfavourably affect the earnings of the agents. It is true that, in the case of the societies, the figure has been raised from £300 to £500, but, as the right hon. and learned Gentleman opposite will be aware, the real value of money today is so reduced that the purchasing power of £500 would be scarcely any more than that of the £300 before the war. After all, that is a very vital and important factor.
On the question of the insurance of the life of another, which is a very important part of this business, it is very difficult to say what proportion of an agent's earnings is accounted for by policies of that description. I have some very interesting figures here which were culled from page 267 of the Beveridge Report, in which a table is given showing the figures for 19 offices, excluding the Prudential and the Co-operative Insurance Society, in March, 1942. A child assuring a parent was discovered to account for 44 per cent. of all the new policies taken out at that time. A parent assuring a child was found to account for 5 per cent., a brother assuring a sister and a sister assuring a brother, taken together, 5½ per cent., and a grandchild assuring a grandparent, 2 per cent., making, in all, a total of over half the new third-party policies issued.
It is quite true that, under Clause 2 of this Bill, one is entitled to assure a parent up to a sum not exceeding £15, but a considerable amount of that 44 per cent. of policies, where the child assures a parent, would obviously have been for a sum exceeding £15. I have estimated, at a very rough computation—and here again it is very difficult to give the exact number of policies under this head—that possibly from 25 to 35 per cent. are "life of another" policies, and, to that extent, it 1492 would mean a considerable reduction in the earnings of the agents.
The field staff has also to consider another great loss—the question of book interest. I admit that is an intangible factor, but it is a matter of very great concern to the agents because in many cases they have expended the whole of their life savings in order to acquire a book. If the value of those books falls, the agents will be Very hard hit financially, and, without doubt, grave distress will be occasioned. I am sorry to say that I regard this Bill as one which prods, probes and pinpricks the agents. The Government seem to be willing to wound and yet afraid to strike, and they would appear from the words of my right hon. Friend, to be trying to patch up some of the anomalies and incongruities which evidently still exist in industrial assurance.
I would say that it is a pettifogging, pernickety and puerile Measure of peevish legislation which is not worthy of the Government, and I hope that, on the Committee stage, some of my hon. Friends on this side, and even some hon. Members opposite, will take the opportunity of going more fully into it. If the Government wish to avoid, as I am sure is their intention, the gambling spirit which is alleged to be inherent in insurance, then all I want to say is that they might have taken a more consistent attitude when dealing with social problems like pools, dog-racing and betting, which involve far more money as far as gambling is concerned, and which are far more open to criticism on ethical and moral grounds.
I suggest that under Clause 2, the limit of £15 should be increased to, say £25. In these days, £15 is a very small amount of money; it might purchase what £8 or £9 did before the war. If reasonable expenses—and that is the term used,—are to be taken into consideration—or to use another phrase, "expenses of an appreciable amount," which, I think, appeared in one of the Acts, at any rate—there are very many factors to be considered. For example, there has been a wide dispersal of the population. When the father or the mother dies, the son or daughter could be 200 or 300 miles away and might have to travel a considerable distance to the funeral. There is not only travelling, but also the cost of purchasing mourning, a matter which has already 1493 been referred to. Of course, it would not necessarily mean purchasing all new clothing, but one or two articles of apparel which, perhaps, people have not been able to purchase in the ordinary way, and which they feel ought to be renewed at a time of distress and sorrow. Again, many people contribute to a memorial stone, and very often it is the fashion for the members of a family to pool their limited resources in order to pay for some permanent erection of that kind.
Then there are floral bequests. That is also an item which must be taken into consideration. If it is a proper thing for hon. Members to present floral tributes to their sweethearts in their courting days or to prima donnas in the later stages of their life, surely no criticism can be made when one presents flowers as a token of respect to someone who is very dear and near and who has just passed away. Another factor is loss of remuneration, which can be very serious to a man who has to spend two or three days in attending a funeral. Although I realise that insurance is not primarily for that object, nevertheless it is a factor which poor people have to bear very much in mind. There is also the lower purchasing power of the pound, which means that in any case these figures should be subject to revision.
I wish to administer a stricture to my right hon. and learned Friend the Attorney-General, for whom I have a fond affection. He reminds me of Coleridge's "Ancient Mariner" who fixed somebody with his glittering eye. The language of this Bill should be lucid, apparent and clear to I he average policy-holder. If the average policy-holder, the average industrial insurance agent and the offices are to be subject to penalties, they are entitled to know what the Bill means. I think there is a conspiracy on the part of lawyers to use obscure language. I will read a passage from the Bill, and if any hon. Member in any part of this House can explain it to me in simple language I will lower my head before him in obeisance. In Clause 8 these words appear:Provided that the preceding provisions of this Section shall not apply to exception on any such ground if the society or company is excepted from liability on that ground apart from those provisions, or to reduction of liability on any such ground so far as liability is reduced on that ground apart from 1494 those provisions, in a case in which the proposer, when making the proposal or at any time thereafter and before the making of the contract, made to the society or company …tra-la-la—tra-la-la—tra-la—and so it goes on. It is only because I have spent a lifetime in this business that I am able to disentangle this obfuscated verbiage. I think there is a conspiracy on the part of overpaid lawyers to puzzle hon. Members with these jangled and archaic words so that we shall give up the struggle and let the Government get away with it.
§ Mr. Mack
What they mean is that if the proposer or the agent fails to disclose the fact that the proposed is in an indifferent state of health, or any other such factor, they are liable to some penalty. I rather gather that is the gist of what it means. Heaven forfend that I should endeavour to be more explicit than that, in case I should find myself still further enmeshed. My right hon. and learned Friend the Attorney-General, who is known to be a very unconventional gentleman in many respects and who has revolutionsed neckwear, among other things, might well revolutionise the language of this and other Bills. He would earn imperishable and immemorial fame. He would go down in history as the one man who made the jargon in Government Bills clear and understood by the common people, and, although he might be contemned and despised by many of his learned colleagues, he would earn the eternal blessings of the more simple and honest members of the community.
I wish to deal with Clause 7, which was stated by my right hon. Friend to be a Clause of lesser importance. It is nothing of the sort. It refers to premium receipt books. These books are very important to an agent who has got to do the doorstep work. Many of the new houses do not have nice porticos and a collector often has to stand in the rain to make an entry into his premium book and mark collectively one payment for perhaps half a dozen policies. If he has to take out six premium books and make six entries, it will throw a considerable amount of additional work on him. Apart from that, there is the enormously increased cost of printing paper. I would much sooner see 1495 books of lore and learning printed with the limited available paper than a multiplicity of premium books.
What induced my right hon. and learned Friend the Attorney-General to insert a Clause like that? Did he have some private conversation with the associated offices? I have never been consulted on, this matter—a fact which may be due to ignorance, or, in the case of my right hon. Friend the Minister of National Insurance, forgetfulness. I have been completely ignored in this matter, not that it has necessarily made much difference to the final outcome of the Bill; but, at least, I could have expressed the point of view of thousands of outside workers. I knew nothing about it until the Bill was produced. My right hon. and learned Friend the Attorney-General, the midwife who has evidently assisted in the Bill's birth, is responsible for the legal language. Perhaps he could tell me where he or the Financial Secretary got the inspiration to insert this petty little regulation. On page 5 there is another phrase in which these words appear:A book used for any policy shall contain a conspicuous statement of the identity of the person who made the proposal for the policy.I would like to know the meaning of "conspicuous" in this connection. Does it refer to the size of the signature, and in what part of the book is it to be written? If that provision is not obeyed, certain dire penalties may be visited upon the offender. The average agent has far too much work already, without having this kind of stuff added to his worries. He has mental as well as physical anxieties. At the moment he is anxious because the business is in a transitional stage, and he does not know where his future bread and butter are coming from. I know it is fashionable to jeer at insurance men. They are the subject of music-hall mirth, but the fact remains that insurance agents represent a very considerable proportion of the workers in this country, and some of the best elements of the working class have come from their ranks.
Clause 13 relates to offences which may be committed, and says:Any registered society not being a collecting society which contravenes or fails to comply with any of the provisions of this Act … shall be guilty of an offence,and shall be liable to a fine not exceeding 1496 £50. I am particularly concerned with Subsection (3) which says that any collector of a collecting society or industrial assurance company who contravenes or fails to comply with any of the provisions in this Bill, is guilty of an offence under the Act of 1923, and shall again be liable to a fine not exceeding £50. farther on, in line 41, reference is made to the Act of 1896, under which Act proceedings may be commenced as late as three years after the commission of the offence, and the alleged culprit may be in danger of having these penalties visited upon him. I wish that could be made a little clearer.
I am glad that the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) paid a tribute to the collectors. My hon. Friend the Member for the Exchange Division of Liverpool (Mrs. Braddock) knows much about the sufferings of the workers in Liverpool and of the difficulties of these agents there, too, and I am sure that we can all find common ground and speak sympathetically on behalf of the workers in this business. There will be opportunities to deal more closely with the Bill in the Committee stage. I hope then we may be able to get some compromise on the Bill. While the Bill does give an increase, in the case of the societies, from £300 to £500, and while the agents as an organised body would not wish to quarrel with the Government, nevertheless, I do say that the Bill fails to deal adequately with this business. I hope, therefore, that we may be able at a subsequent stage to make some adjustments, as a result of Amendments, which will be put down, to ameliorate the situation.
I cannot pay too high a tribute to the industrial insurance agents. All along, in many directions, they have faced great uncertainty, but because of their anxiety to see the Government proceed with their great all-embracing insurance scheme, and because they have great confidence in the Minister of National Insurance, and particular regard for his work, they have submerged their own personal interests and, to a large extent, been prepared to make many sacrifices. I hope that this Bill will not call upon them to make further inordinate sacrifices, and that the attitude of the Ministers responsible for it towards the agents will be one of proper humanity, deeper understanding, and a spirit of sweet reasonableness.
§ 4.52 p.m.
§ Mr. Molson (The High Peak)
I am sure the insurance agents throughout the country will have an opportunity of reading the speech of the hon. Member for Newcastle-under-Lyme (Mr. Mack), and they will be most grateful to him for the tribute which he has paid to them. One is naturally glad to think that one who expresses their point of view in the House and is associated with them should have this warm feeling of admiration for them, and I do not doubt that the admiration is mutual. So far as the House is concerned, I think the hon. Gentleman did well to declare at the beginning that he has a special interest in this matter. If I do not in most matters follow his speech in any detail it will be rather because I feel that, in matters of this kind, the interests of the industrial population as a whole should be considered, and not that primarily of the agents.
§ Mr. Molson
I was grateful to the Financial Secretary to the Treasury for the reference he made to the late Sir Arnold Wilson, and to the great work that he did to ascertain the facts about industrial assurance, and to work for an improvement in this matter. The Financial Secretary has already produced figures to show how immensely great is the premium burden on the wage earners of this country and how great are the sums which they derive from industrial insurance benefits. The book inspired by Sir Arnold Wilson, and written by him and Professor Hermann Levy had, I think, a great deal to do with awakening the public conscience to the importance of this matter. I was reading it again this morning. I regret that Sir Arnold Wilson should have been killed in action during the last war and should not have lived to see come true so much of what he regarded as being the objective of sound social policy. He writes in the foreword:These and other considerations … have brought us to the conclusion that the present system cannot be mended, but should be ended by being merged with the National Health Insurance system operating for the present through Approved Societies, though these in their turn must one day be reorganised on a national and regional basis by counties and county boroughs, with far greater uniformity of benefits than at present, as part of a genuinely national system of public health.1498 That was written by Sir Arnold Wilson long before the Beveridge Committee was appointed or had been thought of. He was one of the pioneers who did something to bring about the series of reforms which have been the work of the last Government and of this Government and of the last and of the present Parliaments.
This Bill I regard as belated, necessary, and modest. It is belated because, as the Financial Secretary said in his very lucid and concise introductory speech, ever since the Act of 1909 the practice of industrial assurance has, in fact, largely ignored the rules laid down by Parliament to be observed. Both on the Adjournment once in the last Parliament and again on the Second Reading of the National Insurance Act, I have drawn attention to this matter, and I have urged that something should be done to bring to an end the state of affairs in which Parliament has twice legislated quite plainly on this matter—in the 1909 Act, re-enacted in the Act of 1923—and in which, as was said by the Industrial Commissioner in his evidence before the Cohen Committee, in point of fact, the law was not being observed.
I regard this Bill also as urgently necessary at the present time. As soon as the death grant, which is provided in the National Insurance Act, comes into operation, one half of the sole justification for the insurance of the life of another in the form of industrial assurance will come to an end. It was in 1774 that Parliament in its wisdom decided that there should be no assurance of the life of another in the absence of an insurable interest; and it was in order to meet the special social problem of providing for funeral expenses, in the case of those who had not the financial resources to provide the cost of a funeral at any particular, unforeseen moment, that this wide exception was made in a rule which, for nearly 200 years now, has in the general law of insurance been consistently observed—and, indeed, strengthened by successive Parliaments.
Therefore, this Bill is necessary before, the coming into operation of the death grant. I long doubted whether insurance on the life of another for expenses in connection with a funeral was desirable; but I have again studied the evidence given before the Cohen Committee—who came to the conclusion that there was a 1499 genuine and widespread demand for a facility of that kind—and provided that it is kept within strict limits, as regards both the life that may be assured and the amount that may be spent, I believe it will be a socially beneficial reform.
In the third place, this is an extremely modest Measure. I am inclined to think it is still too modest, for it will cut out only approximately 10 per cent. of the life-of-another assurance policies at present being contracted. It is a rough and ready system. It lays down that, generally speaking, the younger person may assure the life of an older person, but not vice versa; and, subject to the £15 limit, on the whole that will be beneficial.
My right hon. and learned Friend the Member for West Derby (Sir D. Maxwell Fyfe) referred to Clause 2—which, in the case of each individual descendant, limits the amount assurable upon the life of a particular ascendant to £15—and he raised the very important question, with which I hope the Attorney-General will deal in reply, of having some machinery which will make its effectiveness certain. When we reflect that this Bill is intended to bring to an end a state of affairs in which, for 37 years now, the express and deliberate intention of Parliament has been so widely ignored, it would indeed be disastrous were the new Bill to create a new category of illegal policies. It is right that not mare than £15 should be assured upon the life of one single ascendant. Whether that be so or not, and whether the criticism of the hon. Member for Newcastle-under-Lyme be accepted or not, there surely will be complete agreement in all parts of the House that it would be extremely undesirable to have a number of insurance policies which, in the event of sudden death, were discovered to be illegal.
Firstly, it would be undesirable that either the proposer or the agent should have that opportunity for fraud. Secondly, it would be undesirable from the point of view of the person taking out the assurance if it came to light that the individual had insured more than £15 upon the particular life, for then one or other, or a part of those insurances would be found to be illegal. From the point of view of the life offices and friendly societies themselves it is, surely, important that there should be effective 1500 machinery in order that they may not be involved unintentionally in the issue of illegal assurances. Therefore, during Committee I intend to put down an Amendment designed to ensure provisions to give effect to the policy of Clause 2.
In Clause 6, there is laid down the principle that, while parents may take out life assurance policies on behalf of their infant children, they shall not be able to draw the insurance money in the event of death under the age of 10. In the long history of industrial assurance legislation, social reformers concentrated very largely upon child assurance. As recently as 1931, when the late Lord Snowden appointed the Cohen Committee to investigate the whole question of industrial assurance, the aspect of child assurance was dealt with in a special provision of the minute of appointment; and approximately one-third of the Cohen Committee's report deals with that matter, for they made rather detailed recommendations in order to prevent abuses. I believe the Government have been right and wise to cut right through those recommendations, and to provide that no money shall be paid in the case of a child dying under the age of 10. No hardship is involved, because the parent is able to take out an assurance on behalf of the child, thereby gaining benefit for a life assurance taken out at an early age.
In all those matters I believe the Bill to be wise and necessary, but at the same time only modest. It is modest because a number of recommendations made by the Cohen Committee are not dealt with in the Bill. In the course of this Debate, it has already become plain that at the present time we lack the information which we ought to have about industrial assurance. Down to 1938 there was an annual report upon this matter; but, as a measure of wartime and postwar economy, the Industrial Assurance Commissioner is not now allowed to produce a report. I fully recognise the importance of paper economy, but I hope that the Financial Secretary will consider the possibility of allowing the issue in Roneo form of a report which could be made available to those connected with industrial assurance who are anxious to have up-to-date information upon the subject. During the war, statistical summaries were issued, but they did not get as far as the House of Commons Library, unless 1501 they have done so this afternoon. When trying to arrive at the recent figures upon the subject I found they were not available, so I am in the same position as the Financial Secretary in regard to any figures I quote upon the subject—not having the advantages of the hon. Member for Newcastle-under-Lyme—in having to turn to the Beveridge Report and its appendix.
My right hon. and learned Friend the Member for West Derby was right in referring to two matters, to which the Cohen Committee gave a good deal of attention—although, in the absence of figures, I am not entirely certain that he necessarily drew the right conclusions. We ought to have the figures for which I have asked in order that we may know more about the expenses of management. I do not doubt it is true that, whereas at the time of the Parmoor Committee, who investigated the matter for the years 1912 to 1917, the cost of administration of this form of assurance was 41 per cent. of the premiums paid, by the time the Cohen Committee was investigating the matter in 1930, that had been brought down to 34 per cent. Even at the present time, there is an immense difference between the cost of administration of different offices, and especially of the collecting societies.
I regard it as a serious omission that nothing is being done to bring the very high expenses of these life offices, and especially the collecting societies, down more nearly to the level of those who, by means of the block system and rationalisation of their administration, are able to give a very much better service to the people.
§ Mr. Mack
In making that general statement, will the hon. Member have regard to the fact that, while I am not condoning the relatively high expense ratio, the societies have usually treated their servants and workers better than the companies with the lower expense ratio. In other words, the companies have reduced the ratio at the expense of the agents.
§ Mr. Molson
It is apparent from the speech of the hon. Member that he is one of those who regard industrial assurance as being conducted primarily for the benefit of the agents.
§ Mr. Molson
I am much more concerned with the interests of those who 1502 pay their humble pence each week. It is the case that some of the collecting societies with the highest ratio of expenses are those where, by means of book interest and so on, the collectors run the whole show. I regard it as one of the most serious abuses in industrial assurance that, in spite of the fact that an agent is not allowed under law to hold a responsible position in running a society, the control of many of the societies is, in fact, in the hands of the agents.
§ Mr. Mack
I must object to that. The hon. Member is probably speaking in all good faith, but in fact the control of a collecting society is very often operated by the delegate system, that is, by the direct representatives of the policy holders and not by the agents. Surely, the hon. Member is not going to argue that a society is controlled and governed by the agents. That would be most unconstitutional, and it would be unfair to the agents as well as to the other people.
§ Mr. Molson
It is most unconstitutional, but if the hon. Member will look up some of the evidence given before the Cohen Committee he will find that, broadly speaking, these are the facts.
There has undoubtedly been a very great decrease in the number of lapses, but the fact remains that down to the present time there is no power resting in the Industrial Assurance Commissioner to obtain from the industrial life offices, in contrast with the collecting societies, statistics dealing with this matter. I hope that during the passage of this Bill power will be taken for the Treasury to make rules requiring full disclosure of such facts and figures as they consider to be desirable, in the same way as can be done in the case of the collecting society at the present time. That was one of the recommendations of the Cohen Committee, and this seems to me to be an opportunity to give effect to that recommendation.
Another matter which requires consideration is the distribution of profits. There is a wide difference in practice among different offices in this matter. In the case of the Prudential it was shown in evidence that approximately 75 per cent. of the profits go to the policy holders, 12½ per cent. to the shareholders, and 12½ per cent. to the outdoor staff. I 1503 think I am right in saying that there is no power at the present time to obtain the information, it the life office refuses to give it. In the case of all the committees that have been set up, the companies have always been most frank in giving information, in so far as it was available, but the figures ought to appear in the annual report of the Industrial Assurance Commissioner, and then, if there is need at some later date to legislate, there will be a clear picture of the way in which the business is conducted.
I now come to my last point. Is industrial assurance a good thing? The effect of the State death grant will be to change the whole character of it. I believe that there is, as Sir William Beveridge thought, an immense scope for voluntary assurance in supplementation of the flat-rate benefit given under the compulsory scheme. I see the hon. Member for East Ham, North (Mr. Daines) and the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock) sitting opposite. I paid a visit with them to France last autumn to investigate the French insurance system. In France, both the contributions and the benefits are in proportion to the ordinary weekly earnings, and therefore to the standard of living of the worker. There are many advantages and disadvantages in the British system. One of the disadvantages of the flat-rate benefit under the compulsory system arises in the case of highly paid workers. In the case of those who are accustomed to higher earnings, there is obviously very great scope for voluntary assurance, so that when death, sickness or some other disaster comes it will not bring about an immense fall in the standard of living, from the relatively high weekly earnings to the relatively low rate of payments under the compulsory National Insurance scheme.
I believe it is possible for industrial assurance to develop into a valuable form of thrift in order to make additional provision for sickness, old age and education. It will be necessary for this House to keep a watchful eye upon industrial assurance in order to see that administration expenses are not too high, that pressure is not being exerted on agents perpetually to be increasing unreasonably the amount of insurance people hold, and that the profits made shall be fairly and 1504 equitably distributed. Lastly, it is desirable to consider very carefully whether book interest should not be abolished.
The immediate effect of this Bill will be greatly to add to the danger of inflation of funeral expenses. I have spoken on this matter several times, and I do not wish to repeat myself in a way that might be wearisome to the House. On the Second Reading of the National Insurance Bill, however, the Prime Minister was good enough, in reply to my observations upon this subject, to say:I noted his condemnation"—my condemnation—of some of the abuses connected with the burial of the dead. … I would only say it is our purpose to see that this money is not squandered and wasted in that manner."—[OFFICIAL REPORT, 7th February, 1946: Vol. 418, c. 1897–8.]The Minister of National Insurance, on the Third Reading of the Bill, after I had raised the subject again, said:… the matter is engaging the attention of the President of the Board of Trade. … The Central Price Regulation Committee have given consideration to this, and have presented reports to the President. They are, I understand, being asked to reconsider it."—[OFFICIAL REPORT, 30th May, 1946: Vol. 423. c. 1461.]Well, a good many months have elapsed since then, and we have heard nothing more about that matter. I believe that this Bill will make that a still more pressing and urgent need, and I hope the Government will again give attention to it. I welcome this Bill for what it does, and I believe that in the Committee stage it can be greatly improved. I hope the Government will keep an open mind on it, and will be sympathetic to Amendments if they are moved by some of us who are anxious to see incorporated in the law of industrial assurance some of the recommendations of the Cohen Committee, and to make certain that some of the abuses to which the late Sir Arnold Wilson drew attention are eliminated from the practice and ways of this country.
§ 5.22 p.m.
§ Mr. Daines (East Ham, North)
We have listened with great interest to the speech of the hon. Member for the High Peak (Mr. Molson). I do not think there is much room for controversy about this Bill, but I am quite certain that when Members read his speech tomorrow, and the speech of the right hon. 1505 and learned Member for West Derby (Sir D. Maxwell Fyfe), they will find some essential points of difference between them. The hon. Member for the High Peak referred to France, and all I wish to say on that is that the delegation which went to that country found many points of interest. France has so many attractions. Perhaps that is all I had better say on that point.
This Bill is a modest Measure, and is the inevitable consequence of the National Insurance Act. Underlying the great and mighty business of industrial assurance, with its huge accumulation of funds, is something which is peculiarly English, but which is also of great economic importance. I think it would be very interesting indeed if the Government were to set up another committee of inquiry with real powers, not only to consider the day to day operation of this business, but also the vast financial power that is wielded by this country's great industrial assurance offices. This business has been built up on the fear of a pauper's funeral. I am of the working class; I know their mind instinctively. I believe that one has to be of the working class to be able really to understand them. The fear that when the old gentleman or the old lady dies, his or her funeral will not be conducted with decorum and dignity, has been traded on by the great corporations which have come into existence to carry out industrial assurance. It is our job, as Members of Parliament—and it is the Government's job—to show the people, by means of publicity behind the National Insurance Act, that a death grant has been provided for under that Act, and that the bogy of a pauper's funeral need no longer he feared.
The Government—and I say this with a sense of personal pride—in response to an Amendment I moved on the Committee stage of the National Insurance Bill, agreed that where a person was an inmate of a public institution, and died, benefit should be paid, so that the funeral could be conducted without any taint of pauperism being attached to it. In July, the people of this country will have to meet a substantial increase in compulsory contributions, and it is, therefore, the Government's duty thoroughly to publicise their own scheme so that people will be aware of it, and can arrange their business accordingly. When talking 1506 about this Bill it is a great temptation to say that the solution of this problem, however much we may wish to dodge it, is contained in the Report of the Beveridge Committee. I believe that, ultimately, we shall have to come to that solution.
What surprised me, listening to the speeches made so far, is that no hon. Member has said that the root cause of the over-selling that occurs in insurance is the method of payment. Anyone who understands the business knows that there is over-selling. It is humbug to deny it. Take the average insurance agent. I do not deny that he is an honest and respectable citizen. He can insure, for example, a life at 60 or 70. Suppose he insures a life at 70 for 1s. a week—and premiums of this sort are quite common—immediately he does that, and receives the first is he earns for himself a procuration fee of 12 to 18 times that amount. The very system of payment is part of the extra pressure put upon him to obtain business. I can imagine one of the advocates of the large offices in this country pointing to the fact that the Prudential have reduced the amount that is paid out in procuration fees. They changed the system, and there were two consequences. One was that their expense ratio fell, and when that happened other offices, which maintained a higher procuration fee, with inferior tables and benefits, actually had a substantially higher increase, in proportion to their debit, than did the Prudential. That shows, quite clearly, that the pressure of the system itself is bound to be the most serious factor in this question of overselling.
Clause 2 is the most important Clause in the Bill. Despite previous attempts by Parliament it legalises, for the first time, what has been an extremely doubtful legal position. From that standpoint it must be welcomed, but I suggest to the Government that the figure of £15 is somewhat too tight, and that there is a case for reconsideration on Committee, particularly in regard to the older lives which will not come under insurance when the Clause begins to operate 12 months from next July. On the appointed day, men over 65, and woman over 60, will be outside the death grant, and for men between 55 and 65, and women between 50 and 60, only the reduced benefit of £10 will be payable. I suggest that on this aspect of the benefit some easement 1507 should be given. I am not concerned about the loss of brother and sister insurance. The actual figure is between 4 and 2½ per cent. according to the different types of office. There is not much to object to in the disappearance of that form of insurance, for only in exceptional cases has it ever fulfilled any real purpose.
When we come to the question of assignment, I get rather worried. I think that where a policy holder, through unemployment, for example, wishes to give up a policy, there should be no legal objection to the policy being assigned to the brother or sister, provided that the total amount held by them is not exceeded. There is a Clause in the Bill relating to alienation. I would ask the Attorney-General to give some definition of that when he replies. The Bill specifically prevents brothers and sisters from assigning their policies either to themselves or to other people, but there is nothing in the Bill—and I cannot find anything in previous Insurance Acts—which would debar a person taking on an "own life" policy and then assigning it. This is dealt with very exhaustively by the Cohen Committee. I think that the risk of illegal policies is considerably higher under that head. I should like the Attorney-General to clarify the position, as emphasis is laid on alienation in the Bill, as to what happens to a policy in the event of the policy owner's death. Does it go into the deceased's estate or does it revert to the insurance company?
May I say a word or two from the agent's standpoint? I have dealt with the aspect of the business so far as pressure for increase is concerned. I exempt the Co-operative Insurance Society, the Prudential, the Pearl and some of the other companies from what I am about to say. I may rather shock some hon. Members who have interested themselves in this question when I say, quite bluntly, that many of the large collecting societies in this country, apart from the policies, have no real record of what is actually happening so far as their industrial life business is concerned. It is perfectly true that there is a collecting book. The collecting book is transferred to a fresh collecting book at six monthly periods. I can well imagine when the transfer has taken place some 10 or 12 times that, other than the premium which is checked from book to book, there 1508 is no real record. The amount of error after that number of unchecked transfers is bound to be very high.
In many of these large collecting societies, districts overlap—it is quite possible in a street of 100 houses in London to have agents working for the same insurance office coming from 10 different district offices. It is equally common to find two or three agents representing the same office collecting in the same house. Where we get the efficient office in terms of records there is a valuable safeguard for the agent. He submits his proposal and it is checked with the record, and if it is over the legally prescribed amount, the proposal is rejected. If the House will recall what I said on pressure the other way, one can see that every check that is installed, arising from efficient records, is extremely valuable so far as the agent is concerned. I do not think that legislation alone will make this business really efficient. I believe that the Industrial Insurance Commissioner has to he given far greater powers than he has now to effect reforms that are really necessary. When we come to the question of penalties, the agent who commits an offence has to face the same penalty as his office, that is, a fine on the first offence up to £50. Taking into consideration the difficulties under which agents are working, I submit that the penalty is far too heavy.
I now come to the proposal of the hon. and learned Member for West Derby and also that of the hon. Member for The High Peak. I am quite certain that this Clause will mean, unless something else is put behind it, that a vast number of illegal policies are certain to continue. The hon. and learned Member for West Derby made the only proposal which I think would really safeguard the agents as well as the other persons concerned. That is that we have to try to devise some form of death certificate that will effect the same purpose as in the case of children under 10. As a practical insurance man of over 20 years' experience—I have not been one since I came to this House—I am certain that there is no other way in which it can be made effective.
When the agent knows and the policy holder knows that only on a specific form of death certificate will benefit be paid, we shall have the only safeguard that can be really effective. I can imagine the Attorney-General saying "That is all very 1509 well; you tell me how to do it." Frankly I cannot. During the week-end, I thought round this problem time and again to see what effective practical method could be adopted, when there are a number of insurances in a family, of employing the death certificate check. I do not say that this problem is insoluble, but I confess that I am quite beaten by it.
The provisions of Clause 7 are largely those contained in the Cohen Committee's Report, where a specific recommendation was made that there should be a separate premium book for each policy. The Beveridge Committee showed that the number of policies in 1939 was 103 million; that is, for every member of the population there are 2.25 industrial policies. As an aside, I might add there is no use anyone trying to say after that, that the business is not oversold. If a deduction is made for the number of families who have no industrial assurance and we allow for the fantastic increase in this business during the last two years, we can assess that the number of policies to each house will be around about a dozen. One can well imagine a poor insurance agent having to sign twelve books on every doorstep. That is quite absurd and impracticable. I know the reply from the Government Front Bench will be that the Government will not employ this regulation until paper is freer. Nevertheless, it is absurd from the standpoint of the agent and of the policy holder. I suggest that we confine ourselves to one book for the weekly business, one book for the monthly business and one for the policy holder. There will be full and adequate safeguards if we do that.
My final point is in regard to Clause 9 on policies. I do not see how we can frame an Amendment which will give us what we want. What we really want to see is something simple and direct. The bulk of the people of this country just do not understand what is contained in their industrial insurance policies. I will go further. I would say that the archaic wording of many of the industrial policies is deliberately maintained by some of our offices so that it cannot be understood by ordinary people. There is no earthly reason why legal safeguards for the policy holder should not be in simple, direct English and I plead with the Government to get simple language into policies by some form or another.
§ Mr. Daines
That, of course, is my last point. The point has already been said but I want to re-emphasise it. When I make this plea for simple insurance policy language, I am certain that the offices are going to reply, "What about your own Bill?" Here I want solemnly and sincerely to register a protest at the excessive verbiage that keeps on showing up in all our Bills. I must confess when I read over the Acts of 1923 and 1929 with their simple, clear English, and then I came to the present Bill, it was almost like a speech from my hon. Friend the Member for Newcastle-under-Lyme as compared with a speech from someone I cannot mention. In re-emphasising this plea for clear, simple English in Bills, I want to say it is time all hon. Members of this House irrespective of party said to the responsible officers of the Government, "There is no reason at all why we should have to read and re-read Clause after Clause of a Bill in order to get a simple explanation out of it." I want to make my protest against the excessive verbiage we have in this Bill and to plead again for a simple direct language. I support the Bill.
§ 5.45 p.m.
§ Mr. Emrys Roberts (Merioneth)
Speakers who have preceded me have covered a very wide field, and I shall not detain the House for more than a few minutes. However, it has struck me as I listened to this Debate that there is widespread concern in this House about the position of industrial assurance and it is quite right that we should spend some time on it. It is noteworthy that there have been successive inquiries since 1889 into the operation of industrial assurance and it is rather striking that when figures of industrial assurance were given here today they were those in the Beveridge Report on Social Insurance, because no later official figures are available.
It is worth while looking again for a moment at the figures which show the extent of the industrial assurance business that is being carried on in this country. The Financial Secretary to the Treasury said that in 1939 there were 103 million policies in force—that represents 2½ policies, on the average, for each man, woman and child in Britain; that 65,000 1511 persons were employed as full-time collectors; that premiums amount to £74 million a year—I do not think that figure was quoted—and the actual expenses of the industrial assurance companies are another £24 million a year.
There seemed to be two points at the back of the mind of the right hon. and learned Gentleman the Member for West Derby (Sir D. Maxwell Fyfe): first, possible charges against industrial assurance undertakings on the grounds of the high cost ratio; and, secondly, the high number of lapsed policies. It has been said that the proportion of policies that have lapsed has fallen substantially in the last few years, particularly since 1941. It is a very interesting fact that from 1864—the earliest date for which I have seen any figures—right up to 1929 and 1939, the proportion of policies that have lapsed did not decrease at all. The proportion of policies which have lapsed fell, however, during the war years. I do not think there has been any official figures quoted since 1941, and the figures which the right hon. and learned Gentleman quoted were the figures for 1945, also a war year.
It has to be remembered that a large number of people who effected industrial insurance before the war were serving in the Forces during the war and the Government undertook to be responsible for all insurance liabilities of persons in the Forces Therefore, I suggest that because of that the figures for the years 1941 to 1945 are not an indication of an improvement in the matter of lapsed policies. The figures in 1939 were formidable indeed. In each of the three years before the war, about 10 million policies were issued by industrial assurance companies, and in each year six and three-quarter million policies lapsed because the people who had taken out the policies for some reason or another could not keep up the payments on the premiums.
It does show that there was a feverish rush for new business and an excessive pushing of policies on to people who could not afford to take them out, especially among the poorer classes of the community. As the hon. Member for East Ham, North (Mr. Daines) pointed out, it is the poorer section of the community which is subject to that kind of pressure primarily because of the fear of not being able to afford a decent funeral. They are 1512 afraid of a pauper's funeral and the primary purpose of industrial assurance is to provide funeral benefit. The power to insure for funeral expenses is to be swept away by Clause 1 of the Bill.
In his Report, Sir William Beveridge made, with great emphasis, a suggestion for dealing with the problem of industrial assurance, namely, in the words of that report, thatit should be converted from being a private seller's business to being a monopoly consumer service.I do not think that any further committee of inquiry is necessary. This business cannot be controlled by the kind of supervising power which the hon. Member for The High Peak (Mr. Molson) suggested. The words used in the report are convincing. I will quote the words used in Appendix D of the Beveridge Report:The proposal that life assurance among persons of limited means should be a public service rather than a competitive, private business, is based on the special character of industrial assurance, as a business in which competition leads to over-selling, and as a business in which the seller's interest represents a special danger to the community. Life assurance is not like other commodities, because those who insure make their choice once and for all when they take out a policy.The Attorney-General will, I hope, give an assurance that, in addition to earning a bow from the hon. Member for Newcastle-under-Lyme (Mr. Mack), the Government have not closed their minds to the possibility of setting up an Industrial Assurance Board to deal with industrial assurance as suggested in the Beveridge Report.
§ 5.53 p.m.
§ Mrs. Braddock (Liverpool, Exchange)
I support this very moderate Bill because it makes improvements in the position, but I had hoped that when a Pill of this kind was presented, it would contain many more safeguards for the ordinary working class person in relation to payments for industrial assurance.
I have had a long experience of this matter. I have spent weeks, one after the other, tramping from the bottom of fivestorey tenements up to the top, collecting insurance premiums, when my husband was unable, through illness, to do so. I have been staggered many times at the efforts that have been made by the poorest sections of the people of this country to continue to pay amounts weekly for insur- 1513 ance. When they could not pay, there was no return for the weekly amounts they had already paid, and the business lapsed, after non-payment for six or eight weeks. The family would then commence to worry about what might happen if one of them should die while out of benefit. Then would come a recommencement of the payment of weekly premiums, at a lower rate of death benefit. I know for a fact that that process has gone on in families where the premium could be paid for about f o months while the man was working in temporary employment, or in some better work. After the business had lapsed, with no compulsion upon the company to return the premiums that had been paid, there has been re-insurance in he same company within a year. This process has gone on year after year.
I have wondered why, when premiums have not been paid for about 12 months because the family had got into difficulties, there was not some power to insist upon the return of some of the contributions that had been made. There is no alteration in that respect in the Bill. I intervened when the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) was speaking, to say that people do not lapse on their policies now so often as they used to do, because their weekly financial position is very much better than it has been for the past 25 years. The only reason they allow their policies to lapse is financial inability to continue to make the contribution.
There is a terrific struggle in the insurance world at the moment, an almost fanatical struggle, to secure industrial insurance business. Agents are being pressed by their companies, and business is being put on at a rate which has never been equalled before. The Attorney-General ought to give us some indication of what is likely to happen, after the appointed day under the National Insurance Scheme, to the new premiums now being collected. Industrial workers will have to pay 4s. 11d. weekly to the State after the appointed day, and probably they will find that their payments for industrial assurance, amounting to 3s. or 4s. per week for a family of a man, wife and six or seven children, are impossible, on top of the National Insurance contribution. Is there any possibility of introducing into the Bill in Committee a provision to secure a return of premiums which people are now commencing to pay, 1514 if they subsequently find they are incapable of paying them, in addition to the new insurance payments?
All insurance companies pay death benefits out of their current yearly receipts of contributions. I know that to be a fact. Never at any time, for a number of years, have they had to draw upon their reserves. The profit that is being made at the expense of weekly collections of industrial assurance contributions is perhaps the highest that we can possibly imagine in any form of business. Short of nationalising this section of industry, the Government ought to look at the matter very carefully to see whether it is possible to regulate the amounts that people pay.
§ Mrs. Braddock
I am in favour of nationalising it. I thought hon. Members opposite were not in favour of it. Clause 7 contains the suggestion that there should be a separate collecting book for each member of the family. Having had some experience, I can say that that would be a terrific waste of energy, paper and books. A workingclass woman is not always able to put her hand on all the books she requires at a given time. If this comes into operation, I can visualise the number of times an agent will have to supply a new book for a member of a family because the old book has been lost. It is bad enough at the moment. At the moment, often a woman cannot find the book containing the names of all the insured people in the family. It the agent has to provide a new book every time the person paying the insurance cannot produce the books for each individual in the family, I can imagine the muddle the agent will be in and the penalties there will be when people have not got individual books. That point ought to be looked into during the Committee stage. It should be sufficient to have in one book the names of all the members of the family who are insured.
I hope the Attorney-General and the Government will see whether it is possible to compel insurance companies to return at any rate part of the premiums if a policy lapses through a person's financial inability to carry on the insurance for the 12 months which are at present 1515 allowed by the insurance companies for a free paid-up policy. The points I have made are important and I hope some consideration will be given to them.
§ 6.3 p.m.
§ Sir Patrick Hannon (Birmingham, Moseley)
I ought to disclose to the House the fact that I am associated with a friendly society, whose functions are widespread in the Midlands and which carries on its business with, I hope, a full sense of its responsibility for careful administration. I will not follow the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock), who made an interesting speech, but will submit to the Attorney-General that some of the things she said are, from the point of view of efficiently treating the collection of insurance in the interests of the country, very well worthy of his careful attention. I need hardly say that I do not agree with the suggestion that came from the Liberal benches that we should nationalise industrial assurance. With that part of the hon. Lady's speech and the wisdom we got from the Liberal Benches, I do not identify myself.
I was struck by the clear and concise speech made by the Financial Secretary. I wish he could convey to those responsible for the drafting of Bills in this House some of that facility of expression with which he places before the House from time to time explanations of the matters with which he is called upon to deal. I look again and again at Clause 8. I put it to the Attorney-General whether in common sense and in practice any ordinary person could make head or tail of it without giving it most careful study. The Attorney-General will find a series of Subsections in Clause 11 couched in language of which the ordinary man in the street and, above all, the agent of an industrial assurance society and the people to whom such assurance applies, will have difficulty in getting the real sense and meaning.
I should like to associate myself with what has been said by the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) in the tribute he paid to the work of the industrial assurance in this country. Since the days of Robert Owen to the days in which we live, industrial assurance and the work of the friendly societies have benefited the lives of the poorest people of the land and have 1516 had an important place in our social structure. We can never be too grateful to Lord Beveridge for the Report he prepared and to the Minister of National Insurance for the way in which he has conducted one of the greatest Measures of social reform that has been put before this House since I came here 28 years ago. Leaving apart the substance of the Measure itself, we appreciate the manner in which the Minister has conducted the Measure through the House—he has been conciliatory and has received deputations who have made suggestions—except in one respect, that is that my poor approved societies have been wiped off. I hope the day will not come when the Minister of National Insurance will regret the action he has taken in that respect.
We ought to be grateful for the introduction of this Bill. Small Bills dealing with subjects affecting the very poorest in the land come into this House from time to time. This Bill, which safeguards the rights and privileges of people assured under industrial assurance, is one of those Measures which are not much talked about outside and do not get headlines in the newspapers; nevertheless, it will have a widespread beneficent effect on large masses of the people of the country, and I congratulate the Government on the introduction of the Bill.
I should not like to press the point of the separate premiums receipt book. That seems to be introducing into this Bill a new burden upon the agents of industrial assurance societies. As the hon. Lady pointed out, the work that falls on industrial assurance agents in these days is extremely heavy. I can imagine an agent coming to the door of a house in one of the back streets of Birmingham and a poor woman having to sign 12 books. That is a burden which ought not to be imposed on people already burdened with housework and the responsibilities of a family. I am sure that during the Committee stage improvements will be introduced by hon. Members who have had practical experience of industrial assurance over many years.
The Government are to be commended upon the attitude they have adopted in safeguarding the interests of a very large section of the population who come within the scope of industrial assurance. As a final word for the consideration of the hon. Member for Newcastle-under-Lyme 1517 (Mr. Mack), may I say I believe the agents are a very fine body of men. On the whole, they have done their job uncommonly well, for they have had a difficult pant to play in the maintenance of the great social system of industrial assurance. I should be glad if the Attorney-General would tell me that something will be done to simplify the drafting of Bills.
§ 6.10 p.m.
§ Mr. Goodrich (Hackney, North)
I wish to join with those who have given a hearty welcome to this Bill, and I appreciate very much what was said by the hon. Member for Moseley (Sir P. Hannon) about the friendly society movement. This movement welcomes the raising of the £300 limit to £500 although, naturally, a higher figure would have been more welcome. We all know why the £300 limit was imposed in 1896, but there is a great difference between those days and the present, and £500 today is nothing like what £300 was then. With the passage of time, a great alteration has taken place.
As I say, the friendly society movement would have welcomed a higher figure if only for one reason. Friendly society members are the thrifty section of the population. It is their desire in many cases to purchase their own house, and they seek the aid of the friendly societies first for their own benefit and secondly, for good security for their money. However, in these days, when the price of houses is extraordinarily high, they take out a policy to cover the mortgage on their property and to cover the contingency of dying before the mortgage is redeemed. In order to get full cover, the friendly societies must of necessity under the present Act, farm out that insurance policy to an industrial company as they will do under the Bill.
There was a great fear that the Treasury might make some alteration to the Finance Act, 1918, by stopping the Income Tax benefit enjoyed by the friendly society movement. I am pleased to know that my right hon. Friend is prepared to submit an Amendment to ensure that there is no alteration in respect of the payment of Income Tax by friendly societies, but I would like an assurance that this will be operated as soon as possible after the passing of the Bill.
For some unknown reason, my right hon. Friend has made no alteration in the 1518 ceiling of annuities above £52. I wish to make a point on behalf of those people who are employed where superannuation schemes cannot be adopted. In order to get the benefit which those employed by big corporations, civil servants, and so on, are able to get on retirement at 60 or 65, it is necessary for that section of the population to provide it for themselves. The be[...] means of doing so is to take out a policy for an annuity, a very wise proposition. However they can only receive £1 a week. While appreciating that the Minister's scheme provides 26s. or perhaps 42s. a week by way of old age pension, that sum is absolutely inadequate, and a large section of the population would seek to augment their old age pensions if they could have £2, for they would then have not much below the wages that most of them were earning at the time of their retirement. So I regret that the Minister has been unable to raise the ceiling of the annuities.
It would appear to prominent members of the friendly societies that Clause 16 must be tightened in the interests of the societies and of the Government. I may find it necessary later to put down Amendments to meet the case which it will not: be too difficult for the Government to concede. I thank the Minister for his concession, but I would ask him to look into the matter of the annuities again to see if something cannot be done. I am not asking him to raise the ceiling above £500, and I will refer again to Clause it in due course. I have great pleasure in supporting the welcome accorded to this Bill.
§ 6.19 p.m.
§ Mr. Harold Roberts (Birmingham, Handsworth)
Like my old friend the hon. Member for Moseley (Sir P. Hannon), I ought to avow an interest, though it is only that of a humble vice-president of the friendly society of which he is so distinguished a president. I wish also to join in the congratulations to the Financial Secretary on the clarity and brevity of his exposition. The Debate has been an interesting one, but I confess that the speech I personally most enjoyed was that delivered by, the hon. Member for Newcastle-under-Lyme (Mr. Mack). It is an exhilarating thing for a member of the lower branch of the legal profession to listen to the present and the late heads of the English Bar being publicly ad- 1519 monished; and in particular the present head being exhorted to clarify that involved draftsmanship which the laity always seem to think is necessarily the work of lawyers. I would not try to controvert that allegation in toto, but I submit that it is not the work of solicitors. It is the work of Parliamentary draftsmen who are members of the Bar and who are, I am very much afraid, aided and abetted by Law Officers. I do not know the remedy but I speak as a member of a suffering branch which has to advise on the explanation of Statutes, and I wish to make it plain that it is not our fault.
Speeches have related to industrial insurance, to possible further amendments, and even to nationalisation, but one only, I believe, has referred particularly to the question of friendly societies. All hon Members have had a memorandum on the subject, and that was alluded to by the Financial Secretary in his opening speech. In some of its sentiments it may have been perhaps a little extreme, but I do not think it can be disposed of so lightly as the Financial Secretary saying that there appears to be some misunderstanding. The 1918 Act gives exemption from taxation to societies transacting business up to a £300 limit. This Bill raises the limit to £500 and I think without doubt sweeps the exemption away. I shall not be impressed by any argument that those who wished to do it could do so on the £300 limit and maintain their exemption, because it is common ground that they could not do so, and the value of £300 in 1896 would be as great as Loci now. A Clause could have been inserted in the Bill, as was pointed out by the memorialists, deferring the operation until the passage of a new Finance Act. That was not done possibly because the Bill was not prepared under the supervision of the hon. Member for Newcastle-under-Lyme. It is quite idle to say that there was a misunderstanding and misapprehension and then put in the Clause, which plainly shows there was no misapprehension but that the matter was, let us say, politely overlooked. It is better late than never.
As to the position in regard to investment by friendly societies, it appears to me that from 1896 onwards they have had an unlimited power of investment with the National Debt Commissioners 1520 and, until a certain Statutory Rule and Order, to invest in the Post Office Savings Bank. Those powers are now sought to be cut down, and the slight explanation given by the Financial Secretary that they are not in line with the cheap money policy of the Government appears to me to be totally unsatisfactory. They were conferred in the year 1896 when 2¾ per cent. Consols, which were already known to be due for reduction to 2½ per cent., stood round about 114, and there was a serious question whether the Post Office Savings Bank could permanently continue to pay 2½ per cent. interest. Newspapers were expressing the hope that they would do so, even at a loss, and that has continued since. Can it now be said that money is cheaper than at that time? I should imagine that all long-dated Government securities could be bought now on a 2¾ per cent, basis.
I quite understand that this particular money might be called short money, readily realised money. But what of it? I cannot be expected to know what was the rate of short money 50 years ago, but it was certainly very much less than the figure at which long-dated debt stood. Short-dated money has always been very much cheaper, and it is straining one's credulity to ask one to believe that a Measure which was introduced in a time when money was as cheap as now and which has worked well over 50 years, must now be done away with because it does not suit the cheap money policy of the Government. If the cheap money policy of the Government has to be bolstered up by the withdrawal of this small privilege, it is in a very bad way. Today is not the time to stifle or thwart these attempts at mutual thrift, or to do anything to damp down or discourage the friendly society movement. I sincerely hope that the unwise counsels which are shown in this part of the Bill may be moderated, or totally removed, in Committee.
§ 6.27 p.m.
The Attorney-General (Sir Hartley Shaweross)
We have had an interesting Debate on this matter which, inevitably, I think, has ranged over a wide field and has dealt largely with matters of detail rather than of principle. With some of those matters I will attempt to deal. Some of them, of course, will require careful consideration in Committee.
1521 From the hon. Member for the High Peak (Mr. Molson), who was followed in this respect by the hon. Member for East Ham North (Mr. Daines) and the hon. Member for the Exchange Division of Liverpool (Mrs. Braddock), we had a thoughtful and informed speech upon the subject of industrial insurance, which raises certain general questions of principle as to the utility of the existing system. I cannot attempt to follow him, nor perhaps would this be the appropriate moment, in a discussion of those general principles, except perhaps to say that one can well understand the anxiety which some hon. Members have expressed that this form of insurance, still increasing beyond the figures given in the Beveridge Report, still the subject of an astonishing number of lapsed policies—I think the proportion of lapses in the case of new policies is something of the order of 60 per cent.—and still the subject of what is undoubtedly a very high cost ratio, should be made the subject of some form of public administration and control.
That indeed was the recommendation of Sir William Beveridge, but hon. Members will recall that his recommendation in regard to this matter was a bracketed one, which he did not consider essential to the operation of the general National Health Insurance Scheme. That is the view which the present advisers of the Government have taken. We have by no means shut our eyes to the possibility of making industrial insurance a national service. We have by no means closed our minds to it. We were forced to introduce this admittedly somewhat stop-gap measure because of the introduction of the death grant under the National Health Insurance Scheme and the repercussions it will have both in regard to legality of existing insurance and of payments in respect of the death of children under 10. In introducing this Bill as a stop-gap Measure we have not for a moment forgotten the possibility of a wider measure dealing with the whole subject. This is perhaps a step.
At the moment the Department concerned with National Insurance has a heavy administrative task in bringing the national scheme into being. It was thought that it would not be wise to overload the machine by adding to that task at this stage the further heavy and compli- 1522 cated task of dealing with the question of industrial insurance. I am able to assure the House that this Measure is introduced entirely without prejudice to the possibility that later we might have some further and wider measure, dealing in a more comprehensive scheme with the whole of this interesting and complicated social problem.
Having said that about the matter of general principle, I come to more detailed points. The right hon. and learned Member for West Derby (Sir E. Maxwell Fyfe) raised first a point in regard to the exclusion of policies on the lives of brothers and sisters. As a rule brothers and sisters are not under any legal liability to incur funeral expenses in respect of each other's death. Indeed, of the total premium income of those who undertake the business of industrial insurance the proportion which is attributable to this particular form of insurance between brothers and sisters is given in the Beveridge Report as something under 5 per cent., a figure which seems to show that there is no wide demand for this particular kind of cover. That figure was ascertained when the liability might be for the whole funeral expenses, as opposed to the indirect expenses consequent upon the death. That is not so now, because under the national scheme there will be a death grant of £20.
It may be that in exceptional cases a brother or sister may wish to insure against the risk of incurring expenses—travelling expenses, possibly, though less probably now, mourning, the loss of a day's pay, the cost of a wreath and matters of that kind, in the event of the brother or sister dying. The risk of their having to incur that kind of expense is small, however, and experience has shown that very few want to insure against it. There may be exceptional cases, but just in the same way there may be exceptional cases, say, in respect of a nephew or niece who wishes to insure against expenses of this kind in respect of an uncle or aunt. We have had to draw the line somewhere, and as the hon. Member for the High Peak said, we have had to do it in a rough and ready way. This seemed the appropriate line at which to draw it, and to provide that these insurances should in future only be taken out in respect of people for whom there was likely to be a 1523 legal liability—the parents and grandparents.
Then the right hon. and learned Gentleman, the Member for The High Peak and one or two other Members raised the troublesome problem of proof of death so as to ensure that not more than £15 was paid to any one person and, one might add, to ensure also that not more than £15 was insured to any one person. This is a matter which presents considerable administrative difficulty, and we want to find some solution of it, as the right hon. and learned Gentleman has suggested, which would not cause inconvenience at a time of distress to the people who have taken out policies of this kind. We have been thinking rather on the lines suggested by the right hon. and learned Member about the possibility of a special form of death certificate upon which the payment made would have to be endorsed. That is a matter which we shall have to explore further in Committee. We shall welcome any suggestion which the right hon. and learned Gentleman or any other hon. Member may be able to make to assist us in finding some proper solution for a problem which everyone regards as troublesome.
I turn to the point raised by a number of hon. Members about the provisions of Clause 16, which abolish certain powers which are at present enjoyed to invest funds with the National Debt Commissioners. The suggestion which was made by one hon. Member and repeated by another hon. Member that this new proposal is in some way damaging to the Savings Movement, or is in some way inimical to mutual thrift, is really quite misconceived. The fact that this particular form of investment is no longer to be available to the friendly societies will not result in any individual members of the societies allowing their policies to lapse or ceasing to pay the premiums as they fall due. Those payments, which are the real form of saving and thrift by the community, will still continue, and the insurance fund resulting from them will continue to be invented in one form or another. The fact that they will no longer be capable of investment in this particular fund, a fund which has never been included in the total figures of National Savings published from time to time, does not make these premiums any 1524 the less savings or any the less a form of thrift on the part of the people who pay them.
The position with regard to investment in this fund is simply that the Government really cannot continue a policy of borrowing money at call on the terms which have hitherto obtained. It is in practice money at call, for although there is a right to refuse to allow a fresh deposit to be made once that deposit has been withdrawn, that right has been exercised only twice in the whole history of this investment, and only in the case where the whole deposit has been withdrawn. It has, in practice, been found impossible to exercise that right, when only part of the deposit is withdrawn. In fact, the fund has to be kept fluid and the money is at call.
The Government find it quite impossible to continue a policy of borrowing money a t call at a rate which may well have been economic—I have no idea whether it was or not—50 years ago, but it is certainly uneconomic at the present time, and it is quite inconsistent with the Government's cheap money policy. I do not want to get involved in any discussion about the Government's cheap money policy, about which I could hardly know less than I do, but my advice is that the Government can borrow money for considerably less, and that this money in the hands of the Government does not, therefore, earn the rate of interest which the Government are compelled to pay upon it. In these circumstances we cannot feel that it is right to continue what is in fact a scarcely veiled form of hidden subsidy to the societies. I would only add this in regard to it, that it is impossible to feel that the abolition of this form of investment will greatly inconvenience those who conduct the business of industrial assurance. The total industrial assurance fund stands somewhere in the neighbourhood of £700 million. About one hundredth of that amount happens to be invested with the National Debt Commissioners. We propose to make repayment in an orderly and convenient way over the next three and a half years.
The other part of Clause 15 contains a provision in regard to deposits with the Post Office Savings Bank. It is intended merely to clarify the existing law. In our view the existing law is not that there is any right of unlimited deposit with 1525 the Post Office Savings Bank. The provision of the statute which enables trustees to invest any amount in the Post Office Savings Bank does not impose any obligation on the Postmaster-General to accept large deposits. The matter is now one which we wish to make abundantly clear, and beyond the possibility of legal doubt, by having included in this Bill an express provision in regard to it.
The point was raised by the hon. Member for Newcastle-under-Lyme (Mr. Mack), who was followed in this matter by one of the hon. Members who spoke after him. He attacked on two grounds the £15 limit, which will, in future, be placed upon this form of insurance. The first was perhaps hardly a ground which could assist the House in deciding whether the amount is sufficient in itself to cover the expenses for which it is to be provided. The hon. Member suggested a larger sum would to some extent compensate for the loss—whatever it may be—that societies, companies and agents will suffer from the restriction of the Clause in respect of whom these policies may be issued.
Although the exact figures are not available to date, it seems quite clear that the inclusion of the insurance of brothers and sisters—as mentioned in dealing with the points raised by the right hon. and learned Member for West Derby—will effect only a very small reduction in the premium income. Quite clearly, we could not raise the limit of the amount payable on death simply to bring about the result that insurance companies and friendly societies and agents should not lose quite as much as they might otherwise do from the provisions in this Bill.
The main consideration is whether £15 is enough. Is that a reasonable provision for the loss insured against? When it is appreciated that the object of these policies is simply to indemnify those classes of relatives who are covered by the Bill against reasonable expenses in connection with the death of their relative, there can, in my submission to the House, be little doubt that the sum of £15 is sufficient. Take first the person who has to bear the funeral expenses. He will get £20 national death grant, plus £15. That is the amount recommended by Sir William Beveridge. We understand—and I think we have been told so in this Debate—that the average amount paid under policies, is somewhere between £20 1526 and £30. That person is, therefore, at least as well off as he was before. Probably he is better off. Certainly he is £15 better off than the Cohen Committee thought proper. That Committee, as hon. Members will recall, recommended the figure of £20 without any national death grant. So the person on whom the actual cost of the funeral falls, is in our view, amply provided for. The rest of the relatives may be put to expenses of travelling, mourning, flowers, the loss of pay and so on.
We have formed the view that, in allowing £15, we have allowed a sum reasonable in all the circumstances. Although it is very natural that people should wish to incur expenditure on these unhappy occasions it is better, perhaps from a social viewpoint, not to encourage anything more than is vitally necessary. There is not much doubt that the more that is made available by the way of grant or insurance, the greater is the risk that the cost of funerals and all the attendant matters—already greatly inflated as many people think—will become even higher than at present. On the whole, we think, with Sir William Beveridge, that £15 is a reasonable amount for which to provide.
I come now to the rather difficult question of the premium receipt book. I do not think that any hon. Member will doubt that the present position is neither satisfactory nor convenient. There may be many members in a family each having a number of policies all of which are mixed up, higgledy-piggledy, in a single premium book. What is provided for by Clause 7 of the Bill, as at present drafted, is first, that a premium receipt book shall be provided. That is doing no more than giving legal effect to what, I understand, is normally the usual practice nowadays. The second thing, and it is about this object that complaints are map, is that we take power to provide by regulations for the form which these receipt books should take.
It does not follow that those regulations would prescribe a separate book in respect of each separate policy, although I believe that was in the recommendations which the Cohen Committee made in this matter. It may be that we should take the view that there ought to be one book for each policy holder, so that when he left a particular house and went to live 1527 elsewhere, and became separated from his family, he could take his premium receipt book with him. I can assure hon. Members who have raised this matter that we appreciate the difficulties, and will give them most careful consideration. When this Bill has been passed into law we shall not draft the final regulations without taking into account all that has been said, and any other representations which may be made.
The hon. Member for Newcastle-under-Lyme asked what was the main point of the provision that there should be a conspicuous statement as to the proposer of the policy, and that it should form part of the policy itself. As hon. Members will be aware, great difficulties have arisen as to the ownership of particular policies in the administration of this form of insurance. There is really no particular difficulty in asking that the name of the proposer—and the name of the proposer may be the key to the actual ownership at any given time—should be inserted in the policy. Not in the microscopic print one is usually accustomed to find in insurance policies—microscopic perhaps because it is hoped that nobody will take the trouble to read it—but in a clear manner, which anyone can see. That is the purpose of this particular provision, which I hope will not impose undue burdens on the companies, societies or agents.
The hon. Member for East Ham, North, asked me about the position in regard to assignability. The possibility of assigning this form of policy obviously could raise not only considerable administrative difficulty, but serious dangers of a social kind. If unrestricted assignment is permitted the effect of the restrictions on whom policies of this kind can be taken out is destroyed. Indeed, as the hon. Member himself pointed out, it is a way of effecting policies by persons who have no insurable interest, statutory or otherwise, but who are able to take over by assignment a policy taken out in the name of one who initially had such an interest. Therefore we do not want to do anything to permit general assignment. If someone, in fact, pays the premiums of a policy, 1528 we have provided that the amount that he has paid—and no more—may form a charge on the sum which eventually becomes payable under the policy itself.
I come finally to the point raised by the hon. Member for East Ham, North, and the hon. Member for Moseley (Sir P. Hannon). I confess that it is a matter with which I personally have the very greatest sympathy. I refer to the point that the language of Statutes ought to be more simple. I am bound to say that I am very much in favour of simplicity in the drafting of Bills. It is very much easier in my experience to say that a Bill ought to be simple than to draft the simple Bill. I read the proviso to Clause 8 eight times before I really understood what it did. I cannot assure the House with any confidence that I understand now; but when I tried to draft the same purpose in different wording I found that it was not so easy as I thought it must be at first sight.
Parliamentary draftsmen, who are responsible for drafting these Measures, have a very heavy task in framing the Bills which come before the House. Very frequently their hands are fettered by the language of previous enactments which they are modifying, adding to, or amending, and sometimes also by the language of judicial decisions. It certainly is not an easy matter, as many people think it is, to draft Parliamentary Measures. However, we will gladly consider in Committee any proposed redraft of the proviso to Clause 8 which the hon. Member for Moseley or anyone else may be able to submit.
I cannot attempt now to deal with the other detailed points which have been raised We will go through the OFFICIAL REPORT carefully and give consideration to each point in order that they may be dealt with when we reach them during the Committee stage. I hope that the House will now feel prepared to give a unanimous Second Reading to this Bill.
Question put, and agreed to
Bill accordingly read a Second time.
Bill committed to a Standing Committee.