NATIONAL SAVINGS (Hansard, 3 November 1948)

§ Sir John Mellor (Sutton Coldfield)
I am glad to have this opportunity to refer to the work of the National Savings Movement. The National Savings Movement has as its central organisation the National Savings Committee, and the form of savings with which they are concerned consists of Savings Certificates, Defence Bonds, the Post Office Savings Bank and the trustee Savings banks deposits. Recently, figures have been published by the National Savings Committee for the six months ending 30th September last. Those figures have caused great public concern because they indicated an excess of repayments over receipts.
I would say at once that there is one conspicuous and most happy exception. The trustee savings banks alone showed really satisfactory results; in the case of the trustee savings banks receipts exceeded repayments. They were the only medium of national savings in which that was the case. The trustee savings banks showed a surplus of receipts over repayments to the extent of £10 million, in round figures, whereas, for purposes of comparison, the Post Office Savings Bank showed a deficit during the same period, the six months ending 30th September, of £12 million. I think one could hardly ask for a more remarkable testimony to the success of private enterprise versus a State concern.
The National Savings Committee's aggregate weekly figures for that period of six months showed a deficit of £11 million, compared with a surplus for the corresponding period of 1947 of £66 million. That indicates the way in which national savings have fallen off, comparing this year with last year. Actually, the results are far worse than those figures indicate, because excluded from those figures was the amount of Defence Bonds repaid at maturity. During the six months ending 30th September last, £49 million of Defence Bonds were repaid at maturity, and that figure does not include the Defence Bonds converted into a new issue. Therefore, adding those figures together, one arrives at this result. The published weekly figures in the 990 aggregate showed a deficit of £11 million. Add to that the Defence Bonds repaid at maturity, which were not included, amounting to £49 million, and one gets a grand total of £60 million as the deficit—in other words, repayments exceeded receipts by £60 million. That is obviously a very serious matter.
I would make this clear: current figures are not affected by Defence Bonds being repaid at maturity for this reason. The maturity of seven-year bonds ceased on 30th August and it will not be until 1951 that the 10-year bonds start to be repaid at maturity. Before I proceed, I would point out that since November, 1946, and until 30th August last altogether £181 million of Defence Bonds were repaid at maturity. That amount did not appear anywhere in the weekly calculations which were published by the National Savings Committee. They did appear in the weekly Exchequer Returns, and it was stated by the National Savings Committee in April, 1947, that their publications would exclude such repayments. But what the public look at are the weekly statements of the National Savings Committee. They never have an opportunity of seeing the weekly Exchequer Returns. Therefore, I feel that the public must have entirely under-estimated the very unsatisfactory position of national savings through looking at those weekly Returns.
In view of that, I sought during the summer, with all the persistence at my command, to learn from the Chancellor of the Exchequer why this particular element in national dis-savings, the repayment of Defence Bonds at maturity, was totally excluded from the weekly statements of the National Savings Committee. I was entirely unable to obtain any information at all or any explanation whatever. The nearest the Chancellor of the Exchequer got was to say that these repayments were clearly distinguishable from repayments before maturity. It is quite obvious that the Treasury know which bonds have been repaid before maturity and which are repaid at maturity, but from the point of view of giving a picture of the process of national saving and of the process of dis-saving, surely there is no distinction whatever. Therefore, I do hope that tonight the Financial Secretary, whom I have told that I intended to raise this, 991 will endeavour to give some explanation why in the published weekly statements this very large item has been totally excluded, because, being excluded, it makes complete nonsense of the figures published by the National Savings Committee.
The National Savings Committee has sought to explain—and, I think, with great justification—the falling off of national savings by reference to the deflationary Budget of this year. I recollect that Lord Mackintosh, at the time of the Budget, said that he feared such a result. In that connection I should like to contrast the view of the National Savings Committee with the statement of the Chancellor of the Exchequer. He said on Monday: This year's Budget made tax concessions which were equivalent to the tax increases. It did not make the task of saving any harder."—[OFFICIAL REPORT, 1st November. 1948; Vol. 457, c. 535.] I personally agree with the National Savings Committee against the view of the Chancellor of the Exchequer. I pray in support of my view what happened immediately after the Budget. A week after the Budget national savings slumped to £500,000 a week, whereas immediately before the Budget they had been running fairly steadily at a net amount of about £3,000,000. I think that, shows that the Budget gave a shock to confidence, especially because of the Special Contribution, which made an attack on capital and caused all savers, great and small, to fear that worse might come. Since then the Government have done nothing to restore confidence. They have continued their attacks on every form of property in one way or another, and given most ungenerous compensation in cases where property has been expropriated. I think it is clear that the shock to confidence has been the real thing which has caused the falling off in national savings.
I should like to pay a tribute to the work of those engaged in the National Savings Movement. We all know in our constituencies how hard the local savings committees, the groups in factories, in the streets and in the schools have worked. They have been doing a tremendous amount of public work which is very hard and, indeed, often 992 thankless work. I am afraid that their task has been made so much more difficult for them by the Government.
The National Savings Committee has been described as "independent." It was so described by a Minister when I raised the matter about a year ago, but it must be borne in mind they are not independent, unless the Government have entirely forgotten the real meaning of independence. The members of the National Savings Committee are appointed by the Government, their staff are civil servants, and their advertisements are vetted by the Treasury in order to ensure that they are in accordance with Government policy. I could give chapter and verse for all that if any hon. Member requires it. Therefore, the National Savings Committee are really muzzled.
I turn now to a matter which occurred a little while ago. On 29th September, the Vice-Chairman of the National Savings Committee, Mr. George Gibson, a former chairman of the Trades Union Congress and now a director of the nationalised Bank of England, made a speech in which he expressed considerable concern about the position. He said: I am very seriously concerned with the existence of very large sums of money in the form of Savings Certificates which are repayable on demand, and the sooner we alter that the better. Then he proceeded to dilate upon a proposition about a people's bank. That, however, was countered the next day by Lord Mackintosh, when he said: I am speaking with full authority when I say there is no intention of changing the terms of the National Savings Certificates. I am not the least concerned about £6,000 million worth of small savings which are easily cashable. It is desirable that the House should have the view of the Government upon this matter. Was Mr. Gibson by any chance flying a kite on behalf of the Government when he talked about a people's bank which was going to take over, in his idea, the whole of the savings movement? We should have some explanation of that.
At the present time the local targets in the National Savings Movement are based entirely upon gross receipts. They take no account at all of repayments and withdrawals. That is very unsatisfactory because it is possible for a person to pay 993 £500 into the savings bank one week so that it is reflected in the results and then draw it out the next week. "Hot" money of that kind is no good to a genuine savings movement as we all want this movement to remain. Such transactions only involve considerable administrative expense and the thing that really matters is the savings that are retained.
I hope very much that the Government will find some way with the National Savings Committee to make the local results reflect the true position. The Government are continuing to make savings extremely difficult—the high rate of taxation, the contributions which are exacted for various social services, all take away money which could be saved and would be saved; and, as I said before, the constant attacks upon property do discourage people from saving. It gives them the feeling that if they spend their money at least they will have enjoyed it. If only the Government would try to enable people to have at their disposal as large as possible a proportion of their earnings and not take it from them then savings would flourish. I do not think that, in view of Government policy, the activities of Ministers in support of the National Savings Movement are doing any good. It would be much better if they would refrain from "pep" talks because they do not ring true.

§ Sir Frank Sanderson (Ealing, East)
May I ask my hon. friend one question? Does he agree that so long as the Government continue to take 50 per cent. of the nation's income in the form of taxation they cannot hope materially to increase national savings?

§ Sir J. Mellor
Yes, certainly.

§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
The hon. baronet asked me why figures of 3 per cent. Defence Bonds maturities are not included in the weekly statement of small savings published by the National Savings Committee, and on that question, and from it, he developed a number of arguments which it would be very interesting to answer. I will attempt to answer them if I have time.
Let me, first of all, deal with the specific question he put to me. He put it, as he very rightly said, to my right hon. 994 Friend the Chancellor of the Exchequer, and his view is that the Chancellor of the Exchequer gave him an answer which was unacceptable. What the Chancellor of the Exchequer said, in effect, was that these repayments are clearly distinguishable from encashments before maturity, and therefore, in the opinion of a good many people, there is nothing to be said for including them in the weekly return.
Defence Bonds are issued, as the House very well knows, in denominations of one hundred pounds. It is true that people can buy them in smaller amounts; but in fact people who do buy these bonds are not the savers of small weekly sums whom we have particularly in mind. And, therefore, for that reason if for no other, there is something to be said for not including the maturities of 3 per cent. Defence Bonds in that ebb and flow of weekly savings by the ordinary small saver.

§ Sir J. Mellor
May I interrupt to ask the right hon. Gentleman whether, when these bonds were to be subscribed for, the subscriptions were not included in the receipts?

§ Mr. Glenvil Hall
Converted Bonds are not included in the receipts and repayments are excluded, of course, unless they are made before maturity, in which case they do come into the net figure. But the hon. Baronet and the House will remember that it is only quite recently that the National Savings Committee has given gross savings and withdrawals, and from them a net figure. The first issue of these bonds began to be repaid in 1946 and repayments continued until August, 1948. But the main question which the hon. Baronet put to me was why repayments on maturity have been excluded. The reason for that is that they are not, in the strict sense of the word, the ordinary small sums which the savers who are concerned withdraw week by week. I admit it is arguable whether these amounts should be included or not. There is not a great deal in it one way or the other from a policy point of view; but if they had been included that would, it seems to me, have meant that the figures would have been inflated one way or the other.
Quite recently, during the period when they have matured and been repaid, it would have thrown the figures out of balance pretty considerably. At the 995 moment none are being repaid, and none will be until 1951. So this discussion at the moment is completely academic. However, the hon. Baronet has his rights, and he thought it was wise to raise the matter. As a matter of fact, we are talking now about something which cannot happen, one way or the other, until 1951. The figures of repayments on maturity are given. They are given, as the hon. Baronet said, in the Exchequer return week by week, and those who are interested can always get the two sets of figures.
There has never been any attempt to hide the fact that these repayments of Defence Bonds are not included in the weekly return. So there has been no deception. What we are all of us trying to do is to increase the amount saved week by week by small savers, and the question arises whether the inclusion in this particular return of maturities of this particular kind is going to help or hinder. My view is that it does not make any difference one way or the other. As they have not been included, and as they are different sums, normally much larger than the small savings with which we are concerned, there is a good deal to be said for not including them. But if we are all here, we might be able to discuss this matter again when it becomes a thing of moment in 1951.
The hon. Baronet referred to a speech of a director of the Bank of England who is also a vice-chairman of the National Savings Committee and who has done, I think the hon. Baronet will agree, very valuable work for that Committee. It is true that some time ago, speaking at a private meeting, on quite another subject, he incidentally referred to the fact that in the Post Office and in the trustee savings banks money could be withdrawn at very short notice. He said it might be considered, so I understand it, whether some change would not at some time be a good thing aimed at keeping money for a longer period, and making it necessary to give longer notice before withdrawals took place. There is nothing wrong in that. All of us, no doubt, have said from time to time, that once we have saved money, it would be a good thing to have the temptation removed so that we would have to give notice before we withdrew it.
996 I am here tonight to tell him and the House what has, quite frankly, been said both by the gentleman referred to, and by Lord Mackintosh, Chairman of the National Savings Committee. Lord Mackintosh made it quite plain that the director of the Bank of England was speaking entirely for himself, and so far as the National Savings Committee was concerned there was no intention to suggest that the terms under which money is deposited would be altered; and I am here to say on behalf of the Government—and if that is the assurance which the hon. Baronet wants, I can assure him of it—that my right hon. Friend, and the Government, have no intention of altering the terms of savings securities which have existed for more than thirty years. I hope that he will take it from me that what I am now saying is the definite and considered view of the Government.
The hon. Baronet did make a reference to the falling off in savings. It is quite true—I do not think any reasoning person denies it—that some weeks are better than others, and, compared with the years of the war, when there was money about and less on which to spend it, the current figures are not so good. That is very true, but he then suggested that this was because of what he termed the "deflationary Budget" we had earlier this year, and said that there was fear on the part of small people of some imaginary threat to property, and especially because of the institution by the Chancellor of the Special Contribution. Now, an argument of that kind is quite fantastic.

§ Mr. Baldwin (Leominster)
Was it not rather the speech of the ex-Chancellor, which immediately followed it, which did more harm than the speech of the Chancellor?

§ Mr. Glenvil Hall
I am dealing with what the hon. Baronet says. The hon. Baronet says that the Budget has caused a drop in savings; it may have caused a drop in the savings of the well-to-do because taxation today is swingeing; we all hope that it may be possible to get back to something near the level which used to exist; we hope that those times may come again, but it is admitted that taxation is very heavy.

§ Colonel Gomme-Duncan (Perth and Kinross, Perth)
That is Socialist policy.

§ Mr. Glenvil Hall
Not a bit of it. Taxation is heavy, but it is less today than it was during the war, when another Government was in office. But I would say to the hon. Baronet that it is quite fantastic to assume that the introduction of the special contribution, which is only paid by the very wealthy, and will only bring in £50 million, is having some strange, astonishing effect on the amount which small people save week by week. I am sure when he reflects that he will know that that is quite untrue. He talked of the Budget being a shock to the conscience of people, and of the ungenerous 998 treatment of property owners. But the property owners are not the people who are making these small savings, and if I wanted to be political, or to make a party point, then the means test in the old days, which robbed people of their property, had far more effect.