HC Deb 05 November 1948 vol 457 cc1193-212

Order for Second Reading read.

2.8 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 object of this Bill is to improve the administrative machinery of the Trustee Savings Banks, and to extend their powers It covers a number of matters which have been under discussion between the Treasury and the Trustee Savings Banks Association for some time. Some of the provisions in this Measure would, I think, have received legislative sanction before the war by another Government had time permitted. Many of the things suggested here are quite nonparty, and have received the willing assent of Members in all quarters of the House.

With the exception of Clause 14, which deals with Naval savings banks, the provisions of the Bill have been agreed in substance with the Trustee Savings Banks Association. There are now 86 of these banks in the United Kingdom. They are non-profit making institutions, managed by voluntary trustees of long residence, integrity and good standing. I think this is a good opportunity to pay a tribute to those trustees many of whom have, over quite a long period, done splendid work for this movement. I think, too, the House would like me, on its behalf, to pay a similar tribute to the Association itself which has done very valuable work for the community. Sir Kenneth Stewart, the Chairman of the Association, has done particularly valuable work. He has great drive, and, under his leadership, the savings banks have, in recent years, taken on a new lease of life and gone from strength to strength.

Many of these banks were founded in the early part of the last century, and have built up a very great local tradition. Others are not so old; they have come into existence since the passing of the Savings Bank Act, 1929. But, old or new, there has been, particularly in recent years, a great spirit of enterprise among them, and the expansion which has taken place, has, in my view, been very gratifying, and, indeed, remarkable. They form an integral part of the National Savings Movement, and the work which they have done in this direction has, I believe, proved invaluable in encouraging thrift, particularly among small savers.

This Government—we are not dealing here with a party matter—have done all they can to help the savings banks in the work they are doing. They have approved a programme of development in new areas, and the House will be interested to know that it is hoped to open within the next five or six years something like 150 branches a year. Last year, 60 new branches were opened, and, in the current year, it is hoped to exceed that figure. At the end of 1947, the total sum due from the National Debt Commissioners, who hold the moneys of these savings banks in a special fund, exceeded £600 million. That will give the House some idea of how much money is involved, and of what an excellent job these banks are doing.

I do not wish, at this juncture, to go through this Bill Clause by Clause. As the House will have seen, there is a number of Clauses, but, fortunately, this time, unlike some Bills which deal with financial matters, most of the Clauses are quite plain. But the most important Clause is, undoubtedly, Clause 1, and I will refer to that at some length. Clause 1 arises out of an understanding reached with the Trustee Savings Banks Association. The main object was to find a reasonable means of reducing the total remuneration paid to the banks, consistent with the Government's policy of encouraging their development and activities. As the right hon. and gallant Member for Gainsborough (Captain Crook-shank) knows, the Treasury has power, under Section 2 of the Savings Banks Act, 1920, to fix the interest payable to the banks on sums invested with the National Debt Commissioners at any rate between £2 15s. per cent. and £2 17s. 6d. per cent. Since 1920, the rate has stood at £2 17s. 6d. per cent., but it has been clear for some time that the margin of⅜ per cent. between this rate and the 2½ per cent. paid to the banks' depositors, was more than was needed by the banks as a whole to meet their management expenses.

Some banks, however, were less fortunate than others; and although the margin was obviously more than justified for some banks, with others, not because they were inefficient or for any reason of that kind, but because they were frequently enterprising and launched out perhaps more than some people might have thought they were justified in doing, the amount has not proved more than sufficient, or, perhaps, in one or two cases, not even enough. After considerable discussion with the Association, an understanding was reached with the Treasury that the existing rate of interest should be reduced to £2 16s. per cent., and that, if that were done, legislation should be instituted to empower the stronger banks to give assistance to the weaker ones. Clause 1 gives effect to that understanding between the Treasury, acting for the Government, and the Association. Under the powers which Clause 1 gives, there should be between the banks which have funds to spare and those who are less fortunate a mutual understanding, and the power to enable one to come to the assistance of the other.

2.15 p.m.

Captain Crookshank (Gainsborough)

We on this side of the House do not propose to offer any opposition to this Bill either. I should like to say from these Benches, in the same sort of terms as the right hon. Gentleman used, how much the nation as a whole is indebted to the movement of which the Trustee Savings Bank is the spearhead—that is, the business of small savings, which has gone ahead over the years with such success, and with such advantage to the nation as a whole. I should certainly like to endorse what he has said about the Association itself, and to offer our thanks to all those men and women who are concerned with the management of this very important movement. Indeed, I think it is very remarkable.

I had some figures given me of the last return of the Savings Movement for the week ended 23rd October. We find that, contrary to the trend elsewhere for some time past, new deposits in the Trustee Savings Banks were very well ahead of the withdrawals during that period. That, of course, is all to the good. It is quite clear that with an organisation—if I may use that word—of this kind, administrative changes have, from time to time, to be brought about, and from the very nature of the case they must come before this House. Therefore, it would be tedious and unnecessary, I agree, for the right hon. Gentleman, at this stage, to go through any of the Clauses of the Bill, because we are only asked to accept, in principle, the fact that the time has come for administrative changes, and that this is the way in which the Government propose that they should be carried out.

The right hon. Gentleman said that Clause 1 was the important one, but I would like to tell him that, when the time comes, I shall probably have some questions to ask him about Clause 3, because that Clause is the one in which the Treasury may, by order, say in future that there will be no limit to the amount which may be invested by any individual. I hope I have not got it wrong; I think that is what it is. I also hope that, at some stage early in our proceedings, the right hon. Gentleman will tell us what sort of figure the Treasury has in mind to set by order, because I see the danger that, if they set too high a figure, it may alter the whole character of the Trustee Savings Banks.

At the present moment, the investor is limited, I believe, on the investment side, as to the amount he can invest. In order to make the whole system one of small savings, a comparatively low figure has been kept, but in this, compared with deposits in the joint stocks banks, a comparatively high rate of deposit is allowed. If the figure is raised unduly high it will obviously tend to attract depositors of a different character from those who now use the trustee savings banks. I do not mean that that is the Government's intention but it is better that the point should be stated. We should not alter the character of these banks, which are one of the channels for the small saver. There are other channels for the larger savings—if there are any larger savings in these days. The trustee savings bank movement was not intended for that purpose, any more than was the Post Office Savings Bank. I hope that the right hon. Gentleman will be able to elaborate a little upon the intentions of Clause 3. when we discussed it at a later stage.

The Trustee Savings Banks are a very valuable part of our national life. I could not agree more with the right hon. Gentleman on that point. I am sure that this is the view of all hon. Members in this House. The only sad thing is that in recent months we have seen a considerable drop in the savings of both small and large savers alike. Many of us on this side of the House believe that that drop is due to the policy of the Government themselves. The capital levy in its present form covers a comparatively small number of people, but the adoption of the principle by the Government has shaken many of those who are most active in the savings movement. That is the case also with regard to the Government's general policy of compensation under the nationalisation Acts. People who had small savings invested in industry and not in the small savings movement—there were plenty of them—found that the compensation terms were nothing but legalised robbery and they have had their faith shaken in the value of savings.

I hope that when the Government produce nationalisation Measures in the future they will bear that aspect of the matter in mind. As Lord Catto said the other day, we cannot expect people to be both taxed up to the hilt and to save. We have to make a choice which we want to do. The Chancellor of the Exchequer is always optimistic that people will do both, but it does not work out that way. The general trend of small savings recently has been one that none of us have been pleased to see.

The Bill is adequate for its purpose, but on the general question of savings many of us are very worried at what has been going on. As there was a Debate on the Adjournment the night before last on this matter, when many figures were quoted, I do not want to say anything more about it, except that as that Debate took place late at night after a very important discussion of other matters, practically no reports appeared in the Press, not unnaturally. Therefore, I do not know whether it would be open to the right hon. Gentleman to repeat what he then said so clearly, which was that the Government entirely repudiate as improper the remarks made by Mr. Gibson of the Bank of England. The remarks are on record in HANSARD so I prefer not to repeat them; I would only call attention to what he did.

Perhaps there is more opportunity today for greater publicity for the right hon. Gentleman than he had on Wednesday if he will say once more, as I am sure he is prepared to do, that those statements were contrary to Government policy and should not have been made. He will then have done some little thing to stop the mischief that was caused. I have no further comment to make now but will recommend my hon. Friends to let the Bill go.

2.25 p.m.

Mr. Howard (Westminster, St. George's)

Before and during the war I was associated with and interested in a variety of organisations concerned with the promotion of thrift. I want to join with the Financial Secretary to the Treasury and with my right hon. and gallant Friend in saying that none of those organisations for the promotion of thrift has a prouder record Man the Trustee Savings Banks. When we are considering legislation dealing with their future we should be very careful to remember as my right hon. and gallant Friend has stressed, that they were designed primarily for the small saver—the wage earner and the lower scale of salary earner.

I will not, of course, discuss the details of the Bill today, but my fear is that a tendency may arise to lose sight of that purpose and of the people for whom those banks exist, and to consider too much the administrative convenience of those who are responsible for guiding their affairs. If we are to have these banks efficiently and cheaply operated we must have the most convenient administrative methods but I am sure the whole House would say it would be a retrograde step if, with a view to making it easier to conduct the affairs of those institutions, the individual depositors and small savers were to lose anything. The first point about these banks is that they should be safe. It is tragic that one should even have to raise these points, when we think of the honourable record of the banks, but in view of what was said by the Financial Secretary himself, and by the then Chancellor of the Ex-cheque in April last year it is important that a statement should be made by the Government on this point.

The second point is that the banks should be an example to the individual small saver. One of the objects of promoting thrift is to make the individual more self-reliant and give him a higher sense of personal responsibility. If the banks are to set an example to the individual they must retain and improve their sense of individual responsibility. Each one of them must stand firm on its own feet. There is danger lest the tendency to promote mutual assistance among these banks may bring about a position where they are less solely de- pendent on their own resources. That is a danger against which we should guard.

Perhaps I may return to this question of the safety and security of these savings banks. The reason why I ask a spokesman of the Government to make a statement on the matter is on account of what the then Chancellor of the Exchequer said in his Budget speech in April last. He mentioned a Resolution which he was to propose and which he then referred to as a small technical point."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 57.] Unversed as I then was in the "in-trickeries" of Daltonian dialectic I took those words at their face value. Consequently I was surprised, to put it mildly, when, two days later, the Chancellor of the Exchequer explained the full purposes of the Resolution that he was proposing and the true implications of what he had termed "a small technical point." After explaining that the interest on the deposits was to remain at 2½ per cent. at which it had stood for a long time and that the Government had no intention of altering it, he went on: The consequence, however, might be—although it is not yet the case—that a deficiency would arise on the Savings Bank accounts. As the rates of interest on Government securities in general have been brought down, it might be that when we take account also of expenses management, in a year or two's time, if the cheap money policy progresses well there would be a slight deficiency on these accounts. For this reason we desire to institute a change of practice."—[OFFICIAL REPORT, 17th April, 1947; Vol. 436, c. 467.] To my mind the possibility of deficiency arising in the accounts of these banks, which have to look after the savings of over four million of our people, was something more than a "small technical point." Frankly, I was worried, and consequently, when the Committee stage came on the following week, I again raised the question. The Financial Secretary, who replied, was absolutely specific that the reason for that Resolution was that a deficiency might arise as a result of the cheap money policy which the Government were then enforcing. I will quote his words because then I think he will see the importance of making a statement now: This Resolution… is to provide for meeting a possible deficit that might arise in the finances of the savings banks… The deficiency has not yet occurred"— He was speaking in April, 1947— and we are not certain yet that it will, but it does appear to us likely that one will occur next year or the year after, in both of these great institutions."—[OFFICIAL REPORT, 22nd April, 1947, Vol. 436, c. 909.] That was said just over 18 months ago and I want to know, is it still likely that a deficiency will occur? Has one occurred already? If it is not still likely, is it not conceivable that there ought to be some other inclusions in this Bill to deal with what I imagine is a changed position as a result of a changed financial policy adopted by the Government?

That is my first point and it is of great importance to the future prosperity of these banks, which have such a proud record, that their present position should be made perfectly clear and that it should also be made perfectly clear that if there is any doubt as to their present security, it is the direct and admitted consequence of Government financial policy and in no way the result of any defects of management on the part of those responsible.

The second point is the question of preserving the individual independence of each one of the banks. That is of the greatest importance. All of us can see the value of them giving mutual assistance to each other, but why should one of these banks give a grant of money, which has come to them from the individual savers, to promote the development of another independent institution which is only acting in rivalry with them? Friendly rivalry I admit, but why should the surplus resulting in one extremely well-managed and efficient bank be diverted to encouraging a development in another bank which may not have equal resources? The Financial Secretary in his statement this afternoon used these words: It might be that some of them have launched out more than some people thought they were justified in doing. I think he will recollect those words, but he will see them in HANSARD.

That is the point. Have they launched out more than they were justified in doing? If they have, then this provision, which appears to be something designed to enable them to do something which is good, is in fact something being done now to recover damage they have suffered from doing something which was unwise. I hope that is not the case, but again the words of the Bill and the words of the Financial Secretary create doubt, and the one thing we must remove if we are to have a successful Savings Movement and successful institutions is any question of doubt.

The great danger to my mind is that the Bill seems to remove individual responsibility from the individual banks and to give greater and wider discretion to the Commissioners for the Recovery of National Debt. No one doubts the integrity of the Commissioners for National Debt but their primary duty is to have regard to the National finances. It is not their primary duty to consider the immediate interest of the individual saver. There may well be a conflict of interest arising in their minds as to what they should approve or should not approve for an individual bank, and there is no doubt that if such a conflict arises it will be their primary duty to do that which is desirable for the general support of National financial policy rather than that which is in the immediate, direct interests of the individual saver. On this point the Financial Secretary, speaking last year, used these words in commending the step which was being taken: We believe this is the right thing to do. It will reassure the small saver that he can absolutely rely on the maintenance of his interest at 2½ per cent."— Well and good and that there will be covering authority for investment of the funds in furtherance of the Government's policy.—[OFFICIAL REPORT. 22nd April, 1947; Vol. 436. c. 969–970.] I am suggesting that these funds should be invested not primarily in furtherance of Government policy but primarily in the interest of the security of the individual investor. In spite of the good intentions, which I do not doubt for one moment, of the promoters of this Bill, you Mr. Speaker, and hon. Members on all sides of the House will remember the name of the place that Dr. Johnson said was paved with good intentions, and it is not my desire or, I believe, the desire of the Government, to see the Trustee Savings Banks go to that place. The intentions are right but I hope that before we agree to give this Bill a Second Reading we shall have a perfectly clear statement as to the present financial position of these banks, and an assurance that any tendency to limit the individual independence of the banks will be resisted so far as is practical and possible.

2.38 p.m.

Mr. Burden (Sheffield, Park)

I do not propose to follow the points made by the hon. Member for St. George's, Westminster (Mr. Howard) except to say that he seems to have dissembled his love for the Trustee Savings Bank very well this afternoon. In regard to the points made by the right hon. and gallant Member for Gainsborough (Captain Crook-shank) on the "Once for all" contribution, and compensation under nationalised industries, while extremely interesting, if they were discussed at length would take us too far this afternoon. I believe there is a quite adequate reply to the points made by the right hon. and gallant Member and at an appropriate time and place that reply will be made.

On behalf of those interested in the trustee savings banks movement I wish to thank my right hon. Friend for bringing this Bill forward and also for the tribute paid not only to the Savings Banks movement but also to the Trustee Savings Banks Association which is doing so much to guide and inspire the work of the trustee savings banks. Today there are about 86 trustee savings banks. They have about £600 million deposited and 4,500,000 depositors. Trustee savings banks, as the Financial Secretary has said, have their roots deep in our national life. Like so many of our great movements, they sprang out of perhaps the darkest period of our national life, in the time of the Industrial Revolution, from 1760 onwards, a time when the working classes of this country were forced down to levels of poverty and misery compared with which the lot of the negro slave was humane, the days when, as one historian said, it was not tens, nor hundreds but thousands per cent. which made the fortunes of Lancashire. Like the friendly society movement, the Co-operative movement and the trade union movement, the trustee savings banks movement has come out of that very grim time and today we see it firmly rooted.

I agree with the hon. Member for St. George's, Westminster that we do not want to put this movement into a straitjacket. We must give it freedom to develop along its own lines and in its own way, but at the same time, in view of its particular and close relations to the State, it ought to operate in the general framework set by this House. While there is a very strong case for the independent bank pursuing its own course, we must remember that in the savings banks themselves, as in other walks of life, there is a movement towards amalgamation and the weak going with the strong, or the strong going with the weak, and we ought to foster that movement.

The committee which considered the problem of municipal banking in 1926—and at one time there was thought to be competition between those two forms of banking—made the following comment in regard to trustee savings banks: The financial basis of Trustee Savings Banks is so sound and they are so firmly established and have in the course of their long history come to inspire such great confidence and, indeed, affection, in the minds of many depositors, that we think it desirable that their activities should be more widely extended and their facilities better advertised and their popularity made even greater than at present. Those words of 20 years ago are equally true today.

A small all-party committee of this House has looked at this Bill Clause by Clause. While there may be one or two minor Committee points which will be dealt with in due course, broadly speaking the all-party committee accepts the principles of the Bill. We welcome it and believe it will further extend the sphere of usefulness of the trustee savings banks movement and help forward the ideals of the movement. On behalf of those with whom I am associated I wish to thank my right hon. Friend for the Bill.

2.46 p.m.

Mr. David Renton (Huntingdon)

I agree with the hon. Member for the Park Division of Sheffield (Mr. Burden) in most of what he has said except for the nonsensical comparisons between the British working class of the past and negro slaves. I welcome the Bill without the qualifications stated by the hon. Member for St. George's, Westminster (Mr. Howard). It seems to me that if this desirable movement is to continue to fulfil its purpose, it must be able to expand by opening new branches. The opening of new branches and starting new deposits is an expensive matter. It takes something like six years to build up a new branch into a flourishing concern.

I think it is not unreasonable that the movement should be regarded as an integral whole and that the weaker members, or beginners, in it should get some help from well established branches. I welcome the Bill for those reasons. I do so because Liberals in the past had a very considerable part to play in the building up of this movement, and I welcome anything that is done to strengthen it now.

Lord Beveridge, in his Report on Social Insurance, pointed out that personal savings was one of the essential pillars upon which our standard of living was to be raised in future. Mr. Neville Chamberlain some years ago referred to the National Savings Committee, the Post Office and trustee savings banks as the great trinity of thrift. Lest anyone should think that the Post Office Savings Bank is in any way ousting the trustee savings banks in this vital work, it would be interesting to draw attention to the figures for the period 1st April to 28th September, 1947. During that time the Post Office Savings Bank registered a net dis-saving of £6,600,000 and trustee savings banks a net saving of £9,750,000 so that during that year at least the trustee savings banks made a far bigger contribution to the thrift movement in this country than the Post Office Savings Bank was able to do. I welcome this Bill as a continuation of the old Liberal principle of retrenchment in public and private expenditure.

2.49 p.m.

Squadron-Leader Kinghorn (Great Yarmouth)

In adding my welcome to those already given this Bill, I am speaking on behalf of many hon. Members on all sides of the House who for some years have watched with a benevolent eye the activities of the trustee savings bank movement. We have kept in close touch with those who have worked out this Bill with the Treasury and we welcome its main principles. It would be interesting to follow up the points made today, but time is passing and we must confine ourselves to the essential points. It is true that Mr. Neville Chamberlain called these three parts of the Savings Movement a trinity, but I would point out that the third part of the trinity, the trustee savings bank movement, the oldest, since its birth was more or less at the beginning of the Industrial Revolution, has continued to live and develop in all those years since then and has projected itself into the new order which has come into being this century, while many other movements, like that for freeing the slaves, achieved their objective and passed out of the historical scene.

The Co-operative movement, the trustee savings bank movement and the very beginnings of the political party which now governs this country have been associated with the self-reliance of our people, despite the lack of education of the majority of them, and with the inborn British character which developed in the industrial areas from the time of the Industrial Revolution, and they still go on, in this post-war period, and will continue, whatever Government may run this country, to play a prominent part in this change over, when we are losing an old social and economic order and moving into a new one.

Further, it is not something which has been imposed from above in a totalitarian way, but something which has grown up and been based on the voluntary effort and public spirit of the people throughout the country. The amazing thing to us, who want the stability of our country to be maintained in these years of change and stress, is that, in all this period the Trustee Savings Bank movement has shown a continual increase in savings and now forms one of the most necessary social services for our people throughout the country.

There has been some argument, and no doubt there will be more, about Clause 1, where it is provided that the elder brethren will come to the help of the younger and weaker. We shall probably discuss this matter in Committee, and I believe that it will emerge that the people of the North Country, who gave birth to this movement, will come to the rescue of the people in the Southern part of the country. I believe we shall find that, in order to maintain the stability of this movement and give it that support which it bestows on the Government of the day, the Scotsmen, Yorkshiremen and Lancashire men will have to come to the rescue of the move- ment and give it a fiat from this House by means of an Act of Parliament.

I should like to join my voice to the sentiments expressed by the two right hon. Gentlemen who opened this Debate in paying tribute to Sir Kenneth Stewart and the other voluntary workers for this movement. One of the outstanding announcements in the New Year Honours List at the beginning of this year was the award of a knighthood to Sir James Fiddes, a man who has spent his lifetime in building up this movement at the very centre, in Glasgow, and who has convinced us on the Parliamentary Committee that he looks upon the job which he has been doing as something similar to that of the family lawyer. In the trustee savings bank, we have a movement which has become part of the social fabric of the district, and which is not just a question of handing a book over a counter, but is something very very much more intimate than that. That is probably the strongest part of their claim to be a real part of the social services of this country now moving into the new order which is springing, not from the wishes of the Government, but from the wishes and feelings of the people themselves.

2.55 p.m.

Mr. Charles Williams (Torquay)

Nothing gives me more pleasure in this House than to listen to followers of Karl Marx on the value of capitalism and savings. This is one of the occasions on which we have had three speeches from devoted Socialists expounding the value of capital in its various forms.

Mr. Burden

Will the hon. Gentleman say on what authority he associates Karl Marx with Socialists, and with myself, at any rate?

Mr. Williams

I understood that Karl Marx wrote one of the leading books on Socialism.

Mr. Burden

May I continue the hon. Member's education by telling him that Karl Marx never mentioned Socialism in his great book?

Mr. Williams

I suggest that the hon. Gentleman should make a call upon Transport House, but, if I develop this theme any further, the hon. Gentleman will probably put his foot in it and get into trouble with Transport House. However, that is one thing which we have had today, and I rejoice in it. We have had the Socialist Party supporting the savings movement. I firmly believe and I think that even Socialists in their saner moments also believe, that the savings movement is of immense value to the country. Support for it has been expressed on both sides of the House. The hon. Member for Huntingdon (Mr. Renton), who represents the larger, saner and more progressive element of the Liberal Party, also spoke in support of it, but it was noticeable that the benches of the Liberal Party have been absolutely vacant and their occupants have taken no interest in this Debate.

In a perfectly friendly way I want to take up one point made by the right hon. Gentleman in charge of the Bill, who paid a very welcome tribute to the various savings banks, in regard to the naval savings banks which are affected by Clause 14. I think he will agree that these banks have done most excellent work, but they are to disappear under this Bill. I think that that is a situation on which some of my hon. Friends might have something to say in the Committee stage. So far as the main policy of the Bill is concerned, and the idea of the stronger banks helping their weaker brethren, I think that it is an excellent thing which would assist the whole balance of the savings movement in the country, but I should like to add that there seems to me to be a very real danger that we might have this movement organised in units that are too big, and, if so, we might lose that most valuable part of the Savings Movement in the past—the personal contact.

That is a warning which I think should be given today and I would add another warning to the Government in support of what was said by my hon. Friend the Member for St. George's, Westminster (Mr. Howard). We all want to keep this movement absolutely outside party politics, but, if we get Ministers going round the country saying foolish things, such as that they want these savings for the furtherance of Government policy, they are going to create trouble in that respect. One of the things that distressed me most last year was the feeling that the savings of ordinary people were being used, as they thought wrongly, in the furtherance of Government policy. The Government have had a very peaceful Debate on this matter, though I do not know what would have happened if certain of my hon. Friends had been here.

Certainly, one of the main reasons why the Savings Movement is not as prosperous as it should be is the attitude of the Chancellor of the Exchequer and those under him. If they really mean what they say in supporting the Bill, the best thing that they can do is to remove the grave distress which unfortunately they themselves have raised in the minds of the people through declarations that the Government are using these savings to further Government policy. I do not want to be controversial in this respect. [Laughter.] I could if I wanted to, but I do not desire to be controversial this afternoon. We honestly want this subject of national savings to be above party politics, but there is danger of a departure from that desirable end through Government declarations in the past.

3.0 p.m.

Mr. Glenvil Hall

If I might by leave of the House, I should like to make one or two observations on points that have been raised and answer questions that have been put. First I will take what was said by the hon. Member for Torquay (Mr. C. Williams). He said that it was desirable that those using these banks should know how the Government were using the money. It goes to the National Debt Commissioners and they have to invest it in accordance with rules and regulations, and indeed, in some cases, with Acts of Parliament which are on the Statute Book. Therefore, it is not a question of the Government using the money in any shape or form. In one sense it is true that all moneys that are invested in Government stocks can be said to be used in furtherance of Government policy, for that policy must inevitably react on the price of the stocks. I am sure the House, which is in amiable mood this afternoon, would not desire me to go into those matters. We are dealing with a particular Bill which on the face of it is quite plain and up to now the discussion has been on a very high level. We all seem a very happy family and in full agreement that this Bill is necessary and that all its Clauses should be agreed to.

The naval savings banks were set up under a Statute passed in 1866 to help sailors to save when conditions were different from what they are now. It was obvious for some years that these banks no longer fulfilled the purpose for which they were intended, and it was decided in agreement with the Admiralty that a time had come for these banks to come to an end. I am informed that the last live account was closed in 1946, and what we are doing in this Bill is to wind it up and to hand the surplus over to the Greenwich Hospital, where it will be used in the best possible way, as the House well knows.

The right hon. and gallant Member for Gainsborough (Captain Crookshank) asked me if I could repeat the assurance I gave the other evening as to the intentions of the Government with regard to the conditions under which people can deposit money in the Post Office Savings Bank. I can with the utmost pleasure give the House and the public at large a categorical assurance that there is no intention on the part of His Majesty's Government of departing from, or changing in any single fundamental particular, the conditions under which people can now deposit money in the Post Office Savings Bank and withdraw it. The present terms upon which any moneys are deposited and accepted, will continue and there is no intention whatever of changing them.

The right hon. and gallant Gentleman asked me whether I would explain the meaning of Clause 3. He hoped that it would not mean that the statutory limit would be abolished altogether. If the House will look at Clause 3 they will see it does not deal with ordinary savings bank accounts. It deals with the money which may be put in the special investments side of savings bank activities. Originally it was thought that when the Savings Bank Act, 1920, was passed, Section 1, which gave power to fix limits of deposits, would also apply to special investment accounts, but I understand more recently the law officers of the Crown raised a doubt as to whether the powers there taken did extend to special investment department deposits. Clause 3 is intended to resolve that doubt.

I understand discussions are now taking place as to whether some change should not be made in the limit, but that is an entirely different matter from raising it altogether. All we are doing here is to place the ordinary and the special investment departments on an equality in this matter. At the moment, the limit is still £500, as the right hon. and gallant Gentleman the Member for Gains-borough knows.

The hon. Member for St. George's, Westminster (Mr. Howard) drew attention to Section 72 of the Finance Act of 1947. We remember the discussions which took place on that very well, or at least most of us do. The hon. Member will be gratified to know that the deficiencies therein provided for, which can if necessary be charged on the Consolidated Fund, have not yet arisen. So far nothing has had to be charged on the Consolidated Fund under the powers which Section 72 gave to the Treasury. I do not want here, and the House would not desire me, to go into the question of the cheap money policy, but it was definitely visualised that if the rates of interest were to remain low—and I for one would like to see them remain low; I think the country at large benefits by a low rate of interest—and the National Debt Commissioners could not find an outlet for their investments at more than 2½ per cent., obviously there would be a deficiency if they in turn had to pay 2½ per cent. under contract to depositors in the savings banks.

It was felt that a deficiency was bound to arise at some time. It has not arisen yet and it may well be that it will not arise. I do not know. As the hon. Member pointed out, interest rates have now risen and are approaching, if they have not touched, 3 per cent.

Mr. Howard

Last year the Financial Secretary said it was likely that a deficiency would arise. Can he go a step further and state that he is now able to say it is not likely to arise?

Mr. Glenvil Hall

Obviously I could not prophesy what may happen to money rates in the years ahead but I should like to make this clear—and I am grateful to the hon. Member for allowing me to make it clear by raising the subject: we can assure the public and those who invest their money in these savings banks that they have the Consolidated Fund behind them and that whatever happens to money rates, whether they go up or down, at any rate they can feel quite certain not only that their money is safe but that the rate of interest at which they have deposited it will be paid.

The same hon. Member mentioned that from something I said it might be assumed that some of these banks were a little improvident in that they have launched out when others thought they should not have done so. If I gave that impression I apologise, because I did not mean to do so. All I meant was that sometimes it has been thought by public spirited individuals in a certain locality that a savings bank in the locality would be a useful thing and a helpful thing for those who lived there. If they had reflected about it they might have said to themselves, "This is a rather risky thing to do." But they have gone on—and I, for one, applaud the fact that they did go on—to say, "This will fulfil a useful function, and, therefore we will open up." But I can tell the House that there is no intention on the part of the Government to try to make local people open up where it is quite obvious that heavy loss would be incurred. At the same time we do encourage banks to open branches in localities where, although the chances of complete success are not present, success presently is likely. We do encourage them to go forward. It is one of the reasons, as the right hon. and gallant Gentleman pointed out, for this Bill, that where we have a well-established bank in one locality making a substantial surplus, it should be able to come to the temporary help of another bank which is opening up in a new neighbourhood.

I think I have covered most of the points which have been made. On behalf of the Government I should like to say that I am grateful to my hon. and gallant Friend the Member for Great Yarmouth (Squadron-Leader Kinghorn) and to my hon. Friend the Member for the Park Division of Sheffield (Mr. Burden) and others who have spoken. I am glad that the Bill has met with the sympathetic response that it has. I agree with what has been said, that the need for this Bill has existed for some time, and I am positive that when we do get it on the Statute Book those who will have to work it will find it of the utmost use to them.

Question, put and agreed to.

Bill read a Second time, and committed to a Standing Committee.