CLAUSE 1.—(Grants by trustee savings banks for the benefit of other trustee savings banks.) (Hansard, 18 January 1949)

§ Mr. Howard (Westminster, St. George's)
I beg to move, in page 1, line 6, after the first "Commissioners," to insert "and the Association."
I hope the Government will accept this Amendment. The Bill, as a whole, is a generally agreed Measure, and Clause 1 creates the new procedure for dealing with mutual arrangements between the various trustee savings banks. It is clear that any such mutual arrangements must be subject to the approval of the Commissioners of the National Debt. It is equally clear, and desirable, that they should be subject to the approval of the Association which represents all the individual savings banks. It is, I understand, the practice, and has been so for some years past, that discussions and consultations take place with the Association before the Commissioners give any approval to any arrangements of this sort. The purpose of the Amendment is to make the present practice, which is 114 agreed to by all parties as being desirable, statutory.
May I add a few words as to the reasons why I hope the Government will see fit to accept this Amendment? I would refer to the discussion which took place upstairs in Committee when I raised this point, although I did not put down a formal Amendment. During that discussion I pointed out, as I have already said, that this was an existing and accepted practice which everyone agreed was a right and proper one and, therefore, it seemed right and proper that it should form part of the legislation covering the transactions of these banks. The Financial Secretary, replying, said: The Association had been in existence for a good many years now. From what I hear, and from what I have seen of its work, I consider that it takes its job very seriously, and that it does everything it can to help the weaker banks who may want these advances. I believe that the future of the Savings Bank movement is well secured under the guidance of the Association. It is absolutely essential that the National Debt Commissioners come into the picture. He then added: I agree that the Association should also. I like to feel that the two work together in great amity."—[OFFICIAL REPORT, Standing Committee A, 30th November, 1948; c. 21–22.] I am sure that they do work together in great amity and in view of the fact that the Financial Secretary has already stated that he thinks that the Association should come into this picture, I can see no reason why he should not—and I hope that he will—accept the Amendment.

§ Mr. Erroll
I beg to second the Amendment.
It is obvious that according to past practice that the Commissioners would not of course act independently of the Association. On the other hand, it is desirable to safeguard the future. We have the position in the Clause as it stands at present whereby the trustee savings banks can, on their own, approach the Commissioners direct without referring to the Association.

§ Mr. Glenvil Hall
indicated dissent.

§ Mr. Erroll
The Financial Secretary shakes his head, and I am prepared to be corrected. As I read the Subsection, it appears that the trustees savings banks can make a direct approach to the Commissioners, and while this is unlikely, we 115 think it is undesirable to leave so obvious a loophole, particularly as the Association referred to in latter parts of the Bill is an integral part of the working machinery envisaged by the Bill. We feel it advisable that it should be written into the Subsection that trustee savings banks must get the approval of the Commissioners and the Association before a grant can be made.

§ Mr. Glenvil Hall
The object of Clause 1, which is the essential Clause of the Bill, is to permit assistance by way of grant to be made by one trustee savings bank to another. As the Clause stands, the approval of the National Debt Commissioners alone is necessary. However, the hon. Member for the St. George's Division of Westminster (Mr. Howard) wishes to insert words which will make it essential for the approval of the Association, in addition to that of the National Debt Commissioners, to be sought and obtained before these grants are made. This Measure is not a party Measure in any sense or form. We have throughout dealt with it in a most amicable way, and I for one do not approach the suggestion made by the two hon. Members opposite in any party spirit. When I considered this Amendment, I asked myself two questions: first, is it necessary that these words should go in? If so, no further query arises. Second, if it is not necessary, is it desirable and expedient; that is to say, would it help to increase the prestige of the Association, or help the trustee savings banks? For reasons which I will now give, I came to the conclusion that the words were not necessary and that it would be wrong for the House to insert them.
I agree straight away—and I think it was said by more than one speaker in Committee—that the Association is doing a very great work. We should not only recognise that, but we should pay tribute to the public spirit of those who assist this organisation; indeed we should encourage them as much as we can. But we must remember that the Association is a voluntary body. Most of the banks belong to it, but they need not do so if they do not wish. Although the members of the Association are nominated by the banks, they are not the banks themselves but only individuals. In addition under 116 its constitution the executive of the Association has the power to add honorary members who may or may not have anything to do with the trustee savings banks movement. The constitution of this Association is, therefore, somewhat loose; indeed apart from the right to collect subscriptions, it has no power whatever to bind the banks. We must remember that when we consider whether references of this kind should be made in a Bill of this sort.
When we come to consider whether the proposed words are necessary, we have to remember the wording of the Clause. Under Subsection (3) the Commissioners can upon the application of the Association … if they think fit, debit the Mutual Assistance Account with a grant, which is passed on to a specified savings bank. Now this is an agreed Measure with the Association and the plain implication and intention of those words is that the Association itself should take the initiative when these grants are being made. If that is so, and if the Association itself is in a sense making and fathering the application, it seems rather curious that we should specially insert such words to make their approval of the grant an essential ingredient when the grant comes to be made.
The Association and the whole field of its activities aim at helping the savings banks, and it is hardly likely that it would veto an application for a grant that was asked for and was being made. Therefore, in our view, it is unnecessary to insert these words, because it would mean that the people who ask for the grant will, after they have asked for it, be asked whether they approve of it. We think that it is a redundancy which we ought not to countenance.

§ Mr. Howard
Is the Financial Secretary telling the House that under Subsection (3) the words The Commissioners … may, if they think fit, debit means they cannot do it except upon the application?

§ Mr. Glenvil Hall
A scheme to that end is now being worked out by those concerned, but the wording as set forth in Subsection (3) is that all these applications must come through the Association. That being so, it is quite obvious that 117 they must agree to them and that there is no need to insert further words to say that no grant can be made until they do so. It is, however, necessary that the National Debt Commissioners themselves should have the right to withhold their approval, because it is one of their functions to act for the public and to see that the provisions laid down in statutes are complied with. But the Association has no such obligation; it has no obligations to the public as such, though it certainly has obligations to the banks themselves because it is the body which watches their interests. For those reasons, which I do not wish to elaborate further, I ask the House to resist this Amendment.
The hon. Member for St. George's Division of Westminster (Mr. Howard) was quite right when he said that the Association is now consulted to a very large extent. In fact, the Association is consulted by those concerned well beyond the provisions of the 1929 Act. Therefore, if the fear of the two hon. Members opposite is that the Association will is some way be cold-shouldered in the future, I can assure them that that is far from being the intention. It is the desire of the National Debt Commissioners and the Treasury that in the future, as in the past, the Association shall be consulted in every possible direction, consonant with the powers vested in the various authorities concerned. We want the savings banks to get the full benefit of the Association's activities and of the provisions of this and other Acts of Parliament.

§ Captain Crookshank (Gainsborough)
The right hon. Gentleman has made a very persuasive speech, and I hope that my hon. Friends will not think it necessary to press this matter, because I think the Financial Secretary has made it quite clear that this collaboration and prior consultation are intended to take place, and do take place. The only thing I have in mind is this. When the right hon. Gentleman referred to Subsection (3) he implied—indeed, I think he said—that the Commissioners would not make these grants except upon the application of the Association, and that it was not necessary to bring them in at this further stage because they had been brought in earlier. If that is what is meant to be 118 the interpretation of Subsection (3) perhaps the right hon. Gentleman will look at it again in the subsequent stages, because on the face of it, it is not obvious that it is only upon the application of the Association that the matter arises. The Commissioners, upon the application of the Association, may do so and so does not seem to me necessarily to mean that unless they apply they cannot do it. If that is really the intention perhaps the right hon. Gentleman will see whether it is necessary to make it abundantly clear in the words of the statute.

§ Mr. Howard
I am grateful to the right hon. and gallant Gentleman for his observations, which, I hope, will be noted. In view of what the Financial Secretary has said, and if he will look into this point, I am quite prepared to withdraw the Amendment.

§ Mr. Glenvil Hall
indicated assent.

§ Mr. Howard
I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

§ Mr. Glenvil Hall
I beg to move, in page 2, line 4, after "books," to insert "of the Commissioners."
This is a drafting Amendment. When we dealt with this matter upstairs, we transposed certain Subsections, altering their order, although not their wording. The words in this Amendment were unfortunately missed out. I apologise to the House for that, and we now desire to reinsert them.

§ Captain Crookshank
I am sure we accept the most handsome apology the right hon. Gentleman has tendered to us, but I hope he will see whether this phrase could not be written a little better. When I first saw the Amendment I wondered if it was right, with so many "ofs." … in the books of the Commissioners of any trustee savings bank so specified. It is a very awkward piece of English and perhaps once more it could be turned round and made right.
Amendment agreed to.

§ Mr. Howard
I beg to move, in page 2, line 8, after "Commissioners," to insert "and the Association."
119 The point of principle here is the same as in the previous case, that the approval of the Association should be active and real just as the approval of the Commissioners is necessary, but it is a little bit different in regard to the safeguard to which the Financial Secretary called the attention of the House. There are two ways in which this mutual assistance can be met. The first is by a payment into a mutual assistance account and then the payment out of that account to the receiving bank. With that point we have already dealt, for it is the one, as the Financial Secretary has told us, which is safeguarded.
The second one dealt with in this subsection is where a grant is made direct from one bank to another, not through the mutual assistance account. In this case the approval and consultation with the Association is not in any way safeguarded by other subsections. I will not argue the point of principle, because that is clear, but I want to ask the Financial Secretary to accept this Amendment, which, clearly, is in line with the principle with which we are all agreed, but which is not safeguarded as was the previous Amendment.

§ Mr. Erroll
I beg to second the Amendment.

§ Mr. Glenvil Hall
I quite agree that there is more reason, if we are to insert these words at all, to insert them in Subsection (4); but, as those who remember our discussions upstairs will recollect, we transposed these subsections to make it clear that the principle method by which these grants would be made would be by payment through the mutual assistance account. Actually, the method here mentioned will rarely, if ever, be used. In fact, it is not proposed to use this method at all in normal cases; but it was felt, when this matter was under discussion, that there should be some sort of elasticity in order to provide for cases of emergency, which I, for one, can hardly visualise.
A scheme is being worked out between the Association and those concerned, and the method adopted will in all cases be the method laid down under Subsection (3). The Association can then take the initiative and, when the Commissioners receive the application, they can approve or not, as the case may 120 be. The hon. Member for Altrincham and Sale (Mr. Erroll) no doubt had Subsection (4) in his mind when he said what he did in his first speech. But the savings banks do not intend to use it except under special circumstances.
The association is mentioned in the Act of 1929, but it is not a statutory body in any sense or form, and, though it has been and is being consulted on every occasion, it would not perhaps be fair to put the words suggested into a Bill of this kind. They would appear to give it a power and an influence which is out of all proportion. Therefore, I hope that the hon. Gentleman the Member for the St. George's division of Westminster (Mr. Howard) will not press this Amendment because, if he does, I shall have to resist it.

§ Captain Crookshank
The right hon. Gentleman has referred on two or three occasions to the fact that a scheme is being drafted between the Association and the banks. This Bill does not make it necessary to bring it before the House, but could we have an assurance that some means will be found of giving publicity to the scheme, either by placing it in the Library when it is arranged, or in some other place so that Members interested can see the end of the story?

§ Mr. Glenvil Hall
Most certainly. I assume the savings banks themselves will desire that their members should know what is being done. Apart from that, I will consult my advisers on this, and I will see if a copy of the scheme, when prepared, can be placed in the Library for the use of hon. Members.

§ Captain Crookshank
Thank you.

§ Mr. Erroll
I should preface my remarks on the Third Reading of this Bill, by making it quite clear that I fully appreciate that the Bill is an agreed Measure between the Treasury and the trustee savings banks concerned. Therefore, to introduce any note other than that of agreement might seem to verge on carping criticism. On the other hand, I feel it necessary to 121 point out one or two facts about this Bill. The Bill covers a number of technical matters, with which on Third Reading we are not concerned. On the other hand, the Bill has come into being because of the Treasury's intention to reduce interest rates paid to the banks, and this interest rate was agreed to as a result of discussions, on the understanding that the richer banks or the banks with larger accumulated funds might be allowed to transmit them to the smaller, newer or poorer banks anxious to use such funds for development purposes.
Under normal conditions no objection could be made to such a process of bargaining, because both sides would gain equally, but it is certainly unnecessarily harsh for the Treasury to insist on a reduction of interest rates at the present time when the banks in the next year or two will be incurring a number of increased expenses, the full magnitude of which cannot be properly assessed at the present time. It is indeed a striking commentary on the efficiency of the trustee savings banks that at a time when all forms of Government expenditure are increasing, the Treasury is managing to secure that the trustee savings banks shall, in fact, receive less money for performing increased services to the community.
It is striking, too, that the trustee savings banks are able to accept this demand from the Treasury and apparently still remain solvent. I would urge the Financial Secretary to bear in mind the possible need of reverting once more to higher interest rates in the near future, on account of the many increased costs which the trustee savings banks will be called upon to bear. First of all there are salaries. Salaries are everywhere increasing. In 1948 there were more wage increases than in 1947. It is, therefore, unlikely that salaries will fail to show something of an upward trend during 1949 and 1950. Holidays with pay, larger insurance contributions and many other fixed overheads are now bigger than they were one or two years ago. At the same time office costs are tremendously inflated. Stationery is 122 more expensive and so is office furniture and equipment, not only because of their true cost but because the Treasury levy Purchase Tax upon them.
It therefore has become much more expensive to enlarge office premises and to take on additional work. I suggest that it may well be necessary to revert to the present interest rate in the near future, because of the increased working expenses of trustee savings banks. I know that the better-established banks have accumulated large surpluses in the past. The Treasury, in its frugal way, has now deemed those surpluses to be too large for present needs, but those surpluses only show what valuable work these trustee savings banks have done. It is unfortunate that they should be compelled to part with their surpluses to other banks at a time when they may require to use them themselves. It is important to remember the valuable part which trustee savings banks have played in the savings movement of this country.
Nowhere, where a trustee savings bank has been set up, has the volume of savings through the Post Office Savings Bank been diminished. The trustee savings banks therefore attract a volume of new savings which has not been attracted hitherto by any other form of Government appeal either through Savings Bonds or the Post Office Savings Bank. Trustee savings banks offer, too, a service which inevitably is not available from over the ordinary post office counter. They are managed by men with banking knowledge and knowledge of human affairs. They are thus enabled to render advice and service which is much appreciated by customers who patronise those banks. I hope the fact will be fully appreciated that trustee savings banks occupy a very special place in the savings economy of this country. It would be false economy to impoverish them in any way and so to reduce the service which they have been rendering to the community in the past and which, given a proper measure of financial assistance from the Treasury, they will be able to render in the future.