NATIONAL SAVINGS (Hansard, 4 April 1952)

§ Mr. Cyril W. Black (Wimbledon)

I am very glad to have the opportunity of raising today the need for National Savings in the present circumstances of the country. I think it will be agreed that it is a good practice that we should from time to time have the opportunity of discussing National Savings in this House, and if that is true in comparatively normal times, how much more is it true in the very special circumstances of today.

I think it is some considerable time since this House had the opportunity of considering National Savings, and I suggest that there are at least two special reasons why it is appropriate that we should be thinking about this matter today. The first is the fact that the country is at present in a critical economic and financial position, and to the solving of our economic and financial problems the National Savings Movement is in a position to make a substantial contribution.

The second is the new financial approach initiated by the Chancellor of the Exchequer in the presentation of his Budget. I am quite certain that everyone connected with the National Savings Movement and interested in the problems of thrift generally will have been encouraged by what the Chancellor said in his Budget speech. I should like to quote a sentence or two from what the Chancellor said on that occasion: I should like to stress the importance of National Savings. The fine work done by all members of the National Savings Movement is recognised by all Members of the Committee. I believe in savings. … I believe that what I am doing will give the Movement a great new opportunity …"—[OFFICIAL REPORT. 11th March, 1952; Vol. 497, c. 1290.] I cannot help feeling that both hon. Members of this House and the country generally have not appreciated as fully as they should the decline in recent years in the volume of net National Savings, and also the great danger to the financial position of the country resulting from that decline.

I would give to the House a few facts and figures relating to the past 12 years. During the six years to 31st March, 1945, 2248 which cover roughly, the war period, the aggregate net savings made through the National Savings Movement, that is to say the surplus of new savings over withdrawals during that period, amounted to £3,071 million; which gives an average for the period of the six years of £514 million a year. When, however, we come to the six-year period following the close of the war, and ending on 31st March, 1951, the aggregate net savings for that period were £851 million, giving an average of only £142 million a year.

What is perhaps even more serious than those figures themselves is the fact that there was a steady decline each year during that second six-year period. If we take the first year of that period, that is to say the year ending 31st March, 1946, there was a surplus of National Savings of £473 million. Then there was a progressive decline in each of the five following years, and in the last two years there was actually a deficit; withdrawals being in excess of the new savings. In the last year of the period, that is to say the year ending 31st March, 1951, there was actually a deficiency of £89 million.

I suggest that these figures for recent years are highly unsatisfactory and that the situation they reveal calls for serious consideration. There has been a general change of attitude on the part of a great many people towards the need for savings. A feeling has become spread abroad that we must inevitably expect this decline in the savings of the public to continue; that it is inevitable in present circumstances, and that therefore the best we can do is to accept it with such degree of equanimity as we can muster.

I believe this is an exceedingly dangerous attitude of mind towards the whole problem of stimulating the thrift of the people of this country. I know it is said that people will save under the stimulus and the excitement of a war effort, when they have before them the goal of the winning of the war, and when any price seems not to be high to pay for such an achievement. There is a point of view often expressed that, with taxation at its present very high levels, and also the very high cost of living, it is almost impossible for people to save today on any worthwhile scale.

I believe that such a complacent attitude is not only dangerous, but based upon a lack of a proper appreciation of 2249 the facts. I support that view by reference to the expenditure which is taking place on what I think can properly be described as luxuries or, at any rate, non-essentials. I should like to quote a few figures for the year 1950. I do not think that the corresponding figures for 1951 are yet available, but I should imagine that they would not differ from the 1950 figures to a degree which would invalidate the argument that I am now developing. From the 1950 figures we can see what the expenditure of the country has been on various items of what many people would regard as a non-essential character, especially on the scale at which the expenditure has taken place.

In 1950 expenditure on intoxicants was £727 million; on tobacco, £778 million; on gambling, £650 million and on entertainment, £175 million, making a grand total of £2,330 million. I suggest that, especially at a time like this, it is a sobering thought that the expenditure of the people of this country on intoxicants, tobacco, gambling and entertainment amounts in the aggregate, in the course of the year, to a sum considerably more than half the whole of the national Budget.

I suggest that if it were possible by means of propaganda, and persuading people as to the lines along which their best interests lay, to accomplish a saving of 20 per cent. only in this expenditure, it would completely revolutionise the position as it affects National Savings. A diversion of only 20 per cent. of the expenditure on these articles which I have mentioned into National Savings would mean a net addition to National Savings of no less than £466 million a year.

Of course, I am fully aware of the fact that these items to which I have referred are all very heavily taxed and that, therefore, any reduction in expenditure on them would mean a loss of revenue to the Chancellor of the Exchequer on the other side of the account. But probably the Financial Secretary to the Treasury would agree with me on the point that a diversion of a part of the expenditure on this kind of item into National Savings would bring beneficial economic consequences on the other side of the account which would considerably outweigh any loss of revenue which the Exchequer would suffer as a result of a 2250 curtailment of spending in those directions.

I suggest that any reading of the present economic and financial position that leads anyone to the conclusion that everything is already being done in the field of saving that can possibly be done, and that there are no ways in which the public could reasonably be encouraged to divert some funds which they are at present spending on consumer goods of one kind or another into National Savings is a reading of the position which really does not correspond at all with the circumstances of the case.

I should like to make two or three constructive suggestions to the Financial Secretary about measures by which I think that the savings of the people might be increased by some encouragement which I believe that he and his right hon. Friend could give. First, I suggest that the Chancellor of the Exchequer should make plain to the country that increased savings would mean reduced taxation, or, on the other hand, that diminution in savings, if continued must lead to increased taxes.

I remember very well that during the war period it was the custom of the Chancellors of the Exchequer at that time to put some target before the country at the beginning of each financial year as to the amount which it was considered reasonable to expect the country to provide in the way of a net addition to savings during the year, and that target figure for savings was directly related to the tax proposals for the year, the Chancellor making it clear that any shortfall in savings during the year below the target figure which he had set would inevitably lead in the following year to the shortfall being made good by additional taxation.

I suggest that the Chancellor of the Exchequer would be serving very well the interests I am sure he has at heart in the encouragement of savings if he were to make quite clear to the nation that there is a very definite relationship between the volume of savings, on the one hand, and the amount which has to be demanded from the public by means of taxation, on the other.

Second, I should like to suggest that consideration should be given by the Chancellor to increasing the rate of interest on, at any rate, some forms of National Savings, and also the enlarge- 2251 ment of the present permitted maximum investments. When I refer to the probable desirability of increasing the rate of interest on some forms of National Savings, I have particularly in mind the rate of interest on deposits in the Post Office Savings Bank, which is, of course, 2½ per cent., having been at that rate for a great many years past.

I think there is a very good case against too frequent changes in the rate of interest on Post Office Savings Bank deposits, but I suggest that interest rates have changed so tremendously in the past five or six years as to justify a serious reconsideration of the existing rates. Two and a half per cent. Consols are generally accepted as a convenient yardstick by which to judge the appropriate interest rate at any particular time, and, at the end of 1946, the market price of 2½ per cent. Consols was 98½ whereas, at the end of 1951, it had fallen to 61½ per 100.

I suggest also that consideration should be given to increasing the permitted maximum investment. Anyone who, today, enters the field of National Savings can invest in the first year a sum of £4,875, assuming that they make their maximum deposit both in the Post Office Savings Bank and in Trustee Savings Banks, and, after that, for 2½ years, they can invest at the rate of £1,000 a year, bringing up the total maximum permitted investment to £9,875.

I find it difficult to understand what objection there could be in present circumstances to lifting this maximum amount quite considerably, and may I draw the attention of the Financial Secretary to the Treasury to one particular field in which I think an increased investment should be permitted? That is the investment by building societies in the Post Office Savings Bank.

During the war there was a special arrangement whereby building societies could invest quite large sums in the Post Office Savings Bank. Some of them still have investments of up to as much as £1⅓ million and more, but that field of investment has now virtually been closed for some years past. Consideration might be given to opening that door to investment again, which was opened during the war and closed soon after the end of the war. Whereas in 1946 or 1947 the Chancellor of the Exchequer at that time might 2252 have been unwilling to accept large sums in the Post Office Savings Bank at the interest rate of 2½ per cent. then prevailing, having regard to the rate at which he has to borrow in the very different circumstances of today that might very well be a field in which a substantial amount of money could be realised at a rate of interest below the rate which otherwise he might have to pay.

The third and last suggestion I make is that a great new campaign is needed to bring the need for National Savings before the mass of the people of this country. It should not be a spasmodic campaign or confined to a period of a week or two or a month or two, but a consistent long-term campaign to persuade the public of the necessity for national savings.

I should like the Chancellor of the Exchequer to inaugurate this campaign by a broadcast to the whole nation. That should be followed by meetings held in every constituency in which every hon. Member should be encouraged to play his part—this being a matter in which all sides of the House are agreed about the objectives we desire to achieve. At the same time, in that process of stimulating National Savings by a campaign of the type I am recommending, the opportunity could also be taken of educating the nation on the economic facts of the present situation. It is obvious that the more the public understand the economic facts the more they will realise how strong should be their sense of duty to save to the utmost of their ability.

Finally, we are dealing here with something which is very much more than a question of £ s. d. We are dealing with an instinct which has existed in the British character for centuries—the instinct to save and to build up an estate. That instinct is still strong, and I ask the Financial Secretary to consider what can be done to strengthen and fortify it still further.

§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)

I am very grateful to my hon. Friend and political neighbour the hon. Member for Wimbledon (Mr. Black) both for his choice of this subject to raise on the Adjournment and for the very helpful and constructive manner in which he has raised it. Indeed, 2253 my only complaint is that my hon. Friend has made many helpful and constructive suggestions but has left me in what is technically called by the Ministry of Food "short supply" in time to reply to them. But I will do my best.

I can begin by assuring him and the House that my right hon. Friend the Chancellor of the Exchequer attaches to the efforts of the National Savings Movement at least as much importance as was attached to them by any of his predecessors. The National Savings Movement itself is a peculiar and extraordinarily valuable part of our organisation in this country, for it is an almost exclusively voluntary public service. The overwhelming majority of its members are volunteers who do the job because of their sense of public duty and for no other reason; and they constitute throughout this country 180,000 savings groups with over 7 million members, bringing in a very large sum of money during the course of the year.

Something like a quarter of a million voluntary workers take an active part in the Movement. At the head of it in England and Wales—and I should like to take this opportunity of expressing the gratitude and appreciation of Her Majesty's Government—is that very remarkable and dynamic public servant, Lord Mackintosh of Halifax, who performs today, as he did under the previous Administration, inestimable services which are carried out with his own peculiar mixture of enthusiasm, zest, force and charm.

Equally, there are Committees of great importance in Scotland, under the chairmanship of Sir John Erskine, and in Northern Ireland, under the chairmanship of Mr. Duff. What I have said of Her Majesty's Government's appreciation of the work of Lord Mackintosh's Committee in England and Wales applies, of course, in equally full measure to the Committees in Scotland and Northern Ireland. I should like, too, to say how much Her Majesty's Government appreciate the co-operation given by hon. Members on both sides of the House.

My hon. Friend the Member for Wimbledon referred to the possibility of a new campaign. He will, I am sure, know from his own experience that "Lend Strength to Britain" weeks have 2254 been taking place in different parts of this country in recent weeks, and that the National Savings Committee has had the advantage of the support of hon. Members on both sides of the House; very valuable support of a wholly nonparty nature has been given. I myself had the privilege of opening the week in Sheffield, and I was immensely struck by the enthusiasm and the efficiency of the Savings Movement in that great and famous city. I express the hope most strongly that hon. Members will continue their co-operation in this matter.

The importance of the Movement from the economic point of view is very great. As my hon. Friend said, there is a very direct relationship between the results each year of national savings and the pressure of inflation, and at present, when we are seeking to bear the double burden of restoring our balance of trade and shouldering the load of the defence programme, the need for the assistance of what the Savings Movement can do in the battle against inflation is particularly and peculiarly strong.

My hon. Friend gave some figures and indicated that he thought the position—to use his own words—had become alarming. I differ from him in this. Of course, in this imperfect world there is no situation which any of us can imagine which could not, perhaps, be better. But all the same, the figures for national savings over the last few years do show that the Savings Movement is able, despite the difficulties of the time, still to make a very big contribution to our national well-being.

Last year the net repayment of over £80 million was substantially offset by accrued interest of over £90 million. In January of this year the total amount invested in National Savings certificates, the Post Office Savings Bank, the Trustee Savings Bank and stock on the Post Office Register was £6,100 million compared with £1,500 million before the war and, perhaps even more significant, £5,000 million at the end of the war.

Those figures illustrate that although we could wish for even greater increases, through all the difficulties of these years the Savings Movement has been able to hold its own, and the total of savings has actually risen by the very substantial figure of £1,100 million since the end of the war.

2255 My hon. Friend made a number of practical suggestions for forwarding the end which he and no doubt all hon. Members desire, of increasing savings and improving the results. It is true that the figures he gave for other expenditure illustrate that there is a field for further expansion and further development. So far as his particular suggestions were concerned, I think they are not ones which he would expect to have answered on the spur of the moment; but I can assure him that those suggestions, both by reason of their own merits and by reason of the source from which they came, will receive the most careful attention of my right hon. Friend.

As for his suggestion as to rates of interest, I would only say that there is a great deal of evidence for the view that it is the security and availability of the 2256 money, rather than the precise rate of interest, which is the peculiar attraction of this particular kind of investment to a very large number of people. The rates, as a whole, have been kept at a very stable level over a good many years. With regard to the maximum limits, that is a matter we have to watch carefully from the point of view of securing that these really are new small savings and not merely a convenient switch of investments. My hon. Friend's suggestions will be most carefully borne in mind and I am sure that my right hon. Friend and the House will be grateful to him for having made them.