§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Kaberry.]
§ 9.53 p.m.
§ Mr. Cyril Osborne (Louth)
I wish to raise the question of the National Savings Movement, which at present is appealing for 2 million new savers, and I want to ask my Ministerial Friends, when they arrive, if the Government are doing everything possible to assist the National Savings Movement to get those 2 million new savers. There are about 500,000 voluntary workers in the Savings Movement who, for the past 30 years, have been working unceasingly, with little thanks and no reward, for this excellent cause, in schools and universities, the trade unions, voluntary organisations, factories and businesses. I want to know if the Government are giving them all the support they possibly can.
The 2 million new savers could and should come from what are called the industrial groups. It is extraordinary that, after all these years of publicity, only 15 per cent. of the people who are employed in industry belong to savings groups attached to the works. That figure is far too low. Even in the larger firms, employing 500 men and more, where there is usually an organisation to help savings within the groups, only 36 per cent. of the employees belong to these groups.
I wonder whether my hon. Friend the Economic Secretary can do anything with the smaller firms, first, because in those firms the question of whether or not there will be a savings group depends largely on the attitude of the employer. If he is favourably inclined, then he can get something going. Could a special appeal be made to the employers in small firms to encourage savings groups within those works?
1532 This morning I went to the headquarters of the National Savings Movement and I learned for the first time that only a few weeks ago a new retirement savings scheme was evolved. To my surprise—I must admit that I did not know of this—the Treasury have agreed under the new retirement savings scheme that certain contributions can be made by the small employer which will rank as an expense for taxable purposes. This is a great encouragement to the small groups but it is not well known, and I appeal to my hon. Friend to do what he can to publicise this new scheme.
The amount which we are saving in this country is lamentably small. Withdrawals from the National Savings Movement in 1952–53 were £33¾ million more than the amount saved, even after allowing for accumulated interest. Last year, 1953–54, the new savings including interest, amounted to only £28¾ million, which means that on the two years we hardly broke even. These figures are pathetically small when they are compared with the huge amounts which are being paid out in the factories and works as wages and salaries.
Looking at one of the Blue Books the other day, I was surprised to see that in the last eight years, since 1946, wages in this country have increased by no less than £2,500 million per annum. That is a staggering figure, and it is the source from which we have to recruit the 2 million new savers and to obtain the savings which the country requires. Have the Government considered making a social survey to see where the extra £2,500 million has gone? It would be interesting, from a social point of view, to know how much of this extra money goes to the housewife. I wonder how many women know how much money their husbands earn. I do not believe that women today receive nearly as high a proportion of the wage packets as they received before the war.
If the Government could attempt some social survey into these facts it would help considerably. On balance, the women would be better savers than the men. When we think of the £281 million which we saved last year and remember that in the same year we spent over £2,300 million on what is called "fun and games," we realise that the figure of savings is pathetically small, 1533 even ridiculously and absurdly small, compared with what could be done. I ask my hon. Friend whether there is any way of discovering where this money goes. If not, would he consider introducing some social survey in order that we may have that information?
§ It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.
§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. R. Allan.]
§ Mr. Osborne
I should also like to remind my hon. Friend that of the £1,000 million put into investment savings year by year practically the whole lot is withdrawn, and that we are scarcely adding to our permanent savings at all. I am not discussing trustee savings and building society savings, I am dealing solely with the National Savings Movement. What is wanted is some inducement for the ordinary wage earner and salary earner to invest permanently against his old age.
I have given the figures of the increase in wages over the last eight years. Salaries since 1946 have gone up from £1,625 million to £2,900 million, an increase of £1,275 million per annum. We are not tapping either the extra salaries or the extra wages as we should do. I suggest that there are two reasons why we are not saving as much as we ought to.
I do not think that my hon. Friend or the Government can do anything about the first reason, why we are not, as a nation, saving as much as we should, which is because personal saving in a Welfare State becomes more and more difficult. If the social services are to cover every contingency from the cradle to the grave there is not the urge to put a bit away for a rainy day, as I was taught to do when I was a boy. If both sides of the House agree that a rainy day will never come again, and that the State will look after us should a rainy day come by accident, it is obvious that there is no inducement to save.
It seems that under the Welfare State and the social services which we now enjoy, we look after the thriftless more than the thrifty, and it is need rather than merit that gets consideration. Therefore, where we have guaranteed State help, the desire for personal help must be 1534 weakened. Under these conditions the Savings Movement is fighting a hard, difficult and almost losing battle. About that I think the Government can do very little.
The second reason we are not saving is one which my hon. Friend and the Government could and ought to do something about. The reason is that people believe more and more that it is not worth while saving because of the continuous reduction in the value of money. Inflation is the greatest enemy of saving. I know that all parties in the Western world have made up their minds never again to tolerate mass unemployment. The bitterness of the '30s and '20s have eaten into our hearts and we are determined that, come what may, we shall never have mass unemployment again, and that if it is a choice between inflation and unemployment we will choose inflation.
The hon. Member for Stechford (Mr. Roy Jenkins), in one of the essays which he wrote in the "New Fabian Essays," set out very clearly that so far as he was concerned we would never again have unemployment, and that if the cure for unemployment was continuous, considerable inflation he was prepared to accept it. Last year, I had this point put to me in a rather amusing way by one of the leading American business men in Boston, Massachusetts. I accused him of selling American bonds, knowing full well that they would not be paid back at the proper value at which they had been sold. He said, "In America"—and I suppose it is true over here—"everybody likes that swollen feeling."
He put it in these terms. He said they liked to be permanently "slightly pregnant." The trade unions wanted slightly higher wages, the business men wanted slightly bigger profits, the shareholders wanted slightly bigger dividends and the tax gatherer, as represented here by my hon. Friend the Economic Secretary to the Treasury, wanted bigger taxes, despite the fact that the real wealth of the community might be the same.
Under those conditions inflation is inevitable and people naturally say, "We will not save. We will not go without. We will not forgo present pleasures in order to be paid back at about 16s. in the £." I raised this matter some years ago when I asked the right 1535 hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), who was then Chancellor of the Exchequer, a Question on 24th October, 1950. It was Question No. 56, and I got a written reply. I asked the Chancellor:… what is today's nominal value, including accrued interest, of a National Savings Certificate, purchased in August, 1945, for 15s.; and what is its real purchasing power allowing for the subsequent drop in the internal purchasing power of the pound.The reply said:A Savings Certificate bought for 15s. in August, 1945. is now worth 17s. 7d.…That is, 2s. 7d. had been accrued by way of interest—and would now have a purchasing power in terms of 1945 prices …That is when the certificate was purchased—of about 14s. 2d."—[OFFICIAL REPORT, 24th October, 1950: Vol. 478. c. 320.]Therefore, the man who had been thrifty, the best type of citizen who had denied himself the pleasure of spending, not only lost all the interest which had accrued on this 15s. but he had also lost 10d. of the original capital. It is unreasonable to expect men to save in such conditions. After five years, having lent the State the money, the purchaser was worse off.
It is against that background that I make my plea that the Government should do something to safeguard the wage earner saver against inflation. It is not only the little investor who needs a safeguard. Everybody is asking for it. The big investors can look after themselves. They can buy equities, land or property and hedge against inflation.
I read the other day that the Church Commissioners, very wisely I think although a bit late in the day, have sold most of their gilt-edged securities and bought equities and done extremely well out of them. I hope that some of the poor persons will get a rise in salary as a result of the profits being made on the Stock Exchange. I read that the old age pensioners are to demand that their pensions should be tied in some way to the cost of living and that their pensions should have a stable, real value.
There are millions of wage earners who have their wages tied to the cost of living. If it can be done for these sections of the community, I beg my hon. 1536 Friend and the Treasury generally to see if some scheme can be evolved that would give to the wage earner, the little capitalist, the man whom I want to encourage to have a share in the country and in its prosperity, some safeguard against inflation.
I want to make a practical suggestion to my hon. Friend. I know that he will say that it is difficult and that he cannot give me a promise now. All I ask him to do is to go back to his officials and to think about it. I suggest that the first £500 put into National Savings Certificates should have their repayment value tied to the cost of living or to some calculation of real value as at the time the money is paid in.
I believe that the National Savings Movement would get a great deal more money, even if there were no interest at all on the certificates, if the capital could be guaranteed against inflation. That is a practical step that could be taken. I know it cannot be done tonight, but I am not asking for legislation——
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
To my mind, the point is whether the hon. Member is asking for legislation, which seemed to me to be the case. If he is, that will not be in order on the Adjournment.
§ Mr. Osborne
I am suggesting that my hon. Friend should go home and think about it. Whether he thinks it would be possible to legislate on these lines, or not, would be a matter for him.
§ Mr. Deputy-Speaker
If this does involve legislation—I do not know whether it does or not—the hon. Member cannot pursue it.
§ Mr. Osborne
I do not think this would need legislation. It could be done by the Treasury without requiring the consent of the House. This morning I went to the National Savings headquarters, and that was the idea they gave to me.
I made further inquiries to see if this idea had been tried in other parts of the world. Two instances were given to me. I was told that in France, in 1952, they had a scheme for saving for house building accounts and the Government guaranteed that, if building costs were higher when the money was drawn out, then the capital that had been lost through inflation would be replaced, provided, of 1537 course, that the capital was not drawn out until the building had been put up. I was advised that no interest was paid on the loan. That is one suggestion I would leave with my hon. Friend.
What is even more interesting is that in the same year, in Sweden, the Central Organisation of Co-operative Associations issued a 3 per cent. 20-year loan, the repayment, of course, being at par in 1972. The attraction of that loan was that up to 50 per cent. of the loan would be guaranteed against inflation. Could not something along those lines be done for the National Savings Movement? If it could, I believe there would be no difficulty in getting the extra 2 million savers and a lot of the additional £2,500 million paid in wages today as compared with 1946. In addition, we should be encouraging people to save a little on their own against old age and its difficulties.
I have reminded my hon. Friend that I asked the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) a Question on this point. I also tackled his predecessor, the fate Sir Stafford Cripps, when, on 18th July, 1950, I put a Question to him asking if he would… produce a scheme whereby payment of the first £500 invested in National Saving Certificates shall be based on the cost-of-living index so as to safeguard small investors against loss of real capital through depreciation of the £ sterling …"—[OFFICIAL REPORT, 18th July, 1950; Vol. 477, c. 2034.]I asked him that, because the previous day I asked how much the value of the £ had fallen in the preceding five years. I was told it had dropped from 20s. to 16s. It seemed to me a great scandal that the British Government was prepared to encourage this country's working men to put their money into savings certificates, to save their money, knowing full well that, within five years, the investors would have lost 20 per cent, of their capital. It is not good enough. The little man cannot protect himself against inflation.
Since we are all agreed that a continuous and gradual inflation is inevitable—because we shall never have deflation again as it would bring unemployment and we will not face that—I ask that my suggestion shall be considered. If some scheme could be brought forward, I am convinced that the National Savings Movement could attract those 2 million extra people who are wanted, and the country would benefit immensely.
§ Mr. H. Rhodes (Ashton-under-Lyne)
I am sure that the hon. Member does not wish to discourage anyone in the Savings Movement, but he did infer that there was not very much incentive at the moment to save. I think it would be a mistake if what he has said discouraged people from saving in the local savings groups. Will the hon. Member like to correct that impression?
§ Mr. Osborne
If I may be allowed to do so, I should certainly like to correct it, for the last thing I wish to go out from this House is any form of discouragement to savers. I said that half a million voluntary workers were engaged in this work and I want to encourage them. That is why I am asking for this extra protection, because it would be a very fine thing if we could have these extra savers and if we could help those whom the Chairman of the Savings Movement this morning described as the very salt of the earth.
§ 10.16 p.m.
§ The Economic Secretary to the Treasury (Mr. R. Maudling)
My hon. Friend the Member for Louth (Mr. Osborne) has raised a subject of very great importance and made a most interesting suggestion, which he has submitted once or twice before, but which he has made in rather more detail this evening. I am sure we are all glad to have an opportunity to do anything we can to assist the National Savings Movement. I was interested in the remarks of the hon. Member for Ashton-under-Lyne (Mr. Rhodes) as well as those of my hon. Friend.
Surely the National Savings Movement is one of the remarkable features of the social scene of this country, one of those voluntary movements that started in wartime. It is one of the strange things started in wartime as a temporary movement and became a permanent feature of our land. Other examples come to mind, such as different forms of taxation and forms of licensing regulations which, started in wartime, continue rather to our regret in peacetime. But the National Savings Movement was a movement started under all the difficulties, and also under all the inspirations, of war, and in which these devoted workers engage. So the movement has been carried on in peacetime conditions which invariably are more difficult than wartime, when there is the 1539 patriotic urge, the shortage of goods on which to spend money, and so on, all of which make it easier in wartime to encourage people to save than in peacetime.
It is quite an extraordinary achievement that this movement, starting in 1916, has now about 8 million in savings groups and over £6,000 million has been invested by the people of this country through it. I think something over 60 per cent. of the adult population of this country now hold some form of National Savings. Undoubtedly that could not take place without a tremendous amount of voluntary work put in by a number of people in the movement from the leaders down to the voluntary worker in the street groups, in the industrial group or in the schools. I know that everyone in this House would be glad to have the opportunity once again of paying tribute to the work that they have done.
I am particularly glad that my hon. Friend mentioned the industrial groups, because he is quite right in saying that they contribute the predominate part of the savings saved by organised groups within the National Savings Movement. I think they have done a magnificent job in recent years, and I should like on behalf of the Government to thank the employers in particular and everyone else concerned in the support that these industrial groups have given to the National Savings Movement.
My hon. Friend quoted the figure of 35 per cent., which is the percentage of members in the larger industrial units in the country who are members of savings groups. I understand their savings are at the rate of 9s. 6d. per member per week. Altogether of employed in the country 16 per cent. are members of the savings groups. That, I think, is a considerable achievement, but I am sure that more could be done. My right hon. Friend the Chancellor will be grateful to my hon. Friend for the support he has given to the effort to persuade employers to do even more to develop these industrial savings groups.
My right hon. Friend the Chancellor has recently written a letter on this subject to the President of the British Employers' Federation. I understand that some 15,000 copies of it are being distributed through employers' organisations 1540 to individual employers. I am sure that they will play a large part in this big new drive for 2 million additional savers.
Regarding what was said by my hon. Friend about the retirement savings scheme and the assisted savings scheme within industrial groups, which we are hoping to see substantially developed, in both cases these are schemes whereby an employer can contribute to a savings scheme embracing his employees and in which the employer's contribution will be treated as a trading expense, but not as remuneration in the hands of the employee or of the trust operating the scheme on behalf of the employee.
I think that the retirement savings scheme will be of particular interest to the small industrial concerns, about which my hon. Friend spoke, where the normal pension scheme is not practicable, and where a scheme like this can be of great benefit. In companies where there are pension schemes, I think that the assistance savings scheme should be of considerable interest, particularly where a large number of young women are employed, because to assist them to save for marriage and to take up family life on leaving industry is a very good idea and one which is developing, and which could be further developed at the present moment.
My hon. Friend also referred to the increase in wages in recent years in relation to the increase in savings. I think it is true to say that, if we relate the increase in savings to the increase in wages, it is a fairly small percentage. I have no accurate statistics on the point raised by my hon. Friend about how much men give their wives and how much they retain for themselves. That is rather a ticklish point on which there are no statistics. What I think is undoubtedly true, however, is that the total volume of savings has been increasing in a marked manner during the last few years. It probably started with the very big development in insurance premiums. The National Savings Movement is now showing a similar rise, and recent figures show a most encouraging increase in the rate of the accumulation of savings through the National Savings Movement.
I now turn to the point made by my hon. Friend about tying a certain proportion of National Savings to the cost-of-living index. I have no doubt that, 1541 certainly in recent years, though I must not be controversial about this, any security not tied to the cost-of-living index must have decreased in value. But that is an historical fact. I think that there are considerable difficulties in accepting my hon. Friend's suggestion. Quite clearly, we could not tie all Government securities to a cost-of-living index. If we wanted to bring inflation into economy, that would be the best way to do it.
If it is possible to single out one form of Government obligation from all the others, why not as well as National Savings Certificates, Defence Bonds and deposits in trustee savings banks, because people who have put their savings into those forms of savings have suffered equally from the rise in the cost of living as people who have invested their money in savings certificates?
Again, it is always difficult to discern whether we are talking about small savers or small savings, because everyone is entitled to put a certain amount into Savings Certificates or into Defence Bonds, and they have recently been increased. Therefore, it is not always true to say that people who hold National Savings Certificates are small savers, though essentially the Savings Certificate is the medium of saving for small savers.
Of course, we have already gone a good way towards making National Savings Certificates a very attractive form of investment. If we carry out the necessary calculations, we find that the net return on Savings Certificates is a very generous one, and, of course, it is a return free of tax. To that extent, it already has peculiar attractions as a form of investment.
There are difficulties in singling out one particular Government obligation and applying to that obligation a principle which, in practice, it will be quite impossible to apply to all Government obligations. I know that my hon. Friend has quoted the examples of France and Sweden in 1952, but I would not say that we had sufficient experience and information of either of those schemes to regard them necessarily as excellent examples for us to follow.
What would be the effect in practice of tying the cost of living to the nominal 1542 value of the first £500 of Savings Certificates? One could not make it a one-way option. I differ from my hon. Friend, because I can conceive circumstances when prices might fall. If I may say so, he was rather gloomy on this matter. I agree that the trend over a long period is almost certainly in an upward direction, but although the value of money may fall by a small fraction annually, I cannot accept his thesis that never again shall we see a period of falling prices.
If we give people the benefit of saying that if prices have gone up the nominal value of the security can be raised, we must also say that if prices fall and the value of money is increased, then the nominal value of the security should fall. A one-way option would be difficult to justify. On the other hand, a scheme of this kind operating in a downward as well as an upward direction would be of a far less attractive character.
It is difficult for any Government to accept the assumption that prices will always continue to rise and the value of money will always continue to fall. It may be possible for economists or business men or experts of various kinds to say so, but for a Government to say, "We accept and we act on the principle that the value of our money will continue to decline" would surely have a considerable effect on the confidence of the rest of the world in that particular currency. Whether one is dealing with social service benefits, Government securities, or anything else, if we start as a Government, on the assumption that the value of money will continue to decline we undermine the value of that money to a considerable extent. That is why I find it difficult in principle to accept the assumption that money will continue to fall, and therefore that the nominal value of securities should be guaranteed.
§ Mr. Osborne
I am not asking the Government to assume that money will fall in value, but I am saying that in case it falls in value we should protect the little man who has made small savings. If the value of money does not fall, the guarantee is not necessary.
§ Mr. Maudling
I though that my hon. Friend's argument was based on the assumption that inflation would continue indefinitely. That is certainly what I thought him to say. If he does not think 1543 that, then, on his thesis, one is asking people to accept securities which may become of more or less value as prices fall or rise.
We will examine very carefully and closely any suggestion which is likely to assist in encouraging national savings, particularly those advanced by my hon. Friend, who has taken a very great interest in this matter for many years. The National Savings Movement is quite essential to maintaining our industrial strength and, even more important, to maintaining the position of the United Kingdom as the main source of industrial capital for the development of the whole resources of the Commonwealth. If we do not have adequate savings in this country we cannot provide capital abroad. They are the same thing. If you and I, Mr. Speaker, save money that is our savings. If other people save money it is their capital. If we are to have industrial 1544 investment in this country and are to develop the resources of the Commonwealth we must have savings. Without the National Savings Movement and its activities we cannot hope to have the volume of savings which the country requires.
I am grateful to my hon. Friend for raising this matter tonight and for his continuing interest in the savings movement. We shall examine the suggestions which he has made though, for the reasons that I have given, I cannot give any optimistic forecast of the result of that examination. The more the National Savings Movement succeeds in its own objective, then inevitably the more we can look forward ourselves to the stable value of our currency in the years ahead.
§ Adjourned accordingly at Twenty-nine Minutes past Ten o'Clock.