HC Deb 10 July 1956 vol 556 cc203-19

3.40 p.m.

The Economic Secretary to the Treasury (Sir Edward Boyle)

I beg to move, in page 8, line 11, after "bank", to insert: or a seamen's savings bank". I think it would be convenient, Sir Charles, to discuss with this Amendment my subsequent one, in page 8, line 37.

The Seamen's Savings Bank was set up under the Merchant Shipping Act, 1894, and is operated by the Ministry of Transport and Civil Aviation. The Ministry receives interest on deposits lodged with the National Debt Commissioners at the rate of £2 17s. 6d. per cent. and uses the margin of 7s. 6d. to cover its expenses and credits depositors with £2 10s. per cent. In this respect the Seamen's Savings Bank is on the same basis as a trustee savings bank, though not a trustee savings bank within the meaning of the 1954 Act.

My right hon. Friend has discovered, since the Bill was last in Committee, that the Seamen's Savings Bank is unique in that it is the only savings institution in the country to which all the terms of this Clause apply except for the fact that it is not a trustee savings bank. It was left out on this account at the time the Clause was drafted. My right hon. Friend wants to take the opportunity of the recommittal of the Bill to extend to it the concession made to the trustee savings banks which it resembles in the two important features, that the statutory interest is 2½ per cent. and there is automatic lending to the State.

Mr. A. G. Bottomley (Rochester and Chatham)

We on this side of the Committee see no reason to object to this proposal, but we should like to see it extended further. I do not know whether, at this stage, it would be appropriate to ask the Economic Secretary about, for instance, the case of the Birmingham Municipal Bank. When we discussed savings banks generally my hon. Friend the Member for Stechford (Mr. Roy Jenkins) raised the question of the Birmingham Municipal Bank, and the Economic Secretary favourably indicated that the bank could be treated in the same way as other trustee savings banks.

The Economic Secretary will remember that I myself called attention to the Walthamstow Savings Bank, and many of my hon. Friends who represent Scottish constituencies will be aware that there are also Scottish savings banks. We were hoping that the savings banks run by municipalities, as long as they pay 2½ per cent. and comply with the other requirements applicable to trustee savings banks, would be given the same facilities. Clearly, they ought to have them.

Therefore, while supporting the Economic Secretary in his view about the Seamen's Savings Bank, I would ask him why he has gone back on his word—[Interruption.] I think that would be the interpretation to be placed upon what has happened. [Interruption.] The matter is to come up on the next Amendment? I see. We shall deal with it then. Perhaps the Economic Secretary will understand that he will he questioned further on this matter.

Amendment agreed to.

Sir E. Boyle

I beg to move, in page 8, line 29, at the end to insert: (3) Where, on the application in that behalf of any savings bank maintained under a local Act, the Treasury are satisfied, having regard to the rules to be adopted by the bank, the conditions subject to which deposits are to be accepted by it or any department to be formed by it, and such other matters as the Treasury may require to be proposed in the application, that the deposits will, if the application is granted, sufficiently correspond with ordinary deposits in a trustee savings bank to justify a certificate under this section, the Treasury may certify the bank or department for the purposes of this section, and, while the certificate is in force,—

  1. (a) the interest payable on the deposits shall not exceed the rate of two and a half per cent. per annum, but the interest shall be treated for the purposes of this section as if it were such interest as is mentioned in subsection (1) of this section; and
  2. (b) the deposits shall be invested with the National Debt Commissioners, and sections twenty-five to thirty-eight of the Trustee Savings Ranks Act, 1954, shall apply in relation to the bank or department as they apply in relation to trustee savings banks, but subject to such modifications as the Treasury may by order provide, including, if the order so provides, a reduction of the rate which the Treasury may by order under subsection (2) of section twenty-seven of that Act fix as the rate of interest on receipts for the bank's or department's payments into the Fund for the Banks for Savings.
An order under this subsection shall be made by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament, and may be varied or revoked by a subsequent order. (4) If the Treasury at any time cease to be satisfied that a certificate under the last foregoing subsection is justified they may revoke the certificate and give such directions as they think fit for the withdrawal by the bank or department of any money standing to its credit in the books of the National Debt Commissioners. As the Committee will remember, we had a considerable discussion, when the Bill was last in Committee, about the position of the Birmingham Municipal Bank. I should like, at the outset, because I do not want to relate too much recent history to the Committee and so delay the proceedings unnecessarily, to express my own absolutely unreserved apologies to hon. Members of the Com- mittee if any words of mine then caused any misunderstanding. It was not intentional on my part. I should like to make that apology beyond any question at the very start of my remarks.

3.45 p.m.

My right hon. Friend has been in touch with Birmingham Members on both sides of the Committee. My right hon. Friend came to the conclusion that it would be unreasonable to insist on the formation of a trustee savings bank with the two essential criteria, if the concession could be fulfilled by a new department of the Birmingham Municipal Bank under a less rigid formula.

The effect of the Amendment is as follows. In the first place, the extent of this concession is confined to any savings bank maintained under a local Act. The Birmingham Municipal Bank is at present the only such bank in being, having been formed under the Birmingham Corporation Act, 1919. It is true that other local authorities have similar powers, but although they have similar powers, those powers have not so far been used. Secondly, the Treasury must certify the applicant. The criterion for the certificate, if the concession is applied, is that the deposits sufficiently correspond to the ordinary deposits in a trustee savings bank to justify such treatment.

Any new department of the municipal bank formed for the purpose would function like the ordinary department of a trustee savings bank, but would operate under its own rules and under the terms of the corporation's local powers. Under the Birmingham Act the regulations governing the conduct of the bank require the approval of the Treasury, and the same arrangement would apply to any new department formed for this purpose. While the certificate is in force the interest payable to the depositors of the new department shall not exceed 2½ per cent. and the money lent with the department by the depositors must be invested with the National Debt Commissioners. In return, depositors draw the Income Tax concession.

The Amendment does not provide, and, indeed, is not intended to provide for the National Debt Commissioners to accept the book value of the securities held at present by the bank and by the corpora- tion. It enables the National Debt Commissioners to take new deposits into the Fund for the Banks for Saving and to pay interest on them. This is done by applying Sections 25 to 38 of the Trustee Savings Banks Act, 1954. The Treasury can modify the detailed application of those provisions by Order, and, in particular—and this is the point—the Treasury can fix the rate of interest payable by the Commissioners lower than the rate paid to the trustee savings banks. The rate is at present £2 17s. 6d. per cent. That is the rate applicable to both high cost and low cost banks—if I may so put it—but the latter have the liability to contribute to the Mutual Assistance Scheme, from which the former are helped.

The only criticism which may arise of the Amendment is that the Amendment does not provide for the acceptance by the National Debt Commissioners of securities at book value in lieu of cash. The Birmingham Municipal Bank, or the corporation on its behalf, has a portfolio of securities many of which are standing at lower than book value. I quite understand that what the Birmingham Municipal Bank has in mind is that if depositors in the bank transfer to the new department the bank or the corporation may have to realise those securities at a loss to provide cash to transfer in accordance with the Amendment to the National Debt Commissioners.

Of course, this is not the only possible course of action. For example, the corporation might be called upon to repay part of its loan to the bank and might borrow to do so. We have considered this very carefully indeed. The most the Commissioners would do would be to accept Government securities in lieu of cash at the prices ruling on the day in question. My right hon. Friend has looked into this very carefully indeed, but to go further than this would be unacceptable in view of the essential point that the Exchequer must be protected against direct or indirect loss.

I recognise that this is a point on which there is some difference of opinion and that is why I wanted to explain it as fairly as I could to the Committee. I hope that with that explanation, the Committee will feel that my right hon. Friend has found a reasonable solution to this problem of the Birmingham Municipal Bank. We recognise that a special position arises here, because there is not a trustee savings bank in Birmingham, because of the local Act, and because of the long and honourable history of the Birmingham Municipal Bank. I can assure the Committee that my right hon. Friend has done his very best to find a solution which will suit the great municipality of Birmingham and will safeguard the interests of the Treasury. This is the solution he proposes and I commend it to the Committee.

Mr. Roy Jenkins (Birmingham, Stechford)

The Economic Secretary is, of course, right in saying that there has been a great deal of negotiation on this matter since the earlier proceedings in Committee on the Bill. It is true, as he hinted, that we encountered difficulties in the course of these negotiations which, at first, we certainly had not anticipated. He was good enough to say to the Committee just now that if any words of his had led to a misunderstanding he wished to apologise, but he need not go too far in offering a personal apology, because I can assure him that the words of the Chancellor of the Exchequer went just as far as his own words and, if anything, a little further. Therefore, there is no feeling among Birmingham Members on this side of the Committee that the hon. Gentleman is personally responsible for any of the difficulties into which we ran.

We understood that provided the two principles—the 2½ per cent. fixed rate of interest and the payment of all moneys to the National Debt Commissioners could be accepted—there would be no difficulty, subject to negotiations, in allowing a special department of the Birmingham Municipal Bank, which would not be a trustee savings bank in name, to have the benefit of the Income Tax concession. There have been difficulties in negotiations about that, and there have been a great number of deputations and visits to London. Even though, perhaps unfortunately, those had to take place, we are glad indeed that they have led to some result and, without question, we accept the Amendment as it stands.

Do not let us think, however, that the Amendment is being too generous. As the Economic Secretary also pointed out, it is being fairly sparing in the margins of rate of interest which it allows. In other words, the Birmingham Municipal Bank is not to receive from the National Debt Commissioners the full average rate of interest paid to the ordinary departments of trustee savings banks on the assumption that it would be a lower-cost bank.

There is also the rather more important question of the securities which are to be taken over. This, as the Economic Secretary and the Chancellor know, is a point which is causing very genuine concern to those associated with the Birmingham Municipal Bank at present. The position is that nobody can tell exactly how much money will be transferred from the general Municipal Bank accounts to the new special department. The total deposits at the bank are about £88 million and some proportion of that—no doubt not a purely negligible proportion—will be transferred to the new department. There will then be an immediate obligation upon the bank to transfer to the National Debt Commissioners cash to the extent of that transfer of deposits.

There is no difficulty and no dispute as to the future. As new money is paid into the special department, so it will automatically be paid over to the National Debt Commissioners. The problem is purely that of the transition period, because to realise this cash the bank will have to obtain money from some source or other, with the gilt-edged market in its present state, for which the Birmingham Municipal Bank certainly could not be held responsible.

In the investment policy which the bank has pursued over a number of years in close association with Treasury advice, there might have been marginal dispute as to what type of security might have been invested in on a particular date, but I do not think that there has been any broad dispute between the Chancellor's advisers and the bank as to its investment policy. Indeed, since the outbreak of the war, its investment policy, to meet the wishes of the Treasury, has been very different from that which the bank would have pursued if it had been left to itself and had been unconcerned with special national needs.

As a result of this policy, at any rate, the bank is in a position where it is worried about its liquidity ratio, and I think that the Treasury agrees about this. The bank would like to be rather more liquid that it is at present, but the position in which the present arrangement is putting the bank will militate against its placing itself in a more liquid position, because if it has to dispose of securities the loss which it will incur will be greater if it disposes of long-term securities than if it disposes of short-term securities. This is a genuine dilemma for the bank at present.

The Economic Secretary might say that it might be possible for the corporation to pay back some money to the bank and itself borrow to do so. The bank has not been lending to the corporation for a considerable number of years, and the money which the bank has advanced to the corporation is, to a very large extent, represented by Government securities on that specific account held by the corporation itself. Therefore, there is not so much room for manoeuvre here. But if it were to be done, the corporation would have to borrow at a heavy rate of interest at present and, therefore, there would be possibly an additional liability upon the ratepayers of Birmingham.

There is very serious concern, therefore, about this matter of taking over securities. The Economic Secretary said that the Amendment did not make a provision for the taking over of securities at cost or book value. I think that the position is a little worse. The Amendment makes specific provision for the fact that they cannot be taken over. I wonder whether the hon. Gentleman can confirm that I am right in thinking that. The hon. Gentleman appears to be indicating assent. My hon. Friends greatly regret that. It makes the position of the bank unnecessarily difficult and may, if met by the solution which the Economic Secretary proposes, impose an unwarranted burden on the ratepayers. We are glad that the hon. Gentleman has gone some distance and, on this question of the taking over of securities, I hope that the Treasury will do everything in its power to recognise the short-term transitional difficulties which it may make for the bank and to ease that as far as lies in its power.

Mr. Geoffrey Lloyd (Sutton Coldfield)

I thank my hon. Friend the Economic Secretary for his speech and thank him and the Chancellor of the Exchequer for making this concession. The Birmingham Municipal Bank is unique. It was founded by the late Mr. Neville Chamberlain and was one of the chief of his social reform projects in his career as Lord Mayor and leader of Birmingham City Council. It has a quite special place in Birmingham, and it attracts to the service of thrift all the civic pride and enthusiasm of the local people. Everybody who knows Birmingham knows that that is true.

4.0 p.m.

Owing to the fact that it has, so to speak, scooped the pool of thrift in the Birmingham area—there is not even a trustee savings bank there—unless some provision were made the concession which the Chancellor has made to small savings generally could not have been applied to Birmingham without new and special arrangements that would have cut across the whole of the thrift arrangements in Birmingham. But although that is the case, and, therefore, the case for a concession is strong, we have to face the fact that to the mind of the administrator an exception is an abhorrent thing. Administrators do not like to make exceptions, and we must admit, in fairness, that to a large extent they may be correct, because it is difficult to make exceptions.

I am not at all sure that this concession would ever have been made if we had not been a parliamentary country, because both the hon. Gentleman the Member for Stechford (Mr. Roy Jenkins) and the Economic Secretary stressed the fact that not only have the Chancellor and the Economic Secretary come into this matter, but, also, all the Birmingham Members on both sides of the Committee have come into it. This is a concession for which we are extremely grateful to the Chancellor and to my hon. Friend.

Mr. Cyril Bence (Dunbartonshire, East)

It has been pleasant to listen to the thanks expressed by Birmingham Members for the concession made to the Birmingham Municipal Bank. In my constituency too we have a municipal bank, which was established in the ancient burgh of Kirkintilloch in 1920. This burgh seems to get a rough time at the hands of the Chancellor. Our municipal bank hands over to the local authority between £150,000 and £190,000 every year at an interest of about 3½ per cent. from the savings of the citizens of Kirkintilloch.

Now, as I understand it, Birmingham is satisfied if money is hived off to the National Debt Commissioners. Our municipal bank hives off all its funds to the local authority, and the interest given by the local authority is much lower than would be the case if it had to go on to the open market. Furthermore, this money represents the thrift of the Scottish people, especially of the people of Kirkintilloch, where there are no public houses. This is important, because it represents money which does not go into the breweries but into the local savings bank. That fact should be realised by all interested in saving.

That investment in the local authority is non-inflationary because it is taken out of the purchasing power of the people, whereas, if that money flowed to the National Debt Commissioners, the local authority would go on to the market and its borrowing would probably be inflationary because it would be met by new money created by the banks.

We were hoping that this concession to the Birmingham Municipal Bank would spread to Kirkintilloch. Indeed, I am surprised that the Birmingham Municipal Bank should be given this great opportunity to enjoy legislation passed by this House for itself alone, and my constituents in Kirkintilloch will be annoyed that the industrial city of Birmingham should enjoy this concession while the ancient burgh of Kirkintilloch is ignored. In the course of its history, our municipal bank lent £87,000 to the National Debt Commissioners but, being good local patriots with civic pride, now the money goes to the local authority, which is the right thing to do.

I understand that in order to have this concession extended to the Kirkintilloch Municipal Bank we would have to introduce a Private Bill. If that is the case, no wonder people advocate a Parliament in Scotland, because it is difficult for us to get any of these concessions for our thrifty people. It may well be that when people have a natural tendency to thrift there is no need to give them incentives, but if we have to legislate for incentives for those who are not thrifty by nature, they may get an advantage over the naturally thrifty people. It is a serious state of affairs when we in Kirkintilloch have to suffer from this attitude of the Government, and I am shocked to think that to enable the investors in the Kirkintilloch Municipal Bank to get this concession of freedom from Income Tax it would be necessary to promote a Private Bill——

The Deputy-Chairman (Sir Rhys Hopkin Morris)

If I understand the speech of the hon. Member, he is now providing his own answer that it does not come within the scope of the Amendment.

Mr. E. G. Willis (Edinburgh, East)

On a point of order, Sir Rhys. Surely it is in order to argue about the words in the Amendment, "savings bank maintained under a local Act", which is what I understand my hon. Friend is arguing.

The Deputy-Chairman

If I had understood the hon. Member in that sense, I would not have intervened.

Mr. Bence

My hon. Friend has correctly interpreted the impression I meant to give, Sir Rhys. I thought that was what I was doing, but I appreciate that I might not have been doing it as clearly as has my hon. Friend the Member for Edinburgh, East (Mr. Willis).

There are several such municipal banks in Scotland which have quite as long a history as that of the Birmingham Municipal Bank, and so I hope that wider consideration will be given to other municipal banks throughout the country. I am pleading especially for the one in the small burgh of Kirkintilloch, which is self-contained. I am afraid that it would be impracticable for that bank to hive off a certain amount to the National Debt Commissioners because it has become a part of the local authority, which relies on it to finance its activities.

I do not know whether we shall be introducing a Private Bill, but I hope that the Chancellor will give this matter further consideration between now and the next Budget in order to see what can be done to safeguard the municipal banks which have a long tradition of saving. This one has been established for 36 years. As a result of the proposals of the Chancellor, there may be a considerable outflow from the municipal banks as a result of the tax concession made on the initial interest rates from savings.

Mr. W. E. Wheeldon (Birmingham, Small Heath)

I want to intervene briefly principally to neutralise some of the atmosphere of generosity and gratitude that has been conveyed this afternoon by the right hon. Gentleman the Member for Sutton Coldfield (Mr. Geoffrey Lloyd). In these days we hardly regard the right hon. Gentleman as a Birmingham Member, but we recognise his interest in the city and understand the work he has done, along with his colleagues, in connection with the Municipal Bank.

Mr. G. Lloyd

I hope the hon. Gentleman will remember that I represent the Erdington Ward of the City of Birmingham.

Mr. Wheeldon

That is so and Birmingham was generous enough to turn one of the wards into the division of Sutton Coldfield in order to make the position of the right hon. Gentleman quite safe.

On a previous stage of this Bill, we heard what we thought was a clear and unambiguous statement from the Chancellor as well as from the Economic Secretary. It was with surprise that we later heard there was some confusion about the position. I am sure that there was no duplicity on the part of the Economic Secretary and that it was a misunderstanding which we, and of course he, regret.

We must not get into our minds the idea that Birmingham and Birmingham's Municipal Bank will accept the Clause with open arms. It will be accepted with very mixed feelings. We are speaking about an institution unique in the country, which has done tremendously good work for Birmingham and for the country generally. The local people will not relish an Amendment at this stage which will merely restrict the bank, and they will accept it very reluctantly.

The Clause seems to put almost complete control into the hands of the Chancellor and the Treasury. They can tell Birmingham that unless it accepts this, that or the other, it shall not have the advantages which are bestowed on the Post Office and trustee savings banks. That is particularly so in regard to the point mentioned by my hon. Friend the Member for Stechford (Mr. Roy Jenkins), investments. For a number of years I have been chairman of the Birmingham finance committee, and I know very well the difficulties that we have had to meet. Whatever may be said about the decision. I am sure hon. Members will agree that it was the duty of the city's traders and finance committee to do the best they could for the city, which they certainly did, and it is no fault of theirs that the realisation of investments today would mean a considerable loss to the city. It is hard that Birmingham should be penalised because the Treasury now says that it will not accept these securities.

I think the Birmingham Municipal Bank and the Birmingham City Council will give the matter very careful consideration. They may ultimately decide to come within the terms of this Measure. I am sure they will do so with considerable reluctance and will regard it as unfortunate that the Chancellor was not able, in the first instance in the Bill, to provide proper conditions whereby Birmingham could enjoy the favourable conditions which are at the moment bestowed upon the Post Office and trustee savings banks only.

Mr. Donald Chapman (Birmingham, Northfield)

I should not have intervened but for the remarkable speech of the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd), which implied that there had been a great Birmingham council of war, with him as the flag bearer at its head, and that a concession had been extorted from the Government as a result of such great activity.

I do not want to be ungenerous. I acknowledge that right hon. and hon. Gentlemen opposite have given some help. Nor do I particularly want to claim a proprietorial interest in the solution, about which my colleagues were rather angry when I suggested it in the first place. At the same time, it must be said that the greatest credit in the matter goes primarily to my hon. Friend the Member for Stechford (Mr. Roy Jenkins). He has worked very hard indeed, and has been in almost continuous attendance at the Treasury. I should not like it to be thought from the speech of the right hon. Member for Sutton Coldfield that this solution has been the result of a terrific all-party effort. What has happened has come about because of the very lively Labour group of hon. Members from Birmingham.

The Economic Secretary has been very helpful all the way through, but I still think that if there is any possibility of negotiations on the basis of taking over the assets at their book values, every effort should be made to find a solution to the problem. I put this specific point to the hon. Gentleman during the Committee stage. Although he did not commit himself in reply, the general atmosphere of his reply—he rose in a friendly way and said that it was a fair point—gave my hon. Friends and myself the impression that the problem would be worked out in the way that I have suggested.

4.15 p.m.

I would say to the right hon. Member for Sutton Coldfield, in all friendliness, that, instead of the general felicitations which he was handing out to his own side, he should pay a tribute to my hon. Friend the Member for Stechford. I would say to the Economic Secretary that I still think he owes it to the City of Birmingham, because of the misunderstandings which have occurred, to try to be even more helpful than he has already been.

Mr. Bottomley

The Economic Secretary is always polite and considerate, and, like my hon. Friend the Member for Stechford (Mr. Roy Jenkins), I at once relieve him of any accusation of wilfully misleading the Committee, but, whereas he has gone some way to meet the point raised by my hon. Friends who represent Birmingham constituencies—not altogether satisfactorily, I would add—I join other hon. Members in saying that I doubt whether anything at all would have been achieved had it not been for the efforts of the group of Birmingham Labour Members led by my hon. Friend the Member for Stechford.

I ask the Economic Secretary to recognise that those who raise the position of savings banks at Kirkintilloch, Clydebank, Airdrie, Motherwell, Walthamstow and Barnsley have no reason at all to be satisfied, because the Economic Secretary said that what applied to the Birmingham Municipal Bank could equally apply to these other banks.

Sir E. Boyle

No, Sir Rhys. The extension of the concession is confined to savings banks maintained under local Acts. Other local authorities with similar powers which are not used are Cardiff and Birkenhead. The banks in Scotland to which the right hon. Gentleman has referred were formed under the Companies Act and would not be concerned with the Amendment at all.

Mr. Bottomley

I am sure the Economic Secretary will not mind if I refer him to what he said on 7th June. His words were: The suggestion made by the hon. Member for Stechford (Mr. Roy Jenkins), to which, on behalf of my right hon. Friend, I agreed, could equally well have been accepted from the right hon. Member for Rochester and Chatham (Mr. Bottomley) …"—[OFFICIAL REPORT, 7th June, 1956; Vol. 553, c. 1385–6.) The suggestion that I made was that these banks should have been put in the same category as the Birmingham Municipal Bank, but I will not pursue the matter now.

I would only make an appeal to the right hon. Gentleman. He did a very good job for local government in creating municipal enterprise and encouraging local authorities to take a more active part. I ask him to continue that good work. There are only a few of these banks. Is it not possible somehow to enable such civic pride to be developed?

The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) referred to the civic pride in Birmingham and rightly claimed that a former prominent Conservative politician was responsible for the Birmingham Municipal Bank. It was, however, equally the Conservative Party which prevented any other bank developing, except the ones which have been mentioned, and they had to come into being by a different method. Although they did not come about as the result of a local Act, they are savings banks conducted by municipal enterprise, and I hope that even now the Chancellor will somehow find a way to recognise another aspect of municipal enterprise.

The Deputy-Chairman

The Question is——

Mr. Willis

Are we not to hear from the Economic Secretary why it has been found impossible to include other municipal banks? It is unsatisfactory that something should be given to the Birmingham Municipal Bank, but not to other municipal banks. Why could it not be done? What are the difficulties standing in the way? The banks are in practically the same position, and are performing the same functions. Why could it not be extended?

Sir E. Boyle

Perhaps I may explain to the hon. Member for Edinburgh, East (Mr. Willis) that any bank such as that which the right hon. Member for Rochester and Chatham (Mr. Bottomley) mentioned which forms a special department as a trustee savings bank could take advantage of this Clause.

As I said during the earlier Committee proceedings, the point of this Amendment is that it is confined to the cases of those savings banks maintained under local Acts, and that the Kirkintilloch and the other Scottish banks are in quite a different position, having been formed under the Companies Acts. Provided that they were ready to form a special investment department as a trustee savings bank, all these could get the benefit of this Clause.

Amendment agreed to.

Further Amendment made: In page 8, line 37, at end insert and 'seamen's savings bank' means a bank maintained under section one hundred and forty-eight of the Merchant Shipping Act. 1894".—[Sir E. Boyle.] Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. F. Beswick (Uxbridge)

The complicated Amendments which we have just discussed illustrate the difficulties in which the Government find themselves once they start discriminating as between one kind of small savings and another. It seems to me that is a bad thing to do. Small savings of all kinds ought to be encouraged in this country at present, and we greatly regret that another Amendment which was put down at an earlier stage of the Bill was not accepted, and was not even considered, as we thought, by the Government.

In this Clause, we are accepting a new principle. It is that small savings that go directly to the Government are a good thing, and that small savings that do not go directly to the Government, or which may go to them indirectly or may indeed go to other good, useful and constructive purposes, are less good. That is the new state of affairs into which the Government have landed themselves, and I think it is a bad state of affairs. The Government should encourage thrift as a whole, and not only thrift for one particular purpose.

As a result of the Clause, the Government will discourage and offend institutions and people who have for many years encouraged and developed the idea of thrift among both young people and older people. I see that the Economic Secretary is smiling at the suggestion that the Government should encourage thrift. I was brought up to believe that thrift was a good thing. I always remember investing my first two or three pennies in a co-operative penny bank, and I still remember the legend over the doorway, "Take care of the pence, and the pounds will take care of themselves." That is an admirable thrift institution, but one against which the Government are now discriminating through this Clause, and I feel that in passing it we ought to register a protest.

No one regrets the fact that a method has been found by which the Birmingham Municipal Savings Bank can be encouraged, but we should like the concession to go much further. In the long run, I believe that the Government will be doing a disservice both to themselves and the country in making this differentiation between one type of small savings and another.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.