CHEQUES (Hansard, 27 November 1956)

§ Mr. Graham Page (Crosby)

I beg to move, That leave be given to bring in a Bill to make amendments of the law relating to cheques and similar instruments; in respect of the endorsement thereof; to the discharge of obligations by cheque; to the recognition of cheques as receipts; to crossed and uncrossed cheques and the giving of value therefor; and to make consequent amendments of the law relating to the lights and duties of paying bankers, collecting bankers and bankers' customers towards each other. The purpose of the Bill is to abolish the need for the endorsement of 97 out of every 100 cheques that are drawn. I had the privilege nearly two years ago of being granted leave to introduce a Bill for a similar purpose. That was in the previous Parliament. With the end of that Parliament the Bill came to an end, but in the meantime, the then Chancellor of the Exchequer had appointed a Committee to investigate the principles proposed in the Bill. The terms of reference of the Committee were: To consider (a) whether, and if so in what circumstances and to what extent, it is desirable to reduce the need for the endorsement of order cheques and similar instruments received for collection by a bank. That Committee reported earlier this month, and I would express my humble admiration and gratitude for its very interesting Report. No doubt hon. Members who are interested in this matter have read the Report and will agree with me. If I refer to only one or two items of the summary of that Report, it is only because my time is limited in moving this Motion and not because of any lack of appreciation of the most interesting Report. Paragraph 109 (iii) says: Our assessment of the weight of work done in connection with endorsements is that a large amount of unproductive effort is expended in relation to the provisions of a Statute which was framed to meet conditions very different from today's. We think that if a way can be found to reduce present labours without involving corresponding disadvantages its adoption would be well worthwhile. The unproductive effort referred to in that recommendation entails tens of millions of man-hours in unnecessarily endorsing cheques and therefore entails millions of pounds in wages and salaries paid to those who carry out that unnecessary endorsement.

238 The Report further recommends, in paragraph 109 (v): We consider that a substantial saving of unproductive work would be achieved, and the present system would be appropriately adapted to modern conditions and needs, if it were arranged that endorsement was no longer necessary on a cheque being collected by a bank on behalf of a customer who was the payee. We recommend a change of the law to this effect, making it clear that the collecting banks should not suffer any loss of protection thereby. If that recommendation is carried out it will still retain the valuable characteristics of a cheque that it can be negotiated by endorsement. In fact, only 3 per cent. of all cheques drawn are so negotiated. The other 97 per cent. are paid direct by the payee into the payee's bank. It is in connection with this 97 per cent. that I would desire, in this Bill, to abolish the need for endorsement.

Of course there would be a number of consequential amendments in respect of the relationship of bankers and customers which are set out fully in that Report. One particularly interesting consequential amendment which I desire to introduce into the Bill would be to make certain that a paid cheque is as good prima facie evidence of receipt as a formal receipt signed over a twopenny stamp.

I am in the unique position of being able at this very early stage in the process of a Private Member's Bill to refer hon. Members to the actual text of the Bill which I desire to present, for that text is set out in the Appendix to the Report to which I have referred. I am sure that a Private Member is seldom so well served in the drafting of his Bill. There are only two additions which I should desire to make to that draft in the Appendix to the Report. One is in connection with certain anomalies in the protection afforded by crossed and uncrossed cheques. That is referred to in paragraph 105 of the Report.

The other addition which I desire to make is this: as the Bill relates to cheques—indeed I have given it the very short title of the "Cheques Bill"—the House might like the opportunity of considering an Amendment to Section 8 of the Truck Act to permit payment of wages by cheque. I repeat the word "permit" for this would be merely a permissive provision. I realise that this 239 is a controversial matter and might not find its way to the later stages of the Bill without very full consultation, but I believe that I can produce a formula which would fully safeguard the interests of those concerned, particularly those of trade unions on behalf of their members and those of chambers of trade on behalf of shopkeepers.