HC Deb 15 June 1959 vol 607 cc117-37

(1) Subsections (1) and (2) of section nine of the Finance Act, 1956 (which provide relief from income tax on certain savings bank interest) shall, subject to the provisions of the next following subsection, apply in respect of dividends on shares of a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955, and in respect of interest on deposits with such a society or with a registered friendly society, as they apply in respect of interest on deposits with the Post Office savings bank.

(2) Where by virue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

  1. (a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and
  2. (b) the amount of relief, if any, to which he is entitled by virtue of that subsection,
that excess shall be disregarded for all the purposes of the Income Tax Acts.—[Mr. Beswick.]

Brought up, and read the First time.

Mr. Frank Beswick (Uxbridge)

I beg to move, That the Clause be read a Second time.

The purpose of the Clause is to extend the Income Tax concession granted under Section 9 of the 1956 Finance Act to cover interest on shares invested with a society registered under the Industrial and Provident Societies Acts, and also the interest on deposits with the so-called penny banks organised by such societies. The effect of the Clause would be to exempt the first £15 of interest on such investments and deposits from the payment of tax.

The reason for this is that we want to encourage genuine small savings and also to remove a discrimination imposed upon co-operative societies by the 1956 Act. The Clause deals with genuine small savings. The Government have assisted and encouraged many savings which are neither genuine nor small. Premium Savings Bonds, which are pushed with such extravagant advertising, seem to be neither genuine, in large part, nor small. But the average amount of the individually held share capital in co-operative retail societies is only £20, and there are about 12 million individual shareholders.

We are, therefore, speaking for no narrow section of people. In view of the very large number of people involved, I should have thought that there would be an administrative saving which would appeal to the Chancellor. As the Committee will know, the total amount of any one shareholding is now limited by law to £500 and, in the case of bank deposits, to £50. Furthermore, the interest paid on those shares and deposits, whilst not restricted by Statute, is low in practice, and it is usually limited by the rules of the society which, in turn, has to be approved by the Registrar of Friendly Societies.

It is, therefore, difficult to visualise any better or more solid body of genuine savings than those for which we are asking only the concession already granted in respect of other savings. The Royal Commission warned us against tax reliefs for what it termed "delusive savings", but I challenge anyone to say that there is any element of that kind connected with deposits in the co-operative societies' banks, or in any holding of their shares. There is nothing false or delusive about those shares; they are rock-bottom savings of some of our worthiest people.

No matter what office he holds, the Paymaster-General usually speaks on these matters in Committee on Finance Bills, and when he was holding another office he stressed that the 1956 concession was possible because the savings then effected accrued to the Government. But the Government, the State, or the nation has no more effective recruiting agent for savings than the Co-operative movement. Co-operative societies are not paid by the Government. No expenses are incurred. Yet a considerable proportion of all the savings collected by these societies go to the Treasury, because they are reinvested in Government securities. The figures vary from society to society. In some societies rather more than half the total amount of money saved in this way is reinvested in Government securities, and the average amount of all societies is estimated at 28 per cent. On this basis alone, if the Chancellor really wants to encourage savings which find their way into the Treasury and are at the disposal of the Government, I would have thought that there was a case for the Clause.

But there is another case for it. I believe it to be in the national interest to encourage the Co-operative movement in this country. There are many reasons for this belief, and I will not go into all of them—I should probably be out of order if I sought to do so—except to say that the Government are repeatedly stating that they want to cut the cost of living, and also that they are against monopolies; in fact, they have passed legislation to indicate that they would like to curb monopoly practices. In the fight against undesirable monopoly practices there is no greater ally to which they can turn than the Co-operative movement.

I claim that these societies have been more successful in this field than any amount of Government legislation. Only this weekend I had brought to my notice a certain matter in which co-operative trading concerns were up against certain trading practices of a competitor—not a small man, to whom we often hear references made in this connection, but the Unilever combine. This combine has a controlling interest in Batchelor's peas, Bird's Eye Foods, Mac Fisheries, and Wall's sausages and ice cream, and through its subsidiary, the Home and Colonial Stores, it also controls Pearks, Maypole Stores, Liptons, Meadow Dairies, and Allied Stores.

I doubt whether many people who walk down the High Street and see the different names on the shops realise the connecting interest between these firms. The relevance of that matter to the Clause is that in different ways under recent Finance Acts those companies have been encouraged and assisted by way of tax reliefs, while, under the same Finance Acts, there have been discriminations against the Co-operative movement and that element in the co-operative societies which is a champion of the consumer against industrial monopoly practices.

I should have thought that, if we are interested in a healthy democratic nation, we ought to go out of our way to encourage the Co-operative movement wherever possible and fair, and I claim that the Clause would go a long way towards giving it the encouragement which, in the national interest, is desirable. Moreover, it would restore equity as between this category of small savings and other categories which were helped by the 1956 Act. I therefore hope that the Government will remove at any rate one disability which they have placed upon the Co-operative movement and accept this new Clause.

7.45 p.m.

Sir Frederick Messer (Tottenham)

When we last discussed a similar Clause on the Finance Bill last year, I thought there was some response in the attitude of the Government, although not in their decision. It is difficult to understand why the Clause cannot be accepted, because it appears to have a very desirable object. If we want to encourage small savings we must make the process of saving as easy as possible, and I can conceive of no easier method than is available to a member of a co-operative society. He needs to do nothing at all in this matter. He does not have to put his hand into his pocket; he does not have to take a bank book to the bank. All he does is to allow his credits to accumulate, saving as he does so. His dividends are registered and his interest is calculated. This is the easiest way of saving money.

For that reason alone, I should imagine that the Government would see some value in the Clause—and probably a value even greater that the desire to save on the part of many of the people who are just within the Income Tax range. They are saving in this easy way money which they might not save otherwise.

We have been discussing a Clause relating to house repairs. Many co-operators allow their dividends and interest to accumulate and then use them for the purpose of decorating and maintaining their houses. In this way they are doing something which is of social value, and I should have thought that these people are entitled to be regarded as on the same level as those who put their savings into the Post Office. They should have £15 of their savings interest exempted from Income Tax.

In addition, most co-operative societies run penny banks. There is usually a limit of about £10. When members of a co-operative society make their purchases, it is possible for them to put the small sum which they receive in change into their account at the penny bank instead of taking it away. If we are to look after the character of the people of this country, we have to do more than preach to them that moral standards need to be raised. We have got to do something, and I should have thought that we would be enabling character to be formed by a process of this description.

I will not put it too high, but there is a further value in the Co-operative movement. We have here a body of people who, though they have what are called shares, are not really investing in shares in the sense that is understood on the Stock Exchange. The shares that they hold are really a deposit, because they cannot sell them. They cannot wait until the market is favour- able and get more for them than they paid. There is no profit in the transaction. They are not earning something which, as a result of some arbitrary action in some direction by somebody, can increase the value of a share, if not actually, at least nominally.

For these reasons I support the new Clause, and hope that the Government will give us some encouragement to believe in equity, because all that we are doing in the Clause is to say that, though the money is not being put in the Post Office and the Government are not getting the use of it, saving in itself is a valuable thing.

We sometimes talk of interest, and I am old enough to remember one of the reasons why I lost my seat in 1931. There was a scare that the money put into the Post Office was going to be used if the Labour Government got back. Like many working-class people in those days, my constituents did not realise that when they put money into the Post Office it was always used. They had no idea what created the 2½ per cent. interest that they received. They thought that if they put £2 in the bank it got married and had a family, and that was the interest. They did not understand that, wherever money is deposited, it must be used to earn interest.

We are not dealing with shareholders who live from their shares. We are dealing with people who have deposited a small sum of money and are drawing a dividend on their purchases and an interest on the amount that remains at the end of a period which justifies the interest being paid. I hope, therefore, that the Government will be prepared to accept the Clause.

Mrs. Harriet Slater (Stoke-on-Trent, North)

I support the new Clause, and I hope that the Government will reconsider their past decisions. The Clause really deals with the position of 12 million people who are the consuming population of this country. They are ordinary working-class people who in their small way are indirectly helping the amassing of small savings through co-operative societies.

The Co-operative movement has repeatedly been legislated against, particularly by this Government, and this is an instance where the Government have legislated not only against the Co-operative movement as such but against a large number of ordinary people who desire to save whatever they can through their membership of the Co-operative movement.

I have had a long experience in the Co-operative movement. Many people leave their dividends in as part of their share capital so that the money will be available when they require it. When I first got married, I left my dividends in to help to pay off the mortgage on the house that I was buying. Other people leave them in and build up their small savings to ensure that their children are able to have a holiday. If these people had not had their savings in the Cooperative movement they would not have had their holiday, and in particular their children would have been deprived of it.

Other people leave their savings in to make sure that the money is available to cover their rates. I have been in that position, too. In the early days of my married life, I left my dividend in and was very glad of it. Sometimes I did not use it, but it was there as a security to make sure that the rates and mortgage on my house were being paid.

The Government have made a great song and dance about a property-owning democracy. Through the Co-operative movement large numbers of people are, in effect, a property-owning democracy. Not only are they trying to build up their savings. Through the Co-operative movement, they are becoming owners of shops and warehouses. It is because of the savings that are left in, and the shares which are built up, that the Co-operative movement has been able to make the progress it has during the past years.

If a person puts his money into the Post Office, he is exempt from paying tax on the first £15 of interest. If, however, he puts 10s. or £1 into the penny bank week after week, or if he leaves in his dividend, he has to pay tax on his small savings. That, in itself, is an injustice, and it means that the Government are legislating against a vast number of ordinary people. It does away with the claim that the Government and those people up and down the country who work for National Savings want to make it as easy as possible for people to save. This is the easiest possible way in which money can be saved but the Government are making it as difficult as possible by this kind of—

Sir Peter Roberts (Sheffield, Heeley)

The hon. Lady mentioned the word "injustice". Is it being suggested that if these people, instead of putting their money into co-operative savings, took it to a joint stock bank, or put it into an ordinary bank, that would be an injustice which should also be remedied?

Mrs. Slater

Is the hon. Gentleman suggesting that the vast number of people who are members of co-operative societies would put money into a joint stock bank?

Sir P. Roberts

They could do.

Mrs. Slater

Not many of them could do that. The point is that they do their shopping every week, and there is here a very easy way of encouraging savings.

Sir P. Roberts

The hon. Lady used the word "injustice".

Mrs. Slater

It is all right for hon. Gentlemen who have not known how difficult things can be. It is an injustice because the people I am referring to are ordinary people who, week after week, put their shillings in the penny banks and leave their dividends to mount up as their share capital.

Let us be perfectly frank and honest about it. Because it happens to be the Co-operative movement, and for no other reason, the Government have legislated against the co-operator in this way. It is another instance of private enterprise operating against the Cooperative movement, which is a democratic undertaking representing the working-class people of this country. I have no hesitation in being frank and honest about this. We say that if the Government wish to ensure an easy method of promoting small savings, here is an honest way to do so, by the provision of the concession suggested in the Clause.

8.0 p.m.

Mr. Maudling

Much has been said by hon. Members opposite about discrimination and injustice. I have never heard so much said with so little foundation for it. There is no case for what has been said. I am sorry to speak so strongly to the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater), but if she studies her speech, she will find that she cannot square her argument with the facts of the situation.

How can the hon. Lady talk about injustice and discrimination against the co-operatives? Until 1956 all investment income was liable to Income Tax. One exemption, and only one, was made in that year, in respect of money put into Post Office and Trustee Savings. I will come to the reasons in a moment. They were given clearly at the time by my right hon. Friend the Prime Minister, who was then Chancellor of the Exchequer. That was the sole exception. I cannot understand why it should be argued that there has been discrimination against the co-operatives. If we extended that exemption to the cooperatives, we should be discriminating against other forms of investment income, which I do not think would be logical.

Mr. Holt

Savings Certificates hear no tax whatever and have not borne tax for years.

Mr. Beswick

May I remind the Paymaster-General of something which I am sure my hon. Friend had in mind—the way in which, for National Assistance purposes, certain small savings are exempted but not co-operative savings?

Mr. Maudling

That is true, but Savings Certificates are not investment incomes. I said that all investment income was liable to Income Tax.

My right hon. Friend, speaking then as the Chancellor of the Exchequer, said that he was taking this form of investment income because, in the first place it was investment at a low rate of interest, 2½ per cent. and also particularly because the money would pass directly to the Government. It would therefore assist the Government's monetary policy because more of the State's borrowing needs would be met without increasing the liquidity of the joint stock banks."—[OFFICIAL. REPORT, 7th June, 1956; Vol. 553, c. 1437–8.] This form of savings was singled out at the request of the National Savings Movement, a long-standing request, as a mode of saving which my right hon. Friend wished to encourage because of its inherent characteristics; and particularly because the money passed straight to the Government without increasing the liquidity of the joint stock banks and thereby creating monetary problems.

The moneys invested with the co-operative societies does not pass those tests. Therefore, if it is suggested that this exemption be extended to cooperative societies, I do not understand how we could avoid extending exactly the same exemption to all other forms of small savings, particularly deposits with joint stock banks or societies and clubs of all kinds. I do not understand why it should be argued that one form of small savings outside the Government circle should be chosen for a special exemption which at present is confined only to that form of savings.

Mr. Beswick

The right hon. Gentleman has said that co-operative savings do not pass the two tests which he mentioned, the fact that the interest paid is small and that the money went to the Government. I challenge the right hon. Gentleman to deny that the interest on these savings is small. Of course, it is small. There is a statutory limitation on the total amount, but the interest is small. Regarding the point about the money going direct to the Government, I have already said that in the case of many co-operative societies rather more than half of the money does go to the Government and it does not cost the Treasury anything to collect it.

Mr. Maudling

That is my point. Money put into Post Office Savings goes to the Government. In the case of money lent to the co-operative societies, a proportion—

Mr. Beswick

A large proportion.

Mr. Maudling

—of the money is invested in Government securities, which is a different process, and obviously the effects on the economy are different.

If one argues in favour of this Clause on the ground that it would encourage small savings, obviously that argument is one which would appeal to any Government, and to the Committee. But can we justify the acceptance of this Clause on that argument alone without at the same time treating all other forms of investment income on the same basis? I do not see how it is possible not to do so. A good proportion of the money invested in co-operative societies is used for trading in competition with other business enterprises. Can that money be given a special preference which is not given to the money invested in competing enterprises? I do not think that is possible.

If we went to the extent of spreading this concession round to the first £15 of investment income generally, the cost would be about £40 million a year, which is a sum that it is not possible for my right hon. Friend the Chancellor to contemplate giving up for this purpose. I am afraid, therefore, that I must advise the Committee to reject the proposal.

I am sorry that it should be thought that by doing something for Government securities, and nothing for any other form of saving, we are discriminating against the co-operative societies. I do not think that argument would hold water. If we accepted this Clause, we should be discriminating in favour of the co-operative societies and against everyone else, which would be wrong. Because I think that is the case, I must advise the Committee to reject the Motion.

Mr. H. Wilson

My hon. Friend the Member for Uxbridge (Mr. Beswick) commented on the fact that year by year, no matter what position is held by the right hon. Gentleman the Paymaster-General, we may always look forward to his interventions in these Finance Bill debates. He began to intervene when he was Parliamentary Secretary to the Ministry of Transport and Civil Aviation and continued when he was Economic Secretary to the Treasury with great skill and artistry. In 1956, when he was Minister of Supply, he intervened, and now, as Paymaster-General, he still comes to help out. There is one single theme underlying all the appearances of the right hon. Gentleman. When the Government have a particularly thin case to argue, their motto is always, "send for Reggie."

We can well understand why that should be. Obviously, the Chancellor would be much out of his depth in discussing this matter. I know that the Chancellor would sometimes like to be a bit more out of his depth than sometimes he is, because sometimes he gets in excessively shallow circumstances. The Economic Secretary, whom we are always delighted to hear, speaks with great courtesy, but the hon. and learned Gentleman is in the dog house this afternoon, and after his performance, and the vicious attack on him from what I described earlier as the Tory intelligentsia—from Knutsford and elsewhere—it would obviously have been dangerous to deploy the hon. and learned Gentleman on this occasion; and so the Paymaster-General has been called in.

I am bound to say that the Paymaster-General has lived up to his reputation and has put the best face on the thinest of cases. He began by attacking the argument used by my hon. Friend on the subject of discrimination and pressed it to the point where even a representative of the Labour Party was moved to intervene, and quite rightly. Of course, Savings Certificates have this exemption and there is pretty good evidence to show that, in the last year or two, since the investment in Savings Certificates has been relatively so attractive, the Chancellor has been muttering slightly ominous hints on the subject recently.

A considerable proportion of the money put into Savings Certificates has come from the richer taxpayers. Clearly, this is an attractive form of saving for those normally assessed at the higher rates of tax. Money invested in Savings Certificates enjoys this tax exemption, as do the Post Office Savings. Yet the Paymaster-General says that there is no discrimination, although the exemption does not cover one of the biggest elements of small savings in this country—I emphasise that it is small savings, unlike a lot of Savings Certificate investment. But the right. hon. Gentleman says that there would be discrimination involved were this exemption extended to cover such small savings.

The Paymaster-General got into a very odd argument. He said something about the liquidity of the joint stock banks and that Post Office savings investment do not involve an increase in the liquidity of the joint stock banks. Of course not, but is it suggested that if someone leaves his shares in a co-operative society or leaves his dividends in, it would increase the liquidity of the joint stock banks?

Mr. Maudling

If the Government cannot borrow direct from the investor, they must borrow more from the banks.

Mr. Wilson

I am sorry, but I do not follow the right hon. Gentleman's argument. Is he trying to give an incentive to the co-operator to take his money out of the co-operative society and put it into the Post Office Savings Bank so that the Government will need less money from the banks? Is that his argument? It is not very clear, at least on this side of the Committee. Perhaps we shall have it explained in more detail later.

In any case, the right hon. Gentleman for once is really living in the days of 1956. That is, of course, an advance on most of his colleagues—by about 100 years. He will probably remember that on the Second Reading of the Finance Bill on 9th May, 1956, I suggested various means of dealing with the problem of the liquid reserves of the joint stock banks. I suggested something on the lines of Treasury deposit receipts. I was glad to see that last year the Chancellor introduced the system of special deposits. Surely it is not beyond the wit of the Treasury and the Bank of England to find a means of controlling the problem of the liquidity of the joint stock banks. They have invented a mechanism for it, although it is true that they have not used it yet. It was a thin argument for the right hon. Gentleman to put forward.

We are here dealing with a very valuable source of savings. It is intertwined in the whole development of our social history. Among the most important developments of the nineteenth century were the co-operative societies, the trade unions, and the friendly societies. This has been an historic means of increasing savings in this country, especially in industrial areas, but not exclusively there. It has contributed greatly to the development of thrift. My hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) said that when she was first married she put aside money in this way to help to pay off the mortgage on her house. That is a frequently encountered happening in industrial areas. I know that the house next to the one where I was born was paid for exclusively out of "co-op divi." by an old lady who is now dead, though her children are still alive. Do we want to encourage that kind of saving to continue? Of course we do.

The second point that I want to make is that this is straight saving. There is nothing fishy about it. It is done for the purpose of saving. Sometimes it may be done relatively involuntarily, as my hon. Friend the Member for Tottenham (Sir F. Messer) said. It is not part of a means to a capital gain. Nobody puts any money on one side in the "co-op" in the hope of getting some fantastic gain such as hon. Gentlemen opposite are lauding as part of the capitalist system at the present time. There is no market in these shares or deposits. One does not find them varying in value from day to day, week to week, or month to month. The Clores of this world do not operate in "co-op" savings and deposits; these are straight savings. There is nothing that they would like to do better, but, thank goodness, this is one field which they cannot enter.

This is not a capitalist organisation. It is part of the warp and woof of our social life, and there is no possibility of variation in the value of these savings. If anyone wants to draw them out, they are drawn out at par, and if one puts savings in they are put in at par. There is, therefore, all the difference in the world.

I cannot understand the philosophy even of the right hon. Gentleman, who puts his case with such lucidity. Time and time again the Government justify these vast capital gains and say that they ought not to be taxed. Believe me, Mr. Clore's activities would be very much restricted if there were a tax on capital gains. Yet when it comes to the savings of really worth-while people who try to save a shilling or two a week or leave their dividend in the co-operative society at the end of the half-year, the interest on those savings has to be taxed down to the last halfpenny. So I hope the Government—I am glad the Chancellor is here to listen to the debate—will think again about this.

I have a final point to put to the right hon. Gentleman. Why is he discriminating in this way? In economic terms—I now leave the social arguments for the economic ones—all savings are needed in this country. When the Chancellor presents his Budget statement year by year, he rightly emphasises that what we are interested in is the balance between investment and savings from the national point of view, and his estimate of the balance between investment and savings very much determines the size of the Budget surplus that he considers necessary to enable us to maintain an even path between inflation on the one hand and deflation on the other.

8.15 p.m.

Therefore, since, as we have been reminded, this new Clause provides for 12 million small savers—they are small savers, with an average saving of £20 per head—and since we always hear this sob-stuff from hon. Gentlemen opposite about the need to encourage small savers, I am surprised that we have not had more support for the new Clause from hon. Members opposite. We hear of such schemes as "Every man a capitalist", the scheme of the right hon. Member for Blackpool, North (Sir T. Low), the investment trusts, and all the rest of it. I am bound to wonder whether the motive of hon. Gentlemen opposite is to increase small savings or simply to try to trap a lot more people into supporting Tory ideas about equity shares. What is the real truth about it?

We know that hon. Gentlemen opposite are opposed to the community as a whole having a stake in the wealth which comes as a result of the operations of big business from the wealth which the community itself creates. Now we find that in connection with an old-established form of small saving the Government are unwilling to wipe out this discrimination which was introduced by the Prime Minister in 1956. This creates grave doubts in our minds about the real motives from which hon. Gentlemen opposite, when they get out of this Chamber, are appealing for more efforts by the small savers and, particularly, a greater participation by the wage earners of the country in various forms of small savings.

I hope the right hon. Gentleman will now admit that his arguments were as "phoney" as I think I have proved them to be. Perhaps the Chancellor will overrule him, because he has been listening to what has been said. At any rate, I hope that one of the right hon. Gentlemen will say that they have agreed to accept the Clause. We are not fussy and do not insist on the new Clause being accepted with its present wording. I think it has been drafted with skill, but if the Chancellor will accept its principle and undertake to bring forward a new Clause on Report, we shall be happy. We are prepared to compromise with the Chancellor. If there is no compromise, it will be necessary to press the matter to a Division.

Mr. Coldrick (Bristol, North-East)

I wish to say a few words in support of the Clause. It appeared to me that the right hon. Gentleman was arguing that it would be unfair to the savings movement, the trustee savings banks and so forth if he accepted the Clause. Besides my long association with the Co-operative movement, I have been a member of a savings committee and a trustee of a trustee savings bank, and I can give the right hon. Gentleman an assurance that, generally speaking, those organisations would encourage the granting of a small concession to the Co-operative movement such as is now available to depositors in the trustee savings banks, the Post Office Savings Bank, and so on.

One should realise—if the right hon. Gentleman had had experience of this he would know—that during the war and at other times members of savings committees frequently found that in order to set an example to the rest of the people in their area they had to approach the Co-operative movement and ask it to put a substantial amount into war savings. I was the president of the Bristol Co-operative Society during the war, and from time to time we inaugurated savings campaigns in Bristol by putting £20,000 or £30,000 directly into war savings. Such contributions should be appreciated.

On a previous occasion I drew attention to the fact that there has been a deterioration in the quality of Conservative representation in this House compared with a century ago. If they look at the history of the Co-operative movement, even Conservatives will be obliged to admit that some of their most illustrious predecessors, such as Lord Rosebery, encouraged the development of the Co-operative movement precisely because they believed that if they developed the Co-operative movement they would develop habits of thrift and frugality. They felt that if the people saved they would develop a measure of independence which would lend quality to the British character. They have succeeded to a remarkable extent. This is not a one-sided advantage.

I recall a meeting of a co-operative society being convened for people who had been members of the society for over forty years. I confess that we imagined that probably a hundred or so would attend but, to our great astonishment, there were well over 700. The important point about that meeting is that some people—railway workers and others—had been fortunate enough to have permanent employment and in consequence they had allowed their dividends to accumulate until they reached the maximum for those days of £200. But I am not exaggerating when I say that a substantial proportion of that membership at the meeting confessed to me that they were eking out their old-age pensions by drawing continuously week after week a portion of the savings that they had accumulated in the Co-operative movement. One may take it for granted that even at present there are hundreds of thousands of people in this country who would be drawing more from National Assistance than they are drawing if they were not drawing from their savings accumulated over many years' membership of the Co-operative movement.

As my right hon. Friend the Member for Huyton (Mr. H Wilson) has indicated, I cannot see why we should distinguish between these forms of savings. As I have pointed out in the past, the arguments from the Front Bench opposite change constantly. In practice, the Co-operative movement is virtually doing precisely what the trustee and other savings banks are doing. One is compelled by law to do it and the other is doing it on a voluntary basis.

When I first raised this matter I found that a large number of people who were associated with the Co-operative movement in this country regarded the movement not as a trading organisation but as their bank. It is all very well for people trained in commerce and in the universities to talk so freely about their deposit accounts, current accounts, and so forth. The fact is that there are millions of people in the country who have no account and are timid of going to banks. But they do know their cooperative society. In consequence, if they are going to save they do so through the co-operative society. Knowing local people, I know that if they meet any adversity they immediately go there.

One found at the time when I first raised this matter that 86 per cent. of the capital in the Co-operative movement was not employed in trade. Only about 14 per cent. was so employed. The other 86 per cent. was invested either in local government or in Government assets, so that in practice the Co-operative movement was approximately in the position that is occupied by the trustee and other savings banks. The Government virtually had the control, although they were not compelled to ensure that the money was available to them.

I appeal to the right hon. Gentleman and his hon. Friends to be generous and broadminded. For the past thirteen years, whether a Conservative or a Labour Government has been in office, some of us have served on an advisory committee for the purpose of extending co-operation throughout the Colonies. Let us be under no illusion; sensible Members opposite will agree, I think, that if democracy is to be developed in the Colonies and if self-reliance and a measure of prosperity are to be extended, there is no better instrument through which these could be developed than a co-operative organisation.

I grant that some hon. Members opposite are anxious that these aims should be achieved through the Co-operative movement. Nevertheless, having brought these people from the Colonies over here and trained them at great expense, we proceed to demonstrate to them that we single out the Co-operative movement in this country for an exceptional form of treatment so that instead of encouraging it we discourage it in this country, while encouraging it abroad.

Unfortunately, the right hon. Gentleman has indicated that, in his opinion, this Clause would discriminate against other trading organisations. I have taken several deputations to the Treasury on this question. We have never claimed special privileges or advantages for ourselves. We have argued with the Treasury that we would like to see this concession granted to all small savers. We are not asking for a limited privilege. Those people who have saved only £20, or perhaps as much as £100, are not engaged in speculative business and, for the most part, that money is placed at the disposal of the people who manage this country. Therefore, I sincerely appeal to the Government, without entering too much into party strife, to recognise that this is a

concession which would benefit millions of people and would contribute to a movement which has already contributed much to the Government.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 184, Noes 223.

Division No. 134.] AYES [8.28 p.m.
Albu, A. H. Healey, Denis Pannell, Charles (Leeds, W.)
Allaun, Frank (Salford, E.) Herbison, Miss M. Pargiter, G. A.
Awbery, S. S. Hewitson, Capt. M. Parker, J.
Bacon, Miss Alice Hilton, A. V. Paton, John
Balrd, J. Hobson, C. R. (Keigley) Pearson, A.
Balfour, A. Holman, P. Pentland, N.
Bence, C. R. (Dunbartonshire, E.) Holt, A. F. Plummer, Sir Leslie
Benn, Hn. Wedgwood (Bristol, S.E.) Houghton, Douglas Popplewell, E.
Benson, Sir George Howell, Charles (Perry Barr) Prentice, R. E.
Beswick, Frank Hoy, J. H. Price, Philips (Gloucestershire, W.)
Bonham Carter, Mark Hughes, Cledwyn (Anglesey) Probert, A. R.
Bottomley, Rt. Hon. A. G. Hughes, Emrys (S. Ayrshire) Pursey, Cmdr. H.
Bowden, H. W. (Leicester, S.W) Hughes, Hector (Aberdeen, N.) Rankin, John
Bowen, E. R. (Cardigan) Hunter, A. E. Redhead, E. C.
Bowies, F. G. Hynd, H. (Accrington) Reeves, J.
Boyd, T. C. Irvine, A. J. (Edge Hill) Roberts, Albert (Normanton)
Braddock, Mrs. Elizabeth Irving, Sydney (Dartford) Roberts, Goronwy (Caernarvon)
Brook way, A. F. Janner, B. Robinson, Kenneth (St. Pancras, N.)
Brown, Thomas (Ince) Jay, Rt. Hon. D. P. T. Rogers, George (Kensington, N.)
Burton, Miss F. E. Jeger, Mrs. Lena (Holbn & St.Pncs, S.) Ross, William
Butler, Herbert (Hackney, C.) Johnston, Douglas (Paisley) Royle, C.
Butler, Mrs. Joyce (Wood Green) Jones, Rt. Hon. A. Creech (Wakefield) Short, E. W.
Callaghan, L. J. Jones, David (The Hartlepools) Simmons, C. J. (Brierley Hill)
Castle, Mrs. B. A. Jones, Elwyn (W. Ham, S.) Skeffington, A. M.
Champion, A. J. Jones, T. Idwal (Wrexham) Slater, Mrs. H. (Stoke, N.)
Chetwynd, G. R. Jones, T. W. (Merloneth) Smith, Ellis (Stoke, S.)
Cliffe, Michael Kenyon, C. Snow, J. W.
Coldrick, W. Key, Rt. Hon. C. W. Sorensen, R. W.
Collick, P. H. (Birkenhead) King, Dr. H. M. Soskice, Rt. Hon. Sir Frank
Corbet, Mrs. Freda Lawson, G. M. Sparks, P. A.
Cronin, J. D. Ledger, R. J. Spriggs, Leslie
Davies, Ernest (Enfield, E.) Lever, Leslie (Ardwick) Stewart, Michael (Fulham)
Davies, Harold (Leek) Lewis, Arthur Stones, W. (Consett)
Davies, Stephen (Merthyr) Lipton, Marcus Strachey, Rt. Hon. J.
Deer, G. Logan, D. G. Summerskill, Rt. Hon. E.
de Freitas, Geoffrey Mabon, Dr. J. Dickson Sylvester, G. O.
Diamond, John McCann, J. Taylor, Bernard (Mansfield)
Dodds, N. N. MacDermot, Niall Thomson, George (Dundee, E.)
Dugdale, Rt. Hn. John (W. Brmwch) Mclnnes, J. Thornton, E.
Ede, Rt. Hon. J. C. McKay, John (Wallsend) Tomney, F.
Edelman, M. McLeavy, Frank Viant, S. P.
Edwards, Robert (Bilston) Mahon, Simon Wade, D. W.
Edwards, W. J. (Stepney) Mallalieu, E. L. (Brigg) Warbey, W. N.
Evans, Albert (Islington, S.W.) Mann, Mrs. Jean Watkins, T. E.
Finch, H. J. (Bedwellty) Mason, Roy Weitzman, D.
Fitch. A. E. (Wigan) Mayhew, C. P. Wells, Percy (Faversham)
Foot, D. M. Mellish, R.J. Wells, William (Walsall, N.)
Forman, J. c. Mendelson, J. J. White, Mrs. Elrene (E. Flint)
Fraser, Thomas (Hamilton) Messer, Sir F. Wilkins, W. A.
Gaitskell, Rt. Hon. H. T. N. Mitchison, G. R. Willey, Frederick
Greenwood, Anthony Moody, A. S. Williams, Rev. Llywelyn (Ab'tillery)
Grenfell, Rt. Hon. D. R. Morris, Percy (Swansea, W.) Williams, W. R. (Openshaw)
Grey, C. F. Moss, R. Willis, Eustace (Edinburgh, E.)
Griffiths, David (Rother Valley) Moyle, A. Wilson, Rt. Hon. Harold (Huyton)
Griffiths, Rt. Hon. James (Llanelly) Neal, Harold (Bolsover) Winterbottom, Richard
Griffiths, William (Exchange) Noel-Baker, Francis (Swindon) Woodburn, Rt. Hon. A.
Grimond, J. Noel-Baker, Rt. Hon. P. (Derby, S.) Woof, R. E.
Hale, Leslie Oliver, G. H. Yates, V, (Ladywood)
Hall, Rt. Hn. Glenvil (Colne Valley) Oram, A. E.
Hamilton, W. W. Oswald, T.
Hannan, W. Owen, W. J. TELLERS FOR THE AYES:
Hastings, S. Padley, W. E. Mr. Holmes and Mr. J. T. Price.
Hayman, F. H. Palmer, A. M. F.
NOES
Agnew, Sir Peter Arbuthnot, John Baldock, Lt.-Cmdr. J. M.
Aitken, W. T. Armstrong, C. W. Baldwin, Sir Archer
Alport, C. J. M. Ashton, H. Balniel, Lord
Amory, Rt. Hn. Heathcoat (Tiverton) Atkins, H. E. Barber, Anthony
Barlow, Sir John Grimston, Sir Robert (Westbury) Noble, Michael (Argyll)
Barter, John Hall, John (Wycombe) Nugent, Richard
Batsford, Brian Harris, Frederio (Croydon, N.W.) Ormsby-Gore, Rt. Hon. W. D.
Baxter, Sir Beverley Harris, Reader (Heston) Orr, Capt. L. P. S.
Beamish, Col. Tufton Harrison, Col. J. H. (Eye) Orr-Ewing, C. Ian. (Hendon, N.)
Bell, Philip (Bolton, E.) Harvey, John (Walthamstow, E.) Osborne, C.
Bell, Ronald (Bucks, S.) Heald, Rt. Hon. Sir Lionel Page, R. G.
Bevins, J. R. (Toxteth) Heath, Rt. Hon. E. R. G. Pannell, N. A. (Kirkdale)
Bidgood, J. C. Henderson-Stewart, Sir James Partridge, E.
Bingham, R. M. Hesketh, R. F. Peel, W. J.
Birch, Rt. Hon. Nigel Hicks-Beach, Maj W. W. Peyton, J. W. W.
Bishop, F. P. Hill, Mrs. E. (Wythenshawe) Pickthorn, Sir Kenneth
Black, Sir Cyril Hill, John (S. Norfolk) Pilkington, Capt. R. A.
Body, R. F. Holland-Martin, C. J. Pitt, Miss E. M.
Bossom, Sir Alfred Hope, Lord John Pott, H. P.
Boyd-Carpenter, Rt. Hon. J. A. Hornby, R. P. Powell, J. Enoch
Boyle, Sir Edward Hornsby-Smith, Miss M. P. Price, David (Eastleigh)
Braithwaite, Sir Albert (Harrow, W.) Horobin, Sir Ian Prior-Palmer, Brig. O. L.
Brewis, John Howard, John (Test) Profumo, J. D.
Bromley-Davenport, Lt.-Col. W. H. Hughes-Young, M. H. C. Ramsden, J. E.
Brooman-White, R. C. Hurd, Sir Anthony Rawlinson, Peter
Browne, J. Nixon (Craigton) Hutchison, Michael Clark (E'b'gh, S.) Redmayne, M.
Bryan, P. Hyde, Montgomery Rees-Davies, W. R.
Bulius, Wing Commander E. E. Hylton-Foster, Rt. Hon. Sir Harry Remnant, Hon. P.
Burden, F. F. A. Iremonger, T. L. Renton, D. L. M.
Cary, Sir Robert Irvine, Bryant Godman (Rye) Ridsdale, J. E.
Cole, Norman Jenkins, Robert (Dulwich) Rippon, A. G. F.
Conant, Maj. Sir Roger Jennings, J. C. (Burton) Roberts, Sir Peter (Heeley)
Cooke, Robert Jennings, Sir Roland (Hallam) Robinson, Sir Roland (Blackpool, S.)
Cooper-Key, E. M. Johnson, Dr. Donald (Carlisle) Roper, Sir Harold
Cordeaux, Lt.-Col. J. K. Johnson Eric (Blackley) Ropner, Col. Sir Leonard
Corfield, F. V. Kaberry, D. Scott-Miller, Cmdr. R.
Courtney, Cdr. Anthony Keegan, D. Sharpies, R. C.
Kerr, Sir Hamilton Shepherd, William
Craddock, Beresford (Spelthorne) Kimball, M. Simon, J. E. S. (Middlesbrough, W.)
Crosthwaite-Eyre, Col. O. E. Lagden, G. W. Smithers, Peter (Winchester)
Crowder, Sir John (Finchley) Lambton, Viscount Smyth, Brig. Sir John (Norwood)
Crowder, Petre (Ruislip—Northwood) Langford-Holt, J. A. Stevens, Geoffrey
Cunningham, Knox Leavey, J. A. Steward, Harold (Stockport, S.)
Currie, G. B. H. Leburn, W. G. Stoddart-Scott, Col. Sir Malcolm
Dance, J. C. G. Legge-Bourke, Maj. E. A. H. Storey, S.
D'Avigdor-Goldsmid, Sir Henry Legh, Hon. Peter (Petersfield) Studholme, Sir Henry
Deedes, W. F. Lindsay, Martin (Solihull) Taylor, Sir Charles (Eastbourne)
de Ferranti, Basil Lloyd, Maj. Sir Guy (Renfrew, E.) Taylor, William (Bradford, N.)
Donaldson, Cmdr. C. E. McA. Loveys, Waltor H. Temple, John M.
Doughty, C. J. A. Lucas, Sir Jocelyn (Portsmouth, S.) Thomas, Leslie (Canterbury)
du Cann, E. D. L. Lucas, P. B. (Brentford & Chiswick) Thompson, Kenneth (Walton)
Duncan, Sir James Lucas-Tooth, Sir Hugh Thompson, R. (Croydon, S.)
Eden, J. B. (Bournemouth, West) McAdden, S. J. Thorneycroft, Rt. Hon. P.
Elliott, R. W. (Ne'castle upon Tyne, N.) Macdonald, Sir Peter Thornton-Kemsley, Sir Colin
Errington, Sir Eric McLaughiln, Mrs. P. Tilney, John (Wavertree)
Erroll, F. J. McMaster, Stanley Turner, H. F. L.
Farey-Jones, F. W. Macmillan, Rt. Hn. Harold (Bromley) Turton, Rt. Hon. R. H.
Finlay, Graeme Macmillan, Maurice (Halifax) Vane, W. M. F.
Fisher, Nigel Maddan, Martin Vaughan-Morgan, J. K.
Forrest, G. Maitland, Hon. Patrick (Lanark) Vickers, Miss Joan
Fraser, Hon. Hugh (Stone) Manningham-Buller, Rt. Hn. Sir R. Vosper, Rt. Hon. D. F.
Galbraith, Hon. T. G. D. Markham, Major Sir Frank Wakefield, Edward (Derbyshire, W.)
Gammans, Lady Marples, Rt Hon. A. E. Wakefield, Sir Wavell (St. M'lbone)
Garner-Evans, E. H. Marshall, Douglas Wall, Patrick
George, J. C. (Pollok) Maudling, Rt. Hon. R. Ward, Rt. Hon. G. R. (Worcester)
Glover, D. Mawby, R. L. Ward, Dame Irene (Tynemouth)
Glyn, Col. Richard H. Maydon, Lt.-Comdr. S. L. C. Webbe, Sir H.
Godber, J. B. Medlicott, Sir Frank Webster, David
Goodhart, Philip Morrison, John (Salisbury) Wills, Sir Gerald (Bridgwater)
Cough, C. F. H. Mott-Radclyfle, Sir Charles Wilson, Geoffrey (Truro)
Gower, H. R. Nabarro, G. D. N. Wolrige-Gordon, Patrick
Graham, Sir Fergus Nairn, D. L. S. Woollam, John Victor
Grant, Rt. Hon. W. (Woodside) Neave, Airey
Grant-Ferris, Wg Cdr. R.(Nantwich) Nicholson, Sir Godfrey (Farnham) TELLERS FOR THE NOES:
Green, A. Nicolson, N. (B'n'm'th, E. & Chr'ch) Mr. Gibson-Watt and Mr. Whitelaw.
Gresham Cooke, R. Noble, Comdr. Rt. Hon. Allan