§ Mr. Deputy-Speaker (Sir Gordon Touche)
The next two Amendments in the name of the hon. and learned Member for Kettering (Mr. Mitchison) to page 14, line 41 and to page 15, line 1, may conveniently be discussed together.
§ Mr. Mitchison
I beg to move, in page 14, line 41, at the end, to insert:(2) Without prejudice to the generality of the foregoing subsection, the said first order shall include provisions authorising the application of funds of building societies to assist or promote building societies in any British Commonwealth countries or British colonial territories:Provided that no funds shall be so applied—
- (a) without the consent of the Treasury or
- (b) without the consent in relation to British Commonwealth countries of the Secretary of State for Commonwealth Relations or in relation to British Colonial territories of the Secretary of State for the Colonies; or
- (c) if the funds to be so applied by a building society would, with any other funds of the society so applied, amount to more than five per cent. of its total assets; or
- (d) otherwise than subject to such conditions as the Chief Registrar may prescribe, whether in the said first order or otherwise and either generally or in relation to any particular case or cases; and that the said provisions shall limit applications accordingly.(3) In considering whether to give or withhold his consent under the last foregoing subsection, a Secretary of State shall have regard to the security of the funds proposed to be applied by a building society, to the relevant laws of the country or territory in which it is proposed to assist or promote a building society and especially to the need for any such assistance or promotion and to the sufficiency or insufficiency of the resources of the country or territory for the purpose.I will avail myself, Mr. Deputy-Speaker, of your permission to discuss these Amendments together, and say that the second one, to page 15, line 1, is merely a drafting Amendment which would follow if the Amendment which I am now moving were accepted.
969 I must go back for a moment to the proceedings in Committee. A New Clause was put down in the name of the hon. Member for Wimbledon (Sir C. Black) and some of his hon. Friends providing, in effect, that building societies should be enabled to use a part of their funds, with Treasury consent, to assist or promote building societies in the Commonwealth, the Dominions or in British colonial countries. To that new Clause, my hon. Friends and I added an Amendment specifying that in cases of that sort, the consent of the appropriate member of the Government, that is to say, the Secretary of State for Commonwealth Relations or the Secretary of State for the Colonies, as the case may be, should be required and particularly should be required to give his consent and, even more important than that, in giving that consent, the Secretary of State should have regard to certain matters.
The Government objected to the hon. Gentleman's new Clause and to our Amendment to it, and, without going in detail into their objections, one was that this could be done already under Clause 11 of the Bill. If I may now summarise the Government's objections, they were the se. This can be done under the Bill anyhow; we dislike the Amendment and refuse to accept it; and, in no circumstances, whether the Amendment be passed or not, since Treasury consent is required, shall we do anything about it. These were a magnificently inconsequent collection of objections to that new proposal.
I hope the Government will by now have thought of something at any rate a little more logical. To help them to that desirable conclusion, we now put this down in the form of an Amendment to Clause 11. This is a Clause which empowers the Chief Registrar to stipulate how the liquid funds of building societies shall be invested. It is in very wide and general terms indeed, and this is a mandatory addition to these wide terms, saying that the order to be made by the Chief Registrar shall include provisions on the lines that I have already indicated; that is to say, on the lines of the amalgamation, if I may so put it, of the hon. Member for Wimbledon's new Clause and our proposed Amendment to it.
970 It is mandatory in the sense that the order must contain the provision. It is not mandatory in the sense that the consent of the Treasury is dispensed with. On the contrary, it is still required in every single case, and the safeguards in the Clause against any misuse or excessive use of building society funds in this direction now stand as follows. First, Treasury consent, with the added safeguard that, as we are told, the Treasury will never give it, which is something; secondly, the consent of one or other of the two responsible Ministers; thirdly, that no more than 5 per cent. of the total assets shall be involved; and, fourthly, a very wide power of imposing conditions is conferred on the Chief Registrar. The hon. Member for Wimbledon was responsible for two of the safeguards, and I have added two more. If this is not ample protection, all I can say is that no Act of Parliament can do any more than this.
If the Treasury will never do this, if it says that in all the circumstances and in all cases this will never be done, we are beating thin air and it seems a waste of time to do anything about it. That kind of answer, however, is never accepted from a Government and in this case it certainly ought not to be accepted. I doubt whether, on further consideration, the Government will make it in quite that form.
Let us see in substance what we are on. This is not dealing with advances made by a building society established and carrying on business in this country directly to people borrowing abroad on the security of their houses. It relates to something different. It relates to the diversion, subject to the many safeguards, of a small part of their funds to assist or promote the development of a local building society. There are a number of these local building societies about. I said in Committee, and I repeat it generally again, that they have had varying fortunes. Some of them have had great success. Others have had much less success.
The difficulty, I am told, is that in the case of those which have had less success, they have not had the "know-how." In consequence, they have not been able to raise local funds sufficiently and they never got started. It is not that they have started and have gone wrong; they 971 simply have been unable to start properly. I am not saying that something has not been done, but they have been unable to make any effort commensurate with the requirements of the Colony or Dominion.
I rule out for the moment another type of case. In most, if not all, of the older Dominions there are already prosperous and successful building societies which need no assistance from anyone and which no building society would be likely to try to promote a rival building society. To do so would be to work under considerable difficulties. Accordingly, one of the things to which the Secretary of State is required to pay attention when considering the matter is the sufficiency or insufficiency of the resources of the country or territory for the purpose.
Accordingly, if, in this case, the Secretary of State for Commonwealth Relations were invited to start a building society in, say, Africa, where, I believe, there is already a large and successful one, he would say, "Why do you want to do that? What is the reason for it?" I imagine that he would refuse his consent on that ground alone, if not on other grounds.
That leaves us with cases where there is need for assistance in what may be the Dominion or Colony concerned. That leads me to the answer which was given on Second Reading to this point when it was put up in the course of debate. The answer was that there was no need for building societies to do anything in this matter and that the Colonial Development Corporation can do it. I am informed that there are considerable difficulties about this, difficulties with which the Treasury is well acquainted. That is to say, the Colonial Development Corporation does not have money to spare for the purpose, or, at least, not much money.
The Corporation has recently had the Sinclair Report, which is a report on its accounting methods and its resulting obligations. Broadly speaking, the Sinclair Report directs the attention of the Colonial Development Corporation to the future course of its accounts rather than to its present or immediate cash position. Without wishing to state it in any controversial way, it enjoins the Corporation to make careful provision 972 for the future. Accordingly, the strings are being tightened a little.
So far as I know, the Treasury has never given to the Colonial Development Corporation funds adequate for the sort of purpose which we have in mind, and there are two further objections to the use of the C.D.C. for this purpose. One is that the Corporation and the Government have refused to introduce legislation which might allow it to work in Dominions of recent origin. Accordingly, it would get into considerable difficulty in places which are Dominions but which require assistance, some of them at present Dominions and others at present Colonies but likely to become Dominions shortly. If we look, for instance, at the political map of Africa, it is obvious that there are countries there where assistance of this kind would be very useful and that those countries include both Colonies and Dominions of the type I have indicated. It should not depend on that point.
There is, however, another objection, too. Although it has done a great deal—as much as it could—in this direction, the Colonial Development Corporation is not sufficient for the purpose, not only for the amount of funds, but also because an advantage lies in getting the technical know-how of building societies in this country directed to helping in these, I will not say backward countries, but countries which do not have such adequate resources. If one were to investigate—I cannot claim to have done it—the cases of difficulties, one would probably find that that was one of the reasons for the lack of technical knowledge.
There is another point about it, too. The Colonial Development Corporation is primarily an investing body and so, of course, in a sense, is a building society. I was, however, impressed, as, I am sure, all hon. Members were, by what was said by the hon. Member for Wimbledon on Second Reading. That was, that there were many cases where money of building societies could be used to promote or assist a local building society but that once the local building society was started, there would not be the same need for keeping funds there. I had a beautiful and rosy picture—I should have thought there was 973 something in it—of the funds of building societies being used first in one place and then in another and, therefore, having an effect in assisting these countries quite beyond the amount involved. The funds could be turned over again and again. All this, I repeat, is contingent on consents.
Both sides of the House say that they are concerned with giving all the assistance they can to countries which need it. I do not like using the word "backaward"— it is not the right word for those countries; let me refer to them as countries in need of help in matters of this sort. I do not want to use that term to countries which have passed beyond the stage with which we are concerned today. Places like the countries in the Caribbean would welcome assistance of this sort.
It is said that the laws of those countries are not suitable for the purpose. We have had it quite clear in the course of debates here—there is no reasonable doubt about it—that some, at least, of these countries are perfectly willing to make alterations in their law to conform with the degree of protection that is provided in English law for building societies. That is one of the points to which the Secretary of State would have to have regard when considering the matter. Generally he is asked to consider the security of the funds proposed to be applied. I cannot believe that there is any risk in the matter. This seems to me to be a real test of what the Government's intentions are with regard to helping Dominions and Colonies that stand in need of help, and helping them to start a venture of their own which obviously might be of real and lasting assistance to them.
If the Government say "We cannot do it in this case," or "We will not do it," I would say this to them: "Even if you say that now—and I do not for a moment accept that you are right in saying it—why do you resist putting into this Bill power to do it—that is to say, a provision in the Bill for arrangements of this kind? You can go on refusing your consent for as long as you feel obstinate, narrow-minded and purblind in the matter. When you wake to a more real sense of your responsibilities to those countries that stand in need of help, and when for once you are 974 prepared to mobilise the resources of the knowledge and funds of private enterprise, if I may so call the building societies, to assist you in that respect, then you will be able to avail yourselves of the opportunities presented by the provision that we wish to see inserted."
I beg the Government not to take a short-sighted view of this, but to remember that we have very great responsibilities as a country towards these Dominions and Colonies whose future in this respect we are now considering. I ask them to remember, too, that if the number of immigrants coming into this country goes up sharply, as it has gone up according to recent figures, one of the reasons for it is that those people, or many of them, think that they are not doing too well at home and can do better somewhere else, and it is our responsibility and duty so far as we can to see that they do better at home. That is the real answer to the difficulties about immigration, or emigration, according to whichever way one looks at it.
Accordingly, from a broad point of view, there is everything to be said for having a provision of this sort, and there is everything to be said for the Treasury for once taking off its blinkers and taking a rather wider view of the world than from time to time it does take. There are moments when the Treasury state of mind exasperates me wildly, and if the Economic Secretary intends again to make the sort of speech he made in Committee, I warn him that my temper will again be horrid.
§ Sir Cyril Black (Wimbledon)
I want to add my appeal to that which has been made by the hon. and learned Member for Kettering (Mr. Mitchison) that we may get a more forthcoming and more progressive reply from the Economic Secretary than has so far been forthcoming in the discussion of this proposal.
I suppose it is true to say that some little progress has been made since the Second Reading of the Bill, because at that time I think all hon. Members assumed that it was not possible for building societies to operate in any form in Commonwealth countries apart from some specific change in the legislation of this country. But it has now been discovered, and was pointed out to us 975 by the Economic Secretary in Committee, that that is not so.
If this Bill becomes an Act, as no doubt it shortly will, then under Clause 11 further legislation would not be needed for Commonwealth operations but they could be made by administrative action on the part of the Chief Registrar and the Treasury. I suppose that we may perhaps hail that as some small improvement on the position as we formerly understood it.
But when we come to the practical issue of what the Treasury propose to do we are, as the hon. and learned Gentleman has pointed out, completely up against a brick wall. The Economic Secretary said in Committee:I must tell the Committee frankly that at present we have no intention of authorising investment in a Commonwealth building society."—[OFFICIAL REPORT, Standing Committee D, 14th July, 1960; c. 304.]I should have thought that on considering this matter since the Committee stage, on a matter on which the Chief Registrar and the Treasury have to exercise a discretion in the power given them under Clause 11, it could at any rate be argued that in the exercise of that discretion they are, in fact, acting as it were in a semi-judicial capacity. For the Economic Secretary to tell us in Committee that although the Chief Registrar and the Treasury have this power, they have no intention at all of acting under the power which they possess, seems to me to be, at any rate, a strange procedure, on the one hand to confer a power but on the other hand to make it quite clear at the same time that the exercise of that power will not be permitted.
I do not blame the Economic Secretary entirely for the position in which we find ourselves. On all matters other than this question of Commonwealth operations, if I may say so with respect, he has, I think, handled this Bill at its various stages with outstanding courtesy and skill, but on this issue the real trouble is that while the voice is the voice of the Economic Secretary, the hand is the dead hand of the Treasury. While the Economic Secretary has to come to this House and defend the policy of the Government in this respect, the real people whom we would like to have before us and on whose stony hearts we would like to 976 endeavour to make some impression are those figures in the Treasury who exercise an altogether too decisive influence in matters of this kind.
The reasons behind the unwillingness of the Government to contemplate this proposal have now been greatly clarified as the Bill has gone through its various stages. Only one reason was given to us by the Economic Secretary in the Committee stage when he said:I hope that the Committee will take my word for it that we have reached this decision"—that is the decision not to permit Commonwealth business—on the basis that our duty is to consider primarily the protection of the investor in a United Kingdom building society."—[OFFICIAL REPORT, Standing Committee D, 14th July, 1960; c. 305.]If I can summarise the hon. Gentleman's argument, what he said was this. Money invested in the Commonwealth would be subject to a far greater risk and jeopardy than money invested in this country, and therefore it would be wrong to authorise that use of building society funds inasmuch as the security of small investors might be imperilled. But surely, unintentionally I am sure, that is really a rather grave reflection on some Commonwealth countries and their citizens. What the Economic Secretary is saying is that in, for instance, Australia, Canada, New Zealand or Rhodesia the house property is of such a doubtful value, the legal system is so questionable and the integrity of potential borrowers ought so much to be called into question, that money invested in first mortgages to enable people to buy their own homes in those countries would be subject to a degree of risk and jeopardy which would not apply to similar business in this country. That seems to me to be an argument that this House ought not to accept and which, so far as I have experience of these territories, has no justification in fact.
I do not wish to prolong my speech unduly, having regard to the amount of business we have to do today, and I shall, therefore, conclude in this way. During the past ten years, the number of families enabled to own their own homes in this country, largely as a result of the operation of the building societies, has 977 increased by 50 per cent., from 4 million families to 6 million families. This has been done to the tremendous benefit of the political stability of the country, of the housing standards of the nation and of the happiness of the families concerned. These benefits which we have beef able to enjoy in this country for more than 100 years are benefits in which the Commonwealth countries want to share and in which they can share on an adequate scale only if we help them with our "know-how" and our funds.
This proposal has been supported by the Building Societies Association. It has been warmly commended in the Press. No convincing and valid objections have been advanced against it. If the matter were determined by a free vote in the House, the proposal would be endorsed by the overwhelming majority of hon. Members of all parties. If the Economic Secretary wishes to rely on the legal point that the Amendment is not necessary because the power already exists in Clause 11, that is an argument which he may fairly deploy, but earnestly hope that, in what he has to say about the exercise of the powers conferred by Clause 11, he will be more forthcoming than he was in Committee and more forthcoming than any Government spokesman so far has been on this matter. I hope he will indicate that, subject to suitable safeguards being provided, of which the Chief Registrar and the Treasury may be the judge, the door is not slammed, locked and barred but it is, at least, ajar.
§ Mr. John Hall (Wycombe)
It was not my intention to intervene in this debate at Indeed, I confess that I have not followed the passage of the Bill in great detail through its various stages. It was not until I came and listened to what has been said on this matter that I realised, with horror, I confess, that it was not intended to give power to building societies either to assist other building societies or to promote new building societies in the Commonwealth and the Colonies. I say at once that this leaves me somewhat amazed.
Time and time again, when dealing with matters of emigration—bere, unlike the hon. and learned Member for Kettering (Mr. Mitchison), perhaps, I am thinking more of those of our people who wish to go and settle in other countries of the Commonwealth—difficulty always 978 arises because of the problem of finding suitable housing overseas. Time and time again, one finds that people who wish to go and settle in, shall I say, Australia, New Zealand or Canada are forced to return to this country because they cannot find suitable homes. I appreciate that part of this is due to the lack of sufficient skilled labour and other causes of that kind, but it is due also to the problem of financing the purchase of a house.
I should have thought that if the party on this side of the House believes in a property-owning democracy, we, the members of it, should believe in that principle sufficiently sincerely to wish to see it exported. I should like to see property-owning democracy spread throughout the British Commonwealth. I cannot really see any danger to the depositors in building societies in this country if, with all the safeguards which are included in the Bill and the Amendment, building societies are given the right to invest either by themselves or through other building societies in the various countries of the Commonwealth.
I shall not elaborate the matter, because I do not feel qualified to comment very much on a Bill, which, as I have said, I have not followed with very great attention, but I, too, hope that my hon. Friend the Economic Secretary will consider the matter again and see whether we can through the Bill give an opportunity to our building societies, through their great resources and experience, to help to develop similar organisations throughout the Commonwealth.
§ Mr. Barber
If my hon. Friend the Member for Wycombe (Mr. John Hall) wishes to study this matter, I can refer him to the two occasions when it was discussed recently in another place and to our proceedings on Second Reading and in Committee when it was discussed at great length. Also, there are several hon. Members on both sides who will be able to tell him of what transpired at an all-party meeting we had to discuss it.
§ Mr. Barber
Well, representatives of all parties. The hon. Member for Sheffield, Hillsborough (Mr. Darling) will be able to explain about that.
979 No one can pretend that the utmost consideration has not been given to this matter. I say at once, in the light of its great importance, that I appreciate very much the way in which the hon. and learned Member for Kettering (Mr. Mitchison) and my hon. Friend the Member for Wimbledon (Sir C. Black) have spoken about it. There are, however, certain aspects which I should make absolutely clear at The outset which, I think, anyone who has not read the report of our previous discussions on the matter might well misunderstand.
I accept without qualification the contention of the hon. and learned Gentleman that there is a considerable demand in many parts of the Commonwealth and the Colonies for funds for housing projects. No one in his right mind would dispute that, nor would anybody dispute that it was highly desirable that, in the proper and appropriate way, we in this country should do everything we can to help. But I cannot stress too strongly that the question here is not really whether it is desirable for us to assist Commonwealth countries to raise their housing standards. The question with which we are concerned is entirely different, namely, whether at this time it is right that the funds of United Kingdom building societies should be used for this purpose.
The hon. and learned Member, I thought, seemed to think that this was something to do with what he called Treasury policy.
§ Mr. Barber
I will come to the blinkers in a moment. It really is nothing of the sort. From the point of view of the overseas territories concerned, any plan such as the one the hon. and learned Gentleman and my hon. Friend the Member for Wimbledon have in mind has very great attractions. However, there is, surely, no one in the House who would disagree that that cannot be the only consideration. As the hon. and learned Gentleman pointed out, during the past few years, the Colonial Development Corporation has been providing finance for overseas building societies. I take his point that he considers that, in the future, it will not have sufficient funds to be able to 980 do this adequately. No doubt, there are many hon. Members who think that the C.D.C. should do more.
In this Bill, we are considering the function and safeguards of building societies in this country. I beg the House to believe me when I say that I only wish that, consistent with those functions and safeguards, something on the lines suggested could be done at this time. The Amendment follows broadly the lines of the new Clause originally moved by my hon. Friend the Member for Wimbledon together with the Amendments to it in the name of the hon. and learned Gentleman. I believe that many of the arguments which I adduced in Committee are equally relevant to this Amendment today, but I am sure the House will not wish me to go over all the ground again.
I do not think anyone who heard what I said in Committee or who has since read it will dispute that to invest in an overseas building society, as does the Colonial Development Corporation, involves at least a greater element of risk than the general run of investment in United Kingdom building societies. I agree, of course, that there is nothing wrong in taking risks, especially when one takes them for such an admirable and desirable objective as providing the housing which—goodness knows—is needed in the countries we have in mind. It is important, none the less, to bear in mind that building society investors have deliberately invested in the societies because they know that their money will be safe. They, after all, have no chance, as I have pointed out—and I do not want to speak at length on this particular aspect—by investing in a building society, of capital appreciation, and, equally, they run or should run no risk of capital loss. I explained at some length in Committee what I considered to be a prudent practice of building society investment. I would draw the attention of the House to the opening words of Clause 11:The manner in which a building society may invest any part of the funds of the building society which are not immediately required for its purposes.…
§ Mr. Mitchison
I am much obliged to the hon. Gentleman. I hope that before he leaves this matter he will deal with one aspect of the question which perhaps modesty prevented his hon. 981 Friend the Member for Wimbledon (Sir C. Black) from developing. Does he not think that the directors of building societies, subject to all the safeguards in the Clause, could be trusted to look after the safety element?
§ Mr. Barber
I am certain that the vast majority of them could be so trusted. But, as has been said again and again during the discussion of this Bill, we are concerned with a small group of societies and a small group of directors, and when one is considering the attitude of directors one has to bear in mind these people as well as the general run.
§ Mr. Mitchison
With respect to the hoi. Gentleman, I think that he has it quite wrong. Treasury consent is required. If there is any doubt about the standing of a society, let the Treasury refuse consent, but do not make that an occasion for refusing it to all societies.
§ Mr. Barber
I am sorry. I thought the hon. and learned Gentleman asked me a straightforward question, whether I thought that directors, speaking generally, were capable of making a decision on these matters. It depends on the directors, and for the vast majority it would not even be necessary to have any form of control or Treasury consent.
§ Mr. Mitchison
It was for that reason that I expressly and carefully mentioned the safeguards. Subject to the safeguards, surely they can be trusted.
§ Mr. Barber
I appreciate that point. I will come in a few minutes to the Amendment itself, but I think it is important that the House should appreciate the principles involved.
The investment we are concerned with is of funds not immediately required for building society purposes. One proposition, which I am sure will be accepted by all, is that the funds which are surplus to a building society's requirements at any moment, in the words of the Clause,… which are not immediately required for its purposes…must be held or invested in a liquid and easily realisable form until they are required. They are the society's liquid reserves. If a new building society in a Commonwealth country is to raise any 982 significant part of its capital from a United Kingdom society—this is an important point, and I must repeat what I said in Committee—it is almost certain to need it in a form in which it cannot be called in without a reasonably long notice; in other words, it will be a liquid investment.
It is attractive to suggest, as the hon. and learned Gentleman has done, that what are wanted are no more than short-term funds for a year or two—and this was also mentioned by my hon. Friend the Member for Wimbledon—after which the local funds will take over. I must repeat again that I made inquiries about the experience of the Colonial Development Corporation, which I believe has about £9 million involved in advances to building societies, and I am told that it is the general rule that overseas building societies have to rely for quite a number of years on their initial capital, rather than 'on local savings. That is a point which I made in Committee, and I am repeating it almost word for word because it is very important.
To lend long is a prefectly proper function of other institutions. I appreciate the interest of my hon. Friend the Member for Wycombe (Mr. John Hall), and I hope that he will look at our debates in Committee, because I gave the Committee, and I have a list here, a number of examples where real help is given to the Commonwealth in this direction. I am referring not only to the C.D.C. or to the provision of "know-how" by United Kingdom building societies but to the provision of finance. I would mention, in passing, that in Kenya financial support comes from a British insurance company. The same thing has happened in several societies in Northern Rhodesia and, as I have told the Committee, know-how is being provided on a considerable scale. I thought that the hon. and learned Gentleman seemed to assume that technical knowledge and the capital for new enterprises should come from the same source. That is surely not so. Again and again they are split.
While it may be perfectly proper for a bank or an insurance company to provide those sort of finances, as they are doing, it does not follow, as night follows day, that it is a proper form of investment of building society surplus funds. 983 Indeed, one of the reasons for this Bill of 70 or 80 Clauses is the fact that building societies are in a unique position and, therefore, the same considerations which apply to companies, banks and insurance companies do not apply.
The world of finance is not a static world. As I have said before, there may well be changes which would make it reasonable and proper to permit a United Kingdom building society to invest in a Commonwealth society. In Committee, I threw out the possibility that an overseas government might guarantee the repayment of loans at short notice. I explained that if circumstances changed and it was appropriate to authorise such investment it could be done quite simply by Clause 11 without further legislation, and that the power is there without this Amendment.
The hon. and learned Member for Kettering referred to the Treasury being in blinkers and my hon. Friend the Member for Wimbledon referred to it as a brick wall which he was up against.
§ Mr. Mitchison
Before the hon. Gentleman gets to these personal references, will he deal with this point? I agree that Clause 11 gives general powers but these are more restricted in this case because they provide for the consent of the Secretary of State and for other matters to which he has to have regard. If one attaches importance to that, it is true to say that Clause 11 does not cover that kind of case.
§ Mr. Barber
No. The Amendment as I read it is more restrictive than the Clause as it stands. I say this in no spirit of frivolity, because I realise that this is an important matter, that I do not think it is necessary to have restrictions of that kind which are included in the Amendment. I would have thought that it was sufficient to have the restrictions and safeguards which are in Clause 11 and which provide for the Chief Registrar, according to the provisions of the Bill, deciding on the investments which are to be authorised.
§ Mr. Barber
I believe that would be safe enough. I can go further. Each time we have discussed this we have given more thought to it.
§ Mr. Barber
It is not a question of going a little further. If the hon. Gentleman does not wish me to say something which I hope will please him, it is a very strange way of carrying on when considering one of the most important Amendments to the Bill. This is not a change that has come about as a result of our discussions but is something as a result of this Amendment being put down which was decided previously but which I did not know about and on which I can now inform the House. I am told that it is, and was before our last discussion, the Chief Registrar's intention that loans guaranteed by a Commonwealth Government shall be included in the list of authorised investments provided that they meet the requirement on the period of repayment, which is, as I think every hon. Member agrees, a matter of importance in respect of the building society's surplus funds.
Previously we considered my hon. Friend's proposed new Clause on the mistaken assumption that, if no change were made in the Bill, there would be no power, without further legislation, to permit investment by a United Kingdom society in a Commonwealth society. We were all wrong there. We now accept that at any time an order can be made to permit such investment. It can be made under the Clause as it stands without the Amendment. I want to assure the House that if circumstances change, as well they might, and if it were proper to authorise the kind of investment which we have been discussing, no one would be better pleased than I.
I assure hon. Members that I am in no sense a brick wall with blinkers on, if I may so put it. Furthermore, it is right, because of the interest taken in this matter, that I should tell the House—and I do not think that my hon. Friend the Member for Wimbledon meant us to take his words literally—this is not something which is, as it were, a Treasury matter as opposed to a Ministerial matter. I assure the House that this is something which my right hon. Friend has considered personally.
In all the circumstances, as the door is still open, if I may adopt my hon. 985 Friend's phrase, I hope that, in view of what I have said, the hon. and learned Gentleman will not press the Amendment.
§ Mr. MacColl
The Economic Secretary showed a certain amount of irritation at being interrupted as he came to the grand climax of his speech. But he must not be so sensitive. After all, he has—-I say this with the utmost good will—been playing ducks and drakes in this matter. Every time this point comes up he produces a new rabbit from the hat. When it came up in Committee we all waited breathlessly for a terrific announcement that in the watch of the night he had discovered something which solved the problem. He then produced Clause 11. Today he has spent a lot of time telling us that Clause 11 is not much use and that under it building societies could not invest in overseas countries. He has produced an assurance from the Chief Registrar that certain loans will be made on the guarantees of a Commonwealth Government. The short answer is that, if those are to be as effective as my hon. and learned Friend's Amendment, then we might as well have the Amendment because at least that brings in the responsibility of the Government of this country. I think that that is a most important aspect.
We have been told about the importance of safeguarding the interests of the small investor in building societies. That is precisely what the Amendment does. It provides that the people who are in a position to make a dispassionate assessment of the situation in a Commonwealth country—for instance, on the state of land legislation, the degree of security, the possible risks of disorder, or whatever it might be—namely, the Government through the Secretary of State, are the people who should authorise these advances. I should have thought that that was a very considerable safeguard.
Then I think that my hon. and learned Friend played his trump card, which was the lion. Member for Wimbledon (Sir C. Black). Speaking of the hon. Member for Wimbledon, I am reminded of the remark which Mr. Kramer made about one of the tennis players at Wimbledon this year—he had been around a long time. I think that 986 the hon. Member for Wimbledon has been around a long time. I should like to feel that any money used for the purpose of encouraging investment in houses had the suport of someone like the hon. Member, who has great experience behind him. There is power in the Amendment to prevent spivs and adventurers using it. It should be used and restricted by consent to societies which had the kind of background and experience behind them represented by the hon. Gentleman.
I hope that the hon. Gentleman will not think it offensive if I say that I feel that his wisdom and judgment would be stimulated if some of his own money were involved. I do not think that it is a good thing to separate know-how from investment. The two things should go together. That is a very good Conservative principle. If money is to be invested abroad and if there are to be people advising on investment abroad, their own financial resources should be at risk. That is a point of view which ought favourably to present itself to the hon. Gentleman.
The Economic Secretary produced the Colonial Development Corporation as another rabbit out of the hat which could do this job instead of building societies. There are two points here. First, in that case Government money would be involved, and we are here dealing with private investment. I should have thought that one of the things which the party opposite most wanted to do was to reduce the burden below the line of Government investment and instead to encourage private investment in the Commonwealth. I should have thought that that was an impeccable Conservative principle. Surely my hon. and learned Friend's proposal would do precisely that, and this is another reason for preferring it to the Colonial Development Corporation.
I now return to the hon. Member for Wimbledon. He probably knows a bit more about lending money on real property securities than the Colonial Development Corporation, and I think that he would probably invest it rather more shrewdly and effectively. People get a curious ambivalence about the Commonwealth. We had a debate in the House not long ago on the adoption of children. When we were considering whether English-born children should he 987 adopted in the Commonwealth, some hon. Members painted the most bloodcurdling picture of the Commonwealth countries consisting of baby farmers and assassins who would persecute and maltreat children in a most astonishing way. On that occasion the Government were firm, and, with the support of some of my hon. Friends, including myself, said that that was nonsense and a lot of hysteria. There are many homes in the Commonwealth which are much better for children than many in this country. In spite of all these miserable forebodings, the adoption of children was extended to the Commonwealth.
Today precisely the same kind of rather hysterical picture of life in the Commonwealth is being painted, but not this time by a few people a little out of date with the development of the Commonwealth, but officially by the Government. We have this extraordinary situation in which the Home Office thinks it perfectly all right to export babies to the Commonwealth but the Treasury thinks it all wrong to export money to the Commonwealth.
§ Mr. Barber
This will all make very good headlines, but what the hon. Gentleman has said is far from the truth. No one is suggesting for one solitary moment that the Treasury wants to prevent finance going to the Commonwealth for this purpose or any other useful purpose. The whole question is—and I hope that the hon. Gentleman will direct his attention to it—whether it is appropriate in present circumstances for a United Kingdom building society to do this. All that I am saying is that it would be quite wrong to say that, within the next few years, or even in the near future if certain developments take place, some of which have been referred to by my hon. Friend, this sort of thing will not happen and that finance will not be made available by a United Kingdom building society to a building society in the Commonwealth. This must depend on the operation of Clause 11, and I should have thought that that was reasonable.
§ Mr. John Hall
My hon. Friend said in the early part of his speech that he thought that there was a greater risk in investing building society funds in Commonwealth countries than over here. 988 That has given rise to a misunderstanding. Does he regard investment in, for example, Australia or Canada as providing an element of greater risk than investing the same funds in this country?
§ Mr. Barber
I hope that my hon. Friend will not think me discourteous, but we dealt with this matter at some length in Committee. It is all there if my hon. Friend cares to read it.
§ 2.0 p.m.
§ Mr. MacColl
I hope that the Economic Secretary is right in saying that my remarks will make the headlines. If they do, it will be for the first time, and it will be an important day in my life. In his interruption, the hon. Gentleman has run away from my point, which is that the people who understand the market of investment in real property, freehold or the like, are the building societies.
They are not, therefore, the second-best alternative to these other bodies, but are the people who can most effectively do this work, and they will never do it if they do not know that they can do it safely. They are responsible people, as we all know, and as we have been told continuously. There will be available to them the best possible advice from Her Majesty's Government on the conditions and circumstances in each individual country of the Commonwealth.
I sympathise with the hon. Member for Wycombe (Mr. John Hall) who was rebuked by the Economic Secretary for coming in when he had not done his homework. I see that he has now left the Chamber, no doubt under the lash of the hon. Gentleman's tongue. I would not interfere with that little fracas, but I sympathise with him when I think of anybody coming to the House for the first time and hearing that the proposition was that responsible, experienced, sober people running building societies, who want to provide the funds that would help people in the Commonwealth to get decent homes for themselves, and to help meet the housing conditions, not of the large numbers, perhaps, of those who may be subject to Government schemes, but, as we have been told by the Government, of people who have not the money, are not to be allowed to do so.
989 Bearing in mind that one of the greatest problems in the Commonwealth is shortage of capital, it seems almost inconceivable that the hon. Gentleman should have so turned the arguments round that he has managed to convince himself that he has a defensible case at all If the hon. Member for Wycombe intends to read the OFFICIAL REPORT of our Committee proceedings on this subject, I hope that he will read the speech of my hon. and learned Friend the Member for Kettering (Mr. Mitchison), that of my hon. Friend the Member for Miming-tam, Northfield (Mr. Chapman),
§ Mr. Barber
I beg to move, in page 16, line 23, at the end to insert:and a trustee savings bank or other savings bark established under any Act of Parliament whether public or local".Clause 11 requires a building society to hold its funds only in a bank authorised by the Chief Registrar. Of course, most societies keep their main accounts with one of the clearing banks. Naturally, they will be authorised under this provision, but some societies also have deposits in a savings bank, and, therefore, it is desirable to widen the definition since the Post Office Savings
§ and that of the hon. Member for Wimbledon (Sir C. Black) as well as that of the Economic Secretary. We there had this great weight of experience being deployed from both sides of the Committee in an attempt to persuade the Government that they were being pigheaded about this. I hope that the House will now show what it thinks about the Government's obstinacy.
§ Question put, That those words be there inserted in the Bill:—
§ The House divided: Ayes 31, Noes 68.989
|Division No. 146.]||AYES||[2.3 p.m.|
|Bacon, Miss Allce||Hunter, A. E.||Robinson, Kenneth (St. Panoras, N.)|
|Black, Sir Cyril||Hynd, H. (Accrington)||Royle, Charles (Salford, West)|
|Bowden, Herbert W. (Leics, S.W.)||Janner, Barnett||Taylor, John (West Lothian)|
|Castle, Mrs. Barbara||Johnson, Carol (Lewisham, S.)||Tomney, Frank|
|Chapman, Donald||MacColl, James||Weitzman, David|
|Darling, George||Marquand, Rt. Hon. H. A.||White, Mrs, Eirene|
|Deer, George||Marsh, Richard||Wyatt, Woodrow|
|Ede, Rt. Hon. Chuter||Mendelson, J. J.||Zilliacus, K.|
|Fletcher, Eric||Mitohison, G. R.|
|Foot, Dingle||Pavitt, Laurence||TELLERS FOR THE AYES:|
|Gordon Walker, Rt. Hon. P. C.||Peart, Frederick||Mr. Sydney Irving and Mr. Redhead.|
|Hall, Rt. Hon. Glenvil (Colne Valley)|
|Agnew, Sir Peter||Goodhew, Victor||Mills, Stratton|
|Aitken, W. T.||Harris, Frederic (Croydon, N.W.)||Page, Graham|
|Allason, James||Harris, Reader (Heston)||Peel, John|
|Alport, Rt. Hon. C. J. M.||Harvey, John (Waithamstow, E.)||Redmayne, Rt. Hon. Martin|
|Ashton, Sir Hubert||Holland, Philip||Scott-Hopkins, James|
|Barber, Anthony||Hornby, R. P.||Smith, Dudley (Br'ntf'rd & Chiswick)|
|Barter, John||Hughes Hallett, Vice-Admiral John||Smithers, Peter|
|Batsford, Brian||Hughes-Young, Michael||Stevens, Geoffrey|
|Berkeley, Humphry||Iremonger, T. L.||Sumner, Donald (Orpington)|
|Bingham, R. M.||Jackson, John||Talbot, John E.|
|Bourne-Arton, A.||James, David||Thatcher, Mrs. Margaret|
|Chataway, Christopher||Jenkins, Robert (Dulwich)||Thompson, Richard (Croydon, S.)|
|Clark, Henry (Antrim, N.)||Johnson, Eric (Blackley)||Turner, Colin|
|Collard, Richard||Joseph, Sir Keith||Watts, James|
|Coulson, J. M.||Kershaw, Anthony||Wells, John (Maidstone)|
|Craddock, Sir Beresford||Kirk, Peter||Williams, Dudley (Exeter)|
|Critchley, Julian||Legge-Bourke, Sir Harry||Wolrige-Gordon, Patrick|
|Crosthwaite-Eyre, Col. O. E.||Lewis, Kenneth (Rutland)||Woodhouse, C. M.|
|Cunningham, Knox||Litchfield, Capt. John||Woodnutt, Mark|
|Currie, G. B. H.||Longden, Gilbert||Worsley, Marcus|
|Dance, James||Lucas-Tooth, Sir Hugh|
|Doughty, Charles||McMaster, Stanley R.||TELLERS FOR THE NOES:|
|Fletcher-Cooke, Charles||Maddan, Martin||Mr. Bryan and Mr. Chichester-Clark.|
|Goodhart, Philip||Manningham-Buller, Rt. Hn. Sir R.|
§ Bank and so on are not corporate bodies or partnerships.
§ Amendment agreed to.