§ Motion made and Question proposed, That this House do now adjourn.—[Mr. Gourlay.]
§ 11.10 p.m.
§ Sir Cyril Black (Wimbledon)
I welcome the opportunity to raise tonight the question of what I would describe as the strange case of the Premium Bonds, and I am glad that this debate happens to take place on this particular evening, for a reason which I shall mention later.
The history of Premium Bonds is clear and plain. In 1956, Mr. Harold Macmillan, then Chancellor of the Exchequer, introducerd the Premium Bonds. There was much opposition to them at that time, and the opposition was drawn from all parties in the House and from many sections in the country. It may be helpful if I indicate my own view on the matter both then and now. In 1956, I was opposed to the Premium Bonds. I spoke strongly against them in the House. I ignored a strong Whip of my party and refused to support the Government in the Lobby. Today, in 1966, I am of the same opinion as I was in 1956. My view may be regarded as right or wrong, according to one's point of view, but at least I have been consistent.
In the main debate on Premium Bonds on 18th June, 1956, the principal speaker for the Opposition was the present Prime Minister. Among other views which the right hon. Gentleman expressed then, and repeated on other occasions, was the following:Now Britain's strength, freedom and solvency apparently depend on the proceeds of a squalid raffle.He said that the proposal to introduce Premium Bonds was a proposal for a State lottery. He referred to the many people who were strongly opposed to the creation of a State lottery, adding,I am bound to say that this is the particular group in which I find myself.Further, the right hon. Gentleman said:But I still believe that the decision of the Chancellor to have recourse to the proposal in this day and age is repugnant and degrading",and in his peroration he said:That is why, in our view, the Clause represents not so much a personal as a national 847 demoralisation".—[OFFICIAL REPORT,18th June, 1956; Vol. 554, c. 1087.]In a speech in the country, the right hon. Gentleman, rising to even greater heights of oratory, said:Horatio Bottomley was Mr. Macmillan's inspiration.adding thatthe Tories would be fighting the next election on the slogan, 'Honest Charlie always wins'.When the present Government came to power, I very greatly regretted it on national grounds, but there was for me at least one bright spot in the fact of their coming to power. I thought—in my simplicity as it turns out—that at any rate the Premium Bonds scheme would be wound up, and I expected this to be one of the earliest acts of the new Government. But days passed, weeks passed and months passed, and the Government, who were highly vocal on nearly every other subject under the sun, were strangely silent on the subject of Premium Bonds, and during this silence the sale of the Bonds continued.
I thought—again in my innocence— that no doubt the Government were preoccupied with other things, that winding up the Premium Bonds scheme was no doubt on the agenda and that surely that item of business would be reached soon. Imagine my astonishment when the Government recently announced not only that the sale of Premium Bonds was to be continued but that the top prizes were to be raised from £5,000 to £25,000 each. This was done on the representations of the National Savings Committee with the avowed object of gathering increased support for what the Prime Minister had described as "a squalid raffle" and a number of other unpleasant things.
Certain serious questions arise from this in regard to which I hope that we shall receive a full explanation this evening. Obviously, this raises the whole question of collective Cabinet responsibility. I should like to know whether we can be assured that the whole Government are, in fact, in support of the proposal to raise the top prize for Premium Bonds from £5,000 to £25,000. If we ignore Parliamentary Secretaries and back benchers, 13 members of the present Cabinet, including the Chancellor of the Exchequer, voted against Premium Bonds in 1956, as did nine other Ministers in the present 848 Administration, and the same is true of literally scores of Parliamentary Secretaries and back benchers. I should like to know whether the whole Government are now converted from views which most of them collectively and individually advanced on grounds of high moral principle in 1956. If this be the case, it is surely one of the most amazing cases of mass conversion since the 3,000 on the Day of Pentecost.
Unless a satisfactory explanation of the extraordinary state of affairs that I have described can be given, it is obvious that the current cynicism regarding politics and politicians is bound to be increased. It is not unfair to say that politics generally is in pretty low repute at the present time, and this is, of course, bound to happen when Governments put expediency above principle, as it appears to be obvious has happened in this case. For leaders of the nation who, in terms of loftiest disdain, condemned Premium Bonds in 1956 now to support not only their continuance but a five-fold increase in the top prizes in order to increase the sale of Bonds will be regarded, unless a satisfactory explanation is forthcoming, as an example of nauseating hypocrisy.
I ask again what is the attitude of the Government, because the actions of the individuals concerned are surely completely incomprehensible. I am particularly glad, as I have said, that this debate happens to be held tonight because, at 8.30 tomorrow morning, the draw will take place for the first £25,000 prize to be offered.
I ask the Financial Secretary, finally, whether the purchasers of Premium Bonds are now regarded by the Government as patriotic citizens whose actions in purchasing Bonds are to be applauded, or whether they are regarded, in the Prime Minister's own words, as participators in a "squalid raffle", investors in a proposal which is "repugnant and degrading" and involved in an undertaking that is… not so much a personal as a national demoralisationI await the explanation of the hon. and learned Gentleman with great interest.
§ 11.21 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
The hon. Member for Wimbledon (Sir C. Black), as he has made clear, has been opposed from 849 the start to the introduction of the Premium Savings Bonds Scheme. He opposed it then as he opposes it now on the principle that he objects on grounds of morality to a scheme of this nature.
I do not want to get involved in arguments about whether or not the scheme is in the nature of a lottery. If it is, it certainly is one of a very limited kind because, as is well known and has frequently been pointed out, the nature of the scheme is such that the capital value of one's investment in Premium Bonds is always left intact and the element of chance, in so far as it is introduced, is one which affects only the interest which these Bonds earn.
In effect, the nature of the scheme is one whereby interest is pooled and instead of being distributed equally among all the Bond holders is distributed by prizes according to the laws of chance. Be it a lottery or not, I would certainly say that in any event it could not be characterised as gambling because the essence of gambling, as indeed of most lotteries as well, is that the unsuccessful participant loses his stake money. The essence of this scheme, and what makes it truly a savings scheme, is that the stake money itself is maintained intact.
§ Mr. Norman St. John-Stevas (Chelmsford)
Is this not, in effect, gambling, because the investor—if that is the right word—is gambling with the interest? He is giving up the interest he might earn on his money and hoping to win a large sum in return.
§ Mr. MacDermot
I do not know whether the hon. Member regards himself as a gambling man but I have yet to meet a gambling man who would regard that as a gamble in which he was certain to recover his stake money.
§ Sir C. Black
The Financial Secretary has cast some doubt on the question of whether this is a lottery. I am sure that he will be clear, from the quotation I read, that the Prime Minister himself is in no doubt on the question.
§ Mr. MacDermot
I do not know what the Prime Minister's view on that is. All I am saying is—and I approach this with a legal mind—that I would distinguish the Bonds from any other form 850 of lottery I know. The only element which is of the nature of a lottery, that is to say, to which the laws of chance apply, is in the distribution of the return on the investment. This is a true and real form of saving, but one which has an element in it which imports the laws of chance, an element of a flutter, as many people would call it, which makes it attractive to very many people.
I appreciate the sincerity of those who take a different view and think that it is morally wrong to introduce the element of chance as a reward for saving. Personally, I do not agree with them. As is obvious, no one is obliged to take part in this scheme and no one who wishes to assist the country as well as himself by participating in National Savings is obliged to do so in this form. This is only one of a range of several savings securities and it is our object through National Savings to attract as wide a variety of people as we can, and including those who are attracted by an alternative to straightforward interest as a savings reward. The scheme is designed for those who want the chance of a prize, but those who prefer to shun the element of chance can do so by adopting the Savings Certificate, the National Development Bond, or other available forms of National Savings.
We are always eager to find new ways in which to extend the range and improve the securities which are available and we believe that it is right to make the securities offered as attractive to the public as we can. We believe that the introduction of this very small number of relatively high prizes, these four £25,000 prizes a year, will do that. Certainly the present indications are that this change has captured the public imagination. As the hon. Gentleman has reminded us, the first draw is to take place tomorrow morning and it will be interesting to see what the public reaction to that is.
§ Mr. St. John-Stevas
Surely the great objection to raising the Premium Bond prizes at this moment is that what the Government are doing increases the gambling fever at a time when many moralists and sociologists are extremely alarmed at the growth of gambling. The objection is that the Government have provided another form of gambling.
§ Mr. MacDermot
I do not think that the introduction of four £25,000 prizes a year among the enormous number of bond holders in this country will lead to the kind of moral corruption of the nation which the hon. Gentleman seems to fear from an increase in the gambling fever. Those who like to have a flutter are more likely to divert that passion to more socially useful channels if they can be persuaded to focus their zeal in the form of investing in Premium Bonds, when they will be doing a genuine form of saving of benefit to the country as well as to themselves.
This reference to gambling fever would suggest that the hon. Gentleman is falling into the error of thinking that this scheme involves the sort of something-for-nothing mentality which perhaps lends force to the arguments of those who are opposed to gambling in itself. We are not seeking to foster the belief that success can be achieved without effort. This scheme is one designed for those who are going to make the real effort of saving, which is needed perhaps more than anything else in the country at present. The hon. Gentleman has stressed previously that he is very much concerned about the high moral purpose that under-lies the National Savings movement. During our debate on National Savings in December of last year I referred to this and said that the movement has always had a strong educative and moral purpose. We wish to continue to promote that.
Naturally, before introducing this change in the scheme we consulted carefully with the National Savings movement. Not only did it express its approval of the new prize, but its new Chairman, who has entered into his work with the vigour one would expect of him, Sir Miles Thomas, urged this change on us, as did others. When my right hon. Friend announced the scheme Sir Miles said that he was delighted that the Chancellor of the Exchequer had accepted the idea of introducing these jackpot prizes. He pointed out that the Premium Bond Scheme had been a winner from the very start and that one of its objectives was to win over to the savings habit people who had previously been outside the net of the National Savings movement.
I agree with this and the evidence shows that the Premium Bonds Scheme has managed to tap a genuinely new source 852 of savings. One of the problems which concerns us in devising new forms of savings is to introduce an attractive savings medium which is not merely going to result in switching from one existing form of saving to another which may appear more attractive. This seems to have brought in genuinely new funds, which otherwise would not have been saved. If we can continue to do that with our new prizes, then so far from undermining thrift, we shall be promoting and developing it further.
I do not know whether it is thought that there is a danger, in view of the size of the sum, that people may be led into unwise spending if they win one of these large prizes. That view has not been expressed and it would under-rate the common sense of our people to suggest it. In any event, the National Savings movement and we ourselves will do all in our power to ensure that prizewinners are informed of the National Savings securities available for investment, and to see that they receive proper financial advice in managing their prize money. It has been argued in some quarters that the effect of these large prizes is to diminish the number of smaller prizes that will be distributed. We have had a few letters on this subject at the Treasury since the scheme was introduced. It is true that the numbers of prizes will, to a small extent, be reduced under the new scheme. But it is important to get the figures right and to keep a sense of proportion.
There will be only one of these £25,000 prizes every quarter and the other monthly draws will be exactly the same as before. The reduction in prizes will be very small. For example, in the January draw of this year there were over 500 million Bond units in the draw. The prize fund, which is equivalent to an annual interest of 4½ per cent. came to £1,890,400. This was divided into 52,189 prizes, of which 47,068 were £25 prizes. If there had been a £25,000 prize in January, there would still have been 51,505 prizes, and of those 46,464 would have been prizes of £25. To put the matter in perspective, therefore, there would have been a reduction of just over 1 per cent. in the number of prizes.
We are trying to make the scheme more attractive to investors and we must rely on the judgment of the investors 853 themselves. We think that people will prefer the new system, and the figures certainly seem to bear that out. In the last 12 weeks, after the new prize was announced on 22nd October, the net sale of Premium Bonds amounted to £16,900,000. This compared with net sales of £10,400,000 in the same period of the previous year, a quite remarkable striking increase. In other words, people have been investing an extra £½ million a week on average in Premium Bonds since the new prize was announced. This contrast; sharply with the position of other forms of National Savings, which, as was stressed in the debate before Christmas, have, for reasons of general high interest rates, and so on, been in a period of what one hopes will be only a temporary decline.
§ Sir C. Black
What the hon. and learned Gentleman is saying is all in support of the point I made. My point was that the very people who are now promoting these sales condemned them when they were introduced. It is no answer to that to express pleasure that the sale of the Bonds is expanding. That does not touch the point.
§ Mr. MacDermot
It certainly touches the point with which we in the Exchequer are concerned, which is to increase National Savings. All I am pointing out is that, whatever the hon. Member's personal views may be, the figures indicate that for the general public, and the general saving public, this is a form of saving which attracts them, and that the addition of four £25,000 prizes a year, so far from shocking people into withdrawing from the scheme, appears to have contributed to a striking increase in the sale of Bond units.
The hon. Member is perfectly entitled to his own views about the morality of the scheme and he has expressed them again tonight, as he has done before, but I am sure that he is sufficiently liberal-minded to appreciate that there are other people who will take a different attitude and have 854 a different viewpoint on these matters without there necessarily being any great moral corruption in their attitude. If this is the attitude of a very great number of people, provided that the matter is carried out with proper moderation and propriety I suggest that it is perfectly proper for the Government to use this impulse and impetus to induce people to extend their habits of thrift and saving. They cannot harm themselves, they may benefit themselves and they certainly will benefit the country.
§ Sir C. Black
May I ask the hon. and learned Gentleman whether, in the circumstances, he will bring this evening's debate to the notice of his right hon. Friend the Prime Minister? He will, perhaps, find illuminating some of the things that the hon. and learned Gentleman has said.
§ 11.38 p.m.
§ Mr. Norman St. John-Stevas (Chelmsford)
I have, I think, about one minute or so in which to address the House, and I should like to take this opportunity to make my position plain. I am not condemning gambling, and I disagree on this point with my hon. Friend the Member for Wimbledon (Sir C. Black). I do not regard all forms of gambling as immoral.
What is wrong is for the Government to encourage gambling in this form by increasing the Premium Bond prize at a time when we are facing a very grave gambling problem throughout the country. That is the point on which the Government should be condemned. It is a moral point and it is also a point of sociology. The Government are extremely blameworthy in increasing this fever and the Financial Secretary has produced some cogent evidence in his speech that the fever has been materially increased by the Government's action.
§ Question put and agreed to.
§ Adjourned accordingly at twenty minutes to Twelve o'clock.