HC Deb 12 November 1971 vol 825 cc1453-67

Order for Second Reading read.

1.57 p.m

The Minister of State, Treasury (Mr. Terence Higgins)

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

Almost exactly a hundred years ago, Sir John Lubbock introduced a Bank Holidays Bill into the House. That Bill provided the basis for this country's bank holiday legislation, and the principles of his Act, as it became, have remained virtually unchanged to this day. The present Bill is not designed to alter the basic principles laid down by Sir John Lubbock's Act. It merely brings up to date the Victorian legislation which, with the passage of time, is not suited in certain respects to modern requirements.

The Bill has three main purposes: it consolidates existing bank holiday legislation and makes some relatively minor amendments to the existing law; it provides a code for banks and other financial institutions for days not bank holidays; and it makes some amendments to the Bills of Exchange Act, 1882, to bring that Act into line with modern conditions and requirements.

I shall deal with each of these objectives in turn. I hope that the House will bear with me if I go into a little detail. I have had considerable correspondence from hon. Members on these subjects, and I feel that it will be helpful if I put the basic philosophy on record.

In law, all that the existing bank holiday legislation does is to provide for the closing of banks and some other institutions such as Customs offices, docks and so on, but in practice, in England and Wales, bank holidays came to mean much more than a day off for bank clerks. A good part of the public, in agreement with their employers, came to take the day off on a bank holiday, and hence came the evolution of the English and Welsh institution, the bank holiday. I stress "English and Welsh" because, as hon. Members know, these things are ordered differently in Scotland. I shall deal with the position there in a minute or two.

Before discussing the points of substance in the Bill's provisions dealing with bank holidays, I should say a word about Departmental responsibility for bank holiday matters. This has been the subject of comment, particularly by my hon. Friend the Member for Bury and Radcliffe (Mr. Fidler). The Bank Holidays Act, 1871, makes no provision for a Government Department to be responsible for the administration of the Act, but in recent years at least, the Treasury, as the Department responsible for the Government's relationships with the banking community, has taken a lead in administering the Act and in answering Questions on bank holiday matters.

As I have already explained, a good part of the public in England and Wales already has a day off, and therefore my right hon. Friend the Secretary of State for Employment has an interest in this subject of bank holidays. Similarly, my right hon. Friend the Secretary of State for Trade and Industry has an interest since the incidence of bank holiday days has some consequence for staggered holiday policies, and so on. In addition, the Secretaries of State for Wales and Scotland have an interest in bank holiday questions as they affect Wales and Scotland. It has been suggested that there is some fragmentation in our policy for fixing bank holidays but, given the interests of the various Departments involved, the arrangements which I have described are satisfactory, and there is the fullest consultation between all the Departments concerned.

I now come to the substance of the Bill. I think I should make it clear that, because bank holidays are to a fairly large extent coincidental with public holidays in some parts of the United Kingdom, the Government have given some consideration to the possibility of legislating for public holidays rather than bank holidays. I understand that this is what happens in the United States, but there are many reasons why we have decided not to pursue that approach, and the House may be interested in them

First, there are parts of the United Kingdom where the generality of bank holidays are not observed as public holidays. In Scotland, the only bank holiday which is generally observed as a holiday is New Year's Day. I understand that a good deal of work goes on on the Christmas Day bank holiday in Scotland.

But those two holidays apart, on the other bank holidays work outside the banking community goes on very much as usual. Of course there are public holidays in Scotland and these, I gather, vary to some extent from region to region. I understand that the present system of local holidays in Scotland works very satisfactorily. For example, there is less traffic congestion on the roads, and holiday resorts are not so overcrowded—two desirable features which we do not find with English or Welsh bank holidays.

Because of the position in Scotland, it is clear that to legislate for public holidays to be observed as holidays by the public at large would have caused difficulties in Scotland. Holidays which have come to be observed there by custom and tradition would have been upset, and it would have been very difficult, if not impossible, to get any agreement on when the public holidays should be. There are further difficulties in legislating for public holidays. Obviously, it would be ridiculous to pass a law compelling everyone not to work on a specified day. There would have to be exceptions, and that would raise questions of who was to decide who would be excepted, and who would not.

Considerations such as those have persuaded us that it is best to leave the institution of bank holiday as it is, and I hope that the House today will go along with that view. The great advantage of the bank holiday as an institution is its flexibility. I think it is right to say that in general no one is forced either to have or to give the day off on a bank holiday. The whole issue is a matter for individual employers and employees to decide between themselves, taking into account their own particular circumstances, wishes and needs.

In fact, the vast majority of workpeople in England and Wales have the day off on a bank holiday, or a day off on another day instead, or they get extra payment for working on a bank holiday. In all these various ways people make up their own minds about what suits them best. In our view that is the best policy, and we are proposing to make no change. We also considered whether there should be additional bank holidays but decided, with one exception which I shall mention later, to leave the position as it is. If there are to be additional holidays, these are best left to the agreement of the parties concerned.

So much for the philosophy, as it were, of the situation. I thought that it was worth while spelling it out because there has been considerable confusion about it. The detailed proposals need not detain the House for long. The essentials of the Bank Holidays Act, 1871, and the Holidays Extension Act, 1875, are repeated in Clause 1 and Schedule 1 to the Bill. There are just three changes which I should bring to the notice of the House.

The first concerns the Christmas Day hank holiday in England and Wales. Hitherto, when Christmas Day has fallen on a Sunday, by Long-standing tradition Tuesday 27th December has been proclaimed a bank holiday by Royal proclamation. The Bill makes that no longer necessary by specifying, in Schedule 1, a bank holiday in these circumstances. The purpose of the change is to provide for Chirstmas Day, in rather the same way as the Bank Holidays Act and the Holidays Extension Act provide for Boxing Day, that is to say 26th December, when it falls on a Sunday. Hon Members will know that the 1875 Act makes statutory provision for an additional bank holiday on 27th December when Boxing Day, that is to say 26th December, falls on a Sunday. I have already explained that the Bill makes a specific statutory provision for an additional bank holiday when Christmas Day falls on a Sunday.

Second, the Bill provides for the spring and summer bank holidays in England and Wales to be on the last Mondays in May and August. I remind the House that it was following the publication of the White Paper, Staggered Holidays, that the last Conservative Administration decided, after full consultation with the interests concerned, that the August bank holiday should be on the last Monday in August in 1965 and 1966. As was explained at the time, we would have liked to have combined the change with a fixed spring holiday on the last Monday in May, but that was not possible in May, 1965, because of the arrangements which had already been made for school examinations, and the last Monday in May, 1966, was, in any case, Whit Monday. The statistical quirks of some of these events are rather strange.

The previous Administration continued the experiment by changing the dates of both the May and August bank holidays with slight variations. In Scotland where, as I have already explained, the bank holidays are not generally regarded as public holidays, the dates of the holidays have now reverted to the existing statutory dates—the first Mondays in May and August—to meet the wishes of Scottish bank interests.

The experiment has now continued for about six years, and we consider that the time has come to fix the dates of the two bank holidays on a permanent basis. The change to the last Mondays in May and August has been found to be generally acceptable for England and Wales, and it has already been announced that the holidays will be on those days in 1972. 1973 and 1974. By giving statutory effect to the arrangement we shall remove uncertainty about the dates in future years.

Third, as far as Clause 1 is concerned, the Bill provides for an additional bank holiday in Scotland to be held on 2nd January, except when that day or 1st January falls on a Sunday, when the additional bank holiday will be held on 3rd January. The first of these additional bank holidays in Scotland will be in 1973. We are proposing this change on the grounds of equity, since at present Scottish banks enjoy only five bank holidays as against six bank and common law holidays in England and Wales. The change should not affect holidays for the generality of the public in Scotland since, as I have already explained, public holidays there are not influenced to any large extent by bank holidays. In general, the practice in Scotland is for public holidays to be held on a local rather than a national basis, and in that situation bank holidays have little relevance to the dates and numbers of public holidays.

I now turn to Clause 2, which contains the second purpose of the Bill. This is to confer a power on the Treasury to close, in the national interest, banks and a number of other financial institutions such as authorised dealers in gold and foreign exchange, commodity futures market, the National Giro and stock exchanges.

It may be helpful to the House if I delve into recent history a little and explain why the Government consider that this power is necessary. It will be recalled that the previous Administration found it necessary to close the banks at the time of devaluation in 1967, and during the period of the gold speculation in 1968. That was done for the purposes which were then necessary by proclaiming a special bank holiday under the Bank Holidays Act, 1871. But it did have some inconvenient side effects, and perhaps I may give one example.

Certain wage agreements specify that employees are to have either a day off on a bank holiday or to receive extra pay for working. In the case of the special bank holidays in 1967 and 1968, there was some confusion about whether the bank holiday was a bank holiday for the purpose of wage agreements. Similar problems arose in a number of other situations. Hon. Members may recall that there was some doubt about whether parking meter restrictions applied on the days in question, and that demonstrated the inconvenience which could arise when there was recourse to bank holiday legislation in such circumstances. Hence the need for the powers conferred in Clause 2. They will enable the Treasury to close the banks without having recourse to the bank holiday legislation, with all the inconvenience which that involves, and will also provide for closure in the national interest of a number of financial institutions.

As it is difficult to foretell the exact occasions on which the powers conferred by Clause 2 would be of use, it would be a mistake to restrict them to limited and specified circumstances. They have therefore been drafted fairly comprehensively—but it does not necessarily follow that they will be used to the full extent at any one time. Indeed, we have deliberately framed the legislation so as to allow certain transactions and classes of person to be exempt from the scope of any order. This would allow the Treasury to proceed whenever practicable for institutions which would otherwise be affected by an order to carry on as much normal business as possible, compatible with the terms of the order.

I turn finally to the third objective of the Bill, which is to amend the Bills of Exchange Act, 1882 in three respects. First, it takes into account the fact that the banks now close on Saturday by defining it as a "non-business day" for the purposes of Section 92 of the Act, which provides that, where the Act limited the time for doing any act or thing to less than three days, non-business days were to be excluded from the reckoning of time.

I want to make it clear that this is a technical amendment, to take account of the fact that the banks have closed on Saturdays for a number of years now. It would not be right to interpret this provision as the Government's endorsement of the banks' decision to close on Saturday. Banking hours are a matter for the banks, not for the Government.

I should also point out that there is nothing in the new proposals to prevent the banks from opening in future on Saturdays, any more than they felt inhibited from closing because of the existing provisions.

The second change is to abolish the three "days of grace" which Section 14(1) of the 1882 Act allowed in the case of all bills not payable on demand to be carried to the time of payment as fixed by the Bill. The abolition of the "days of grace" brings the practice with regard to the payment of Bills in this country into line with the general international practice.

Finally, the Bill tidies up the provisions about the payment of bills falling due on non-business days by providing that all such bills shall be payable on the succeeding business day. Section 14(1) differentiated between bills falling due on common law holidays, which it made payable on the preceding business day and bills falling due on statutory bank holidays, which it made payable on the succeeding business day. The reason for this distinction is not clear and the purpose of the change proposed in the Bill is to put the law on a more consistent basis.

I have sought to explain the objectives of the Bill. If hon. Members have any particular questions to raise on it, I shall do my best to answer them, in the hope— perhaps justified, perhaps not—that the House will give me leave to speak again. But it may be the case that the matters raised are fairly detailed, in which case it would no doubt be more appropriate to reply to them in Committee.

2.13 p.m

Mr. John Silkin (Deptford)

This, as the Minister of State said, is a highly technical Bill. The House will be grateful to him for his excursions into history, which he made as entertaining as they could possibly be. It is something of a tribute to the distinguished forbear of our former colleague, the noble Lord, Lord Avebury that his original concept of the bank holiday has hardly been interfered with in a century. It seems time that some progress was made on this.

I do not propose to go into detail on the various technical points. They are technical and they clearly needed to be dealt with. But I should like to raise one question. The Minister may say that he has answered it and I will understand. I am not now talking about Scotland— a certain number of years in the House and acquaintance with my Scottish colleagues has taught me that I must never on any occasion do that—but in England and Wales, there is in practice a correlation between the bank holiday and the public holiday.

It is for that reason that I want to put to the hon. Gentleman the proposition, which must have been put several times to his Government and no doubt to mine in their day, that 1st January, New Year's Day, should be a bank holiday, since it is in any event rapidly becoming a public holiday. It follows from that that the more of a public holiday it becomes, the less banking work there is to be done. In other words, it is a pressure from the community as a whole. This is something to which we as a people are becoming more and more accustomed, and there should be some recognition of the fact.

I do not want to detain the House any longer on a purely technical Bill. Having become aware while the Minister was talking of its extreme technicality, I can only say that for my part he may have leave to speak not once more but a dozen times if he wishes.

2.16 p.m

Sir Geoffrey de Freitas (Kettering)

I am disappointed that the Government have not sought under Schedule 1 to provide for a "Europe Day" public holiday on the second Friday in May, the day nearest to 5th May, which is the most convenient day. The date of 5th May has, of course, for many years been recognised as Europe Day by the Assembly of the Council of Europe and the governments concerned, of which, of course, we are one of 17. In this country, hundreds of local authorities—a number which is increasing every year—fly the Council of Europe flag on 5th May.

Why do I suggest an additional bank holiday and why in May? First, we have fewer bank holidays than our neighbours in Western Europe and, second, May is a delightful time of the year to have an extra bank holiday.

I look forward to the British Government offering to house the European Parliament in London. After all, we have 700 years' experience of parliament and it would be much more appropriate to have the European Parliament in London than in Brussels, Strasbourg or Luxembourg. As a result of three Amendments which I shall put down to Schedule 1, I hope that on Europe Day in 1974 the European flag and the 10 national flags will fly outside the European Parliament—possibly in the South Bank development, very appropriately opposite St. Paul's or near Tower Bridge.

But to make it a really important occasion, it will be necessary to have it as a public holiday. I shall seek to amend Schedule 1 so that the second Friday in May each year, starting in 1974, shall be a public holiday.

2.18 p.m

Mr. John Roper (Farnworth)

The Minister of State has given a very lucid explanation of the Bill, but I still have one or two small worries. This is a Bill about banking and financial dealings which take certain powers to the Government to control the banks. It is unfortunate that, in such a Bill, we have not been given rather more details of the controls which the Government have over the banks, both directly and indirectly.

In his Budget speech in April, the Chancellor foreshadowed changes in the banking system and in the same debate the Minister of State dealt to some extent with possible changes in the banking system. Since then, we have had fundamental changes affecting the whole of our banking financial system. Yet although this control of our banking and monetary system is of growing import- ance to the Treasury's economic policy, and although it was implemented by one of our nationalised industries, the Bank of England, we have had no opportunities to discuss the details of this in the House.

A Bill of this nature should have included these details. The Treasury and the Bank of England have considerable powers to control banking and financial dealings, both formally and informally, under the powers in the Bank of England Act, 1946. At present it seems that, all too often, as in this Bill, despite what the Minister said, we are agreeing to something the banks have decided. It is the private banking system which controls the decisions of the Government rather than vice versa and in this situation, in which Parliament seems to have no effective control over the banking and financial system, it is not surprising that there are calls for nationalisation of the banks. However, that is not included in this Measure, though there are four points in the Bill on which I would like the Minister's comments.

The first is the question of Bank Holidays, to which my right hon. Friend the Member for Kettering (Sir G. de Freitas) referred. I do not suppose that in anticipation or advance of the consequential legislation next year, provision to increase the number of bank holidays to something approaching the norm in the Community would be included.

However, I hope the Minister will consider including in the Bill, perhaps by tabling an Amendment in Committee. an additional subsection to Clause I which would enable either the Chancellor or Secretary of State to authorise, subject to positive Resolution of this House, the naming of up to four extra days in the year as bank holidays to bring us up to the standard of the Community.

In the event of our not entering the Community it might be in the minds of some of my hon. Friends that perhaps we should have an additional holiday to celebrate our escape from the fate of E.E.C. membership. In either case, if such a subsection were included in Clause 1, power would exist to enable the right hon. Gentleman to make additional public holidays by order, and taking such discretionary power in a Bill of this sort could be of considerable value.

The second point relates to Clause 2 and the power to restrict the activities of banks. How far will this power affect bodies like co-operative societies which have direct trading and banking relationships with their members? Will the power given to savings banks to continue their transactions apply to members of co-operative societies who wish to withdraw their share capital?

The third point to which I wish to draw attention was mentioned by the Minister and is the question of the commercial banks' retrograde step in closing on Saturdays. Perhaps I should declare my interest as a director of the Co-operative Wholesale Society, which of course has banking subsidiaries. Nevertheless, I believe that Saturday closing was a backward step which has been harmful to the country.

Why did the banks not have to get an amendment to the Bills of Exchange Act, 1882, before starting to close on Saturday? Have they been acting legally or illegally since then? I understand that in November, 1968, when the banks suggested Saturday morning closing, the Retail Consortium, on behalf not only of the Co-operative Movement but the nation's shopkeepers, made representations to the Board of Trade and Treasury asking the Government not to take any action to facilitate Saturday closing by amendment of the Bills of Exchange Act.

At that time although the Treasury, and I assume the banks, were aware that it might be necessary to amend the 1882 Act, no amendment was brought forward. Did the banks, realising that my right hon. Friends would not assist them in carrying out such a retrograde policy, bide their time until a more pliable Government arrived?

The fourth point I wish to raise was clarified to some extent by the Minister. It is the more obscure—indeed, if I were more suspicious I might say "sinister"— point of the abolition of the three days' grace in Clause 3(2) in one of the long-hallowed traditions of our commercial life—the three days of grace on a Bill of Exchange not payable on demand.

It might be thought from a quick reading of the Bill and from the slightly ambiguous form of the Long Title that this is consequential on Clause 3(1) but I do not believe that this can be so. It would have been perfectly easy to amend Section 14 of the Bills of Exchange Act, 1882, by the introduction of "Saturdays" in the appropriate places. Perhaps there is an innocent explanation for this change. The Minister said that it was to bring us into line with others. In this connection, I was interested to read in a footnote of the appropriate volume of Halsbury's Laws: Days of grace, which were probably in their origin 'voluntary and discretionary on the part of the holder' … became gradually established by custom in most countries, but at no time was the custom uniform in regard to the number of days allowed, and at the present time in most foreign countries (e.g. France, Germany and the other states of Western Europe, and some of the states of the United States of America) the custom has been abolished altogether". One is bound to ask whether the real reason for this change is a piece of back-door harmonisation in advance of the legislation next year. If this is the way in which the Government intend to bring forward their legislation to harmonise our laws with those of the Community countries, they will not get a welcome response from my hon. Friends. irrespective of our views on the general question of entry into the Community. Indeed, if this is the way in which the Government intend to proceed it augurs badly for the future, and I trust that we will be given some explanation on this point.

As my right hon. Friend the Member for Deptford (Mr. John Silkin) said, this is a technical and minor piece of legislation. However, it is to be hoped that we will have on opportunity to examine some of these points in more detail in Committee upstairs. Meanwhile, we are entitled to an answer from the Government to the questions that have been asked before giving the Bill a Second Reading.

2.26 p.m

Mr. Higgins

With the leave of the House, I will reply to some of the points that have been raised. [HON. MEMBERS: "Hear, hear."] I thought that hon. Members would welcome some remarks from me, as virtually every speaker has indicated that I should comment further on the Bill. I will do my best to answer as many of the questions that have been asked.

As the right hon. Member for Kettering (Sir G. de Freitas) pointed out in his courteous remarks, this is in part a highly technical Bill. He was right to say that some of its provisions would be more appropriately considered in Committee. That being so, I will answer the points that have been raised in the reverse order.

I start with the fourth point to which the hon. Member for Farnworth (Mr. Roper) referred, the question of days of grace. As I sought to indicate in my opening remarks, this is a question of bringing us into line with what I under- stand to be general international practice. There are no sinister implications of the type he suggested. This is a highly technical point and it might be better if we deferred discussion of its until we debate the Clause stand part, or perhaps the hon. Gentleman might care to table an Amendment at a later stage.

His third point was about banks closing on Saturdays. I hope I made it clear in my opening remarks that this is a separate matter. If he will read my speech in the OFFICIAL REPORT he will see that I made it clear—perhaps if one speaks quickly on such a complex issue it is difficult for the listener to appreciate precisely what is involved—that there is a separate issue between the question of the Bills of Exchange Act, 1882, and that of banks' hours, and the Amendments which we are proposing do not necessarily affect the issue either way.

The second point the hon. Member for Farnworth raised really concerns the scope of the Bill. He mentioned co-operative societies. The list has been kept as concise as possible and, while I cannot off-hand answer his question about co-operative societies, I will look into the matter and if necessary write to him about it.

The question of whether there should be additional bank holidays was raised along with the European position. The hon. Member for Farnworth was rather cunning in his suggestion that we should get extra holidays irrespective of whether we join the E.E.C.—no doubt an attempt to present a unified view on this issue by hon. Members. I do not wish to enter into controversy on that point. The crucial point is that there are variations in the number of bank holidays between Europe and this country.

I note the point raised by the right hon. Member for Kettering (Sir G. de Freitas) about the flying of flags on public buildings. He has written to me over the years and I have written to my local authority and it has been happy to co- operate in the exercise he mentioned. The point he raises would be best discussed on the Amendment which he has informed the House he proposes to table. It is, strictly speaking, a matter for the Secretary of State for Employment, because it raises the question of how many bank holidays there should be.

That brings us to the position of New Year's Day in England and Wales. Again, we are taking a number of holidays which are generally recognised in England and Wales and Scotland, and bringing them into line. If we then went on and made another public bank holiday in England on 1st January we would be putting them out of line again. There would be some danger of leapfrogging back and forth from England and Wales to Scotland. There are certain alternative formulae laid down. The question of additional holidays must be a matter for decision between the individual employee and employer concerned, and maybe more flexible arrangements can be made.

The matter is not divorced from the much broader question of inflation. In a sense, additional holidays are the equivalent of paying more and it is something best discussed in the context of the broad terms of employment and agreement on wages and so on. It would be inappropriate for the Government to take a lead in this. The right hon. Gentleman can of course table an Amendment in Committee but the broad line of policy is as I have outlined it.

I believe that the Bill is generally welcomed by most hon. Members, clarifying as it does the position over bank holidays. The only other outstanding point is that raised by the hon. Member for Farnworth who referred to the arrangements made for credit control. These are radical changes which are a substantial contribution to our ability to manage the economy in an effective way. He should not be misled by the Title of the Bill which is "Banking and Financial Deals", which has a much narrower scope than the broad questions to which he was referring. The opportunity for a debate on the broader matters he raises is a matter for my right hon. Friend the Leader of the House. I hope that the House will now agree to give the Bill a Second Reading.

Question put and agreed to

Bill accordingly read a Second time

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

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