HC Deb 07 November 1974 vol 880 cc1381-92

10.10 p.m.

Mr. Geoffrey Finsberg (Hampstead)

I am glad to have this opportunity of firing the opening shot in what I assure the Minister and his advisers will be a long battle. I hope that he will accept from me that blunt speaking means no discourtesy to him. I am determined to get the decision to phase out the national savings stamp reversed. The right hon. Gentleman's predecessors twice had to reprieve the sixpence that they tried to get rid of.

The national savings stamp goes back to the First World War, and it provides a most valuable weapon in the battle we are all trying to fight. The DNS annual reports show that the sale of stamps in 1971 was £83 million. That had risen by 1974 to £118 million. The management expenses rose over that same period from £4.85 million to £8.97 million. It is fair to say that these stamps represent interest-free borrowing by the Government from the public. It is also right to say that the Government are paying at the moment between 11 and 11½ per cent. for short-term borrowing. I make 11 per cent. on £53 million about £5.8 million. That is left in the hands of the public. It is the interest the Government does not have to meet because stamps are interest-free, and this must be deducted from the management expenses in order to arrive at the net cost of the stamp scheme to the Government, which is about £3 million a year. If a stamp had been introduced to pay for television licences its cost would have to be taken into account in calculating what the Government might possibly pay.

The first hint that the stamp might go was, clearly, not a ministerial hint. It came from the recesses of the Treasury, and it came at the time the Page Report was published. I took a deputation to see the then Minister of State, and at that stage the petition had 120,000 signatures, and the number has since risen to nearly 190,000. I attacked the decision then. I thought it was a particularly foolish one. I now go on to attack the decision that the present Government have taken. I do not regard this as a political issue because Ministers of both major parties have fallen for the Treasury arguments.

The Paymaster-General, in a letter on 31st October to Mrs. Perkins, talks about the importance attached to the social practice, and says that the decision to abolish the stamp was not based solely on economic considerations. He said: I must emphasise that my primary consideration was the fact that the stamp is a bad buy for the saver; it is not, and cannot practicably be, a security which carries interest and thus give a reward to the saver for deferring consumption. But it was never meant to be, and anyone connected with savings knows that. It is meant to be the first step on the road to saving, and anyone who has ever collected door to door as I have—perhaps the Minister has not had the chance or the honour—will know that one never tries to kid people that by buying national savings stamps they will earn any interest. I believe that the right job for the national savings movement is to encourage purchase of security, and to get people along the proper road towards national savings.

I wish to quote some distinguished people who go along with the idea that the national savings stamp is extremely important. One of the most important people that I can quote is Mr. George Woodcock, who is not unknown to the Paymaster-General. Mr. Woodcock said at a conference of the National Savings Committee: And then in terms of our securities we have everything from the stamp, which has been much criticised, but which is essential to us; it is one of our unique responsibilities and our unique functions". He repeats: It is an essential part of us. It enables us to offer the small saver everything from the humble stamp to Save-As-You-Earn. What does the Paymaster-General have to say about all this? He made an interesting, though long, speech in Glasgow. I think that he had to rewrite it in view of the leak that had taken place. I shall quote one or two extracts from the speech to show the fallacy of the arguments that were being adduced for him.

The right hon. Gentleman said that the stamp "is expensive to the Government". I can show that it is not expensive to the Government and that the cost is probably less than the cost of the proposed television stamp. He said that the stamp made a negligible contribution to Government finances. It was never intended primarily to finance the Government. The stamp leads into savings for those who would not otherwise acquire the habit.

The right hon. Gentleman said that the stamp was "bad for the saver", "insecure" and paid no interest. This ignores the advantages of familiarity, simplicity and convenience. The stamp can be readily encashed, and it provides convertibility to a permanent form of saving and leads to the saving habit.

As a member of the Parliamentary Committee of the Trustee Savings Bank movement I can say that the TSB regards the savings stamp as very important. As regards the case for its abolition, the Government have been criticised for giving an inadequate return on savings securities in view of the rate of inflation. In the case of the stamp the return is negative. This criticism, however, cannot be directed at the stamp, as it is meant for short-term saving, to help people with budgeting.

It is said that the national savings movement has been divided on the need for the stamp. Those parts of the movement which use the stamp arc convinced that it is vitally needed. In schools, for instance, the alternative would be school banks, which are not particularly feasible for young children but it is essential that they should be able to form the savings habit right from the start. Even in industry the stamp is widely used and its abolition would reduce saving among people employed in industry.

A recommendation of the NSC in 1973 was that stamps should be retained but reviewed in two years' time. The National Savings Committee is unanimous in recommending retention of the stamp. I believe that if the stamp goes the national savings movement will collapse, and the Government and their officials would be responsible for this. It is no use praying in aid the situation in other countries because no other country has a voluntary movement.

If the stamp were abolished, what would be the alternative? People would have to use the National Savings Bank or the Trustee Savings Bank. I wonder whether the Paymaster-General or any of his officials have gone to a post office or trustee savings bank to deposit savings. It is not possible to go to a TSB on a Saturday, and if some unions get their way post office counters will also be closed on Saturdays.

In many cases if the stamp were abolished there would be no alternative for people, such as in those areas where collections of savings are made week after week. It seems that no proper thought is being given to this desperately important matter.

Let me quote to the House the words of Sir Robert Bellinger, who must be a reasonable man or he would not have been appointed Chairman of the National Savings Committee. He is reported in the Sunday Telegraph of 27th October as saying: I am disappointed. While we are waiting for the Budget and the Prime Minister is calling for national unity in time of crisis, it is unfortunate that this should be announced at this time. The 10p stamp is the greatest rise of savings activity in this country. I believe that the Government have gone into this matter on bad advice. I hope that they will be big enough to recognise that they have made a mistake. They cannot afford to throw aside the 50 years or so of hard work that has gone into this movement. There is a wealth of talent that is about to be lost. There is a desperate need to encourage thrift.

One of the practices we are losing is the habit of saving. This has not been helped by the recent disappearance from most post offices of the national savings stamp caused by the Stationery Office strike. As a result, there have been resignations from the savings movement.

I was grateful to the Paymaster-General for his Written Answer to me on this topic on 6th November. He said: Provided that the present output of national savings stamps is maintained, supplies should be available at all post offices by the end of November."—[OFFICIAL REPORT, 6th November 1974; Vol. 880, c. 159.] I am grateful to the Minister for allowing the record to be set right and for encouraging people to believe that they can go back to the post office and obtain these stamps. It seems foolish that the movement, which exists only to try to encourage the savings habit, should suddenly be told, virtually at no notice, that it has two years to try to find another form of activity. I do not believe that it will be possible for this to be done.

I have certain links with the savings movement having run a group, having for some years been on the board of the largest trustee savings bank, and having also been a member of the Parliamentary Committee. Therefore, I know the desperate importance of trying to encourage people to start on the road to thrift. Nobody has ever said that the savings stamp by itself is the right form of saving, but it must be looked at as a lead-in. An alternative does not exist.

If the Paymaster-General wants to do something constructive—and I am sure he does—he must impress on his colleagues in the Department of Trade that the National Savings Bank should take 10p deposits rather than a 25p minimum. That would be some recognition of a desire to help the small saver. At the moment I see no evidence that anybody will take this attitude. I am distinctly worried about the situation. There is a vital need to encourage voluntary effort.

There are so many people who are anxious about this matter that it should be said that if the Minister is unable to give a helpful answer tonight—and I warn him that this is only battle No. 1—he will find himself defending the Government's action during Consolidation Fund debates, and during debates at Christmas and other Adjournment debates. Life will be easier for him if he is realistic now and accepts, with his usual smile and courtesy, that perhaps there has been a mistake and that the stamp should not be phased out.

If the right hon. Gentleman does not make a gesture of that kind, he will find that the names on the early-day motion—an all-party motion—will grow in number. I have not yet even tried to persuade people to sign it, and I believe that the numbers will be embarrassingly large for the right hon. Gentleman. The matter will be brought up on business questions on a Thursday and the Leader of the House will no doubt say that time may not be found "next week". But the Paymaster-General knows that when there is a motion containing 100 or so signatures, the right hon. Gentleman the Patronage Secretary gets a little worried and starts to say "Will you not be a little more helpful?"—and all the minions in the Treasury will not overcome the Patronage Secretary when he is in that mood.

Knowing the Paymaster-General, I cannot believe that he will remain adamant. I urge him to have a second thought on the subject and, when he has had it, to have a third one. If he really has at heart the interests of the economy and those of small people and he wants to encourage the habit of thrift, which is to be treasured in this country, he is going about it in the wrong way. I hope that he will change his mind.

10.25 p.m.

The Paymaster-General (Mr. Edmund Dell)

I am sure that the hon. Member for Hampstead (Mr. Finsberg) wishes this debate to be conducted on the merits of the question rather than in terms of the opportunities which hon. Members have to exercise pressure on the Government. We are all aware of those opportunities but let us tonight at any rate discuss the merits of the question with which we are dealing.

The hon. Gentleman has no justification for suggesting that the Government are not interested in small savers. He will know from what the Government have done in respect of the future of the trustee savings banks and in introducing index-linked bonds for small savers that we have given specific evidence of our interest in small savers—evidence which his right hon. and hon. Friends did not give in the 12 months that they had the Page Report in their hands.

The hon. Gentleman referred to the fact that at the Glasgow assembly I made this announcement, and he quoted from the speech that I made there. I made the announcement at the Glasgow assembly of the Scottish movement because I had been told that that movement found itself especially dependent on the stamp. Let me say here and now, having listened to the debate which followed my announcement, how encouraged I was at the response the announcement had at the Glasgow assembly. The debate was extremely constructive. Again and again speakers said "Very well. Here is a decision. We may not like it, but that is what has been decided. What we will now do is exploit the new opportunities for saving opening up in its place." No one said what the hon. Gentleman said tonight, that the end of the stamp was the end of the movement. I am sure that everyone there would have denied it emphatically if that had been suggested.

The decision has its origin in the report of the Page Committee, which made a recommendation. I should like to go through the reasons given by the Page Committee for its recommendation and to make some comment about them.

The Page Committee's first reason was that the stamp was irrelevant to State finance. I do not see that anyone can deny that. There is no question about it. The hon. Gentleman said that it was a lead-in to saving. That was the original intention in introducing the stamp. But there is little evidence that it is a lead-in to saving. The figures last year were £119 million in respect of purchases and £115 million in respect to sales. That is not a lead-in to saving, and it seems a little out of date to imagine that in this day and age thrift will be encouraged by exchanging a 10p coin for a 10p stamp which does not carry any interest.

If we want to encourage thrift among young people, which is an important objective, the sensible course of action is to introduce, as is increasingly being done, banking schemes of one kind or another.

The Page Committee's second reason was the high administrative costs. The hon. Member for Hampstead said that in calculating the cost of the stamp we should consider the fact that the Government paid no interest on it. I take no pride in the fact that this is a form of saving on which the Government pay no interest. Nevertheless the cost is high. But this is not an overwhelmingly important question. Given the scale of Government expenditure, it is not the most important reason why the decision was taken. But this is a high-cost activity. I gave the figures of purchases and sales. They mean a net gain of about £4 million. The administrative cost during the same period was £9 million. If we take into consideration the 7 per cent. of the sales that are converted into more permanent securities, we have £12 million worth of permanent savings which cost £9 million to achieve. That is a high administrative cost.

The Page Report described the stamp not as a savings medium but as a short-term budgetary device. That, indeed, is what it is. A number of people, particularly the elderly, still buy stamps and use them for various payments, especially for television licences. I suggest that savings banks are better and safer. The hon. Gentleman tells me that he is on the board of a trustee savings bank. I would have thought that it was much better to encourage people to put their savings in banks. As the hon. Gentleman has said, the National Savings Bank will take small sums. That is a very much better and safer way of saving.

We acknowledge that there are people who buy stamps and use them for various payments such as TV licences. That is why we are introducing a television scheme. We shall not phase out the national savings stamp until the TV scheme is introduced.

Education is one of the most important aspects of the national savings movement, and one which we hope will be developed in the future even more than in the past. I cannot imagine how anyone can advocate the savings stamp as the best way of teaching people how to save. School banking schemes are being developed in more and more schools. That is the way to teach modern money management.

I hope that as a result of the announcement that I have made the change-over, which I believe has not been happening rapidly enough, will move ahead very fast. I think I can say with some security that many educationists within the national savings movement are glad that the savings stamp is being phased out so as to encourage movement in another direction.

Another point which the Page Committee made was the high security risk of the stamp. It can be lost, damaged, burned or stolen. I do not know whether the hon. Gentleman has seen tonight's Evening News. Coincidentally for his Adjournment debate it carries the headline: Thieves snatch cripple's £160 savings. Where were those savings? They were in stamps. There was £160 worth of savings in stamps. They were stolen and they did not carry any interest. Those savings would have been very much securer in the National Savings Bank. They would have been totally secure there even if the book had been stolen.

Mr. Geoffrey Finsberg

I have not seen the headline to which the Minister refers, but how could a cripple get to the National Savings Bank to deposit his money?

Mr. Dell

The cripple's wife could get to the bank to deposit the money. How would a cripple cash an amount of that kind without going to the post office or getting somebody to do it for him? The headline to which I have referred gives an example of the sort of insecurity which sales of the stamp to old people involve.

I know a lot of people are afraid that because the stamp is being phased out the stamps that they have in their possession may not be redeemed after a certain date. That is not so. The Government undertake that the stamps will be redeemed indefinitely. The outstanding stamps are about £50 million. On that amount we pay no interest. That is not a point on which I take any pride. I do not regard it as advantageous to the Government that such a situation does not give rise to any cost to the Government. Of course, no one knows how much of the £50 million actually exists. No one knows how much of it has been lost, or how much of it would be redeemed if people wished to redeem it. There is £50 million on which the Government pay no interest. We are criticised enough for the fact that there is £6 million worth of very old certificates at low rates of interest still outstanding.

In short, the stamp is wrong for the saver. Other schemes can take over, such as schemes based on the National Savings Bank or the Trustee Savings Banks. This was very well illustrated by a number of speeches at the Glasgow assembly.

The reason for a period for phasing out is precisely to give the movement in England and Wales and Scotland an opportunity, in consultation with the Government, to find the best ways of replacing the rôle which the stamp now fills. I want to make it clear that the national savings movement is by no means unanimous in the view that the stamp should be retained. There was a working party of regional chairmen of the movement in England and Wales, chaired by Mr. John Anstey, which reported in September 1973 to the National Savings Committee. It said about the stamp: Having paid due regard to all the factors involved we are of the opinion that to meet the conditions of the 1970s stamp instalment saving should no longer have a place in National Savings and we, therefore, Recommend that:

  1. i. the National savings stamp shall be withdrawn after a period of at least two years' notice;
  2. ii. during that period, as a matter of high priority, the Voluntary movement shall seek alternative schemes for the small saver which would progressively replace the Stamp".
In other words, in the view of this distinguished group of members of the national savings movement there are alternative schemes available to replace the stamp.

It continued:

  1. "iii. no new schemes using the National Savings Stamp shall be set up in any section of the Movement;
  2. iv. there is a strong case for the Post Office to be requested to introduce its own special stamp for instalment saving for a Television licence."
We are also doing that.

That recommendation was rejected by the full committee of the Natioal Savings Committee. It let the Treasury know why. It rejected it because it said that it would be divisive and injurious to the voluntary movement at a time when it was facing uncertainty and criticism. It is now not facing uncertainty, because the Government have made it clear that they wish the movement to continue and will enter into discussion with the movement as to the best ways in which it can do so. The committee continued: The committee does not regard its future as dependent upon the Stamp"— which, again, is directly contrary to the views of the hon. Gentleman, who appears to think that the movement will collapse without the stamps— but agrees that steps must be taken forthwith to reduce its dependence upon this facility. Accordingly it is proposed in respect of Education and Industry that no new Stamp Group be established and for the next two years priority be given to transferring Stamp Schemes into bank and other schemes. That is the view the National Savings Committee held in September 1973, at a time which it says was one of uncertainty. Uncertainty is ended now. The committee can go ahead and develop the many alternative routes for increasing saving.

Hon. Members have also received a circular from the committee in which it refers to the decision I announced. It said: The National Savings Committee for England and Wales, whilst deeply regretting the decision"— I did not know the committee had yet declared itself in that sense— will now intensify its efforts to encourage the public to utilise other National Savings facilities. That is the right attitude.

. Here we come to the question the hon. Gentleman raised about the future of the movement and whether it would collapse.

I think that the movement is in more danger if it follows the hon. Gentleman's lead and spends the next two years or more fighting the decision. If the movement wishes to prove that the Page Committee was wrong—as I believe it was, because I believe that it has a future in the education and industrial sectors in particular—it must accept this decision and work from it to develop the many opportunities available to it to encourage savings. In that way it can make a valuable contribution to the encouragement of savings among young people and in industry. That is the way to justify the Government's decision not to abolish the movement. But if the movement follows the hon. Gentleman's course it will be ill-advised.

Mr. Geoffrey Finsberg

No one is following my course. I am speaking for 190,000 people who asked me to raise the subject. That is very different from following my course.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty minutes to Eleven o'clock.