HC Deb 12 December 1978 vol 960 cc508-21

4.55 a.m.

Mr. Teddy Taylor (Glasgow, Cathcart)

It is a sign of the conscientiousness of Scottish Members, quite apart from the conscientiousness of Deputy Speakers, that at this ridiculous time of the morning we have heard the right hon. Member for Kilmarnock (Mr. Ross) putting forward an excellent case for Massey-Ferguson and its workers. I had the pleasure of meeting the Massey-Ferguson workers when they came to London. After this short debate has ended, my hon. Friend the Member for Dumfries (Mr. Monro) will be raising another important issue.

The main purpose of the debate is to seek answers to questions that I was asked to put to Treasury Ministers by trade unionists whom I met on 23rd October in Glasgow. I have been unable to obtain answers through the usual parliamentary means. Nothing makes people lose faith in parliamentary systems more than if elected representatives are unable to ascertain what is going on, especially when a Government Department is involved. I hope that this morning the Minister will provide the information that he has declined to provide to date.

I must confess that there is a subsidiary purpose in raising the debate. It is common knowledge that the Treasury is usually regarded as being among the more helpful Departments for providing information. The reluctance of the Minister —what might be called his mysterious discourtesy—to provide even the most basic information makes me suspicious that something unusual and worrying is occurring.

My hon. Friends who are official spokesmen for the Conservative Party on Scotland and I asked the Minister of State, Treasury for a meeting to discuss the future of the National Savings Bank. The right hon. Gentleman declined, saying that a meeting would serve no useful purpose. However, he said that he would be happy to consider any Written Questions that I tabled. I provided a table consisting of a number of questions in writing in a letter dated 21st November. I asked eight specific questions that had been raised with me by the trade unionists. I received a reply today in which, unfortunately, the Minister has failed to reply to seven of the eight questions. His answer to the eighth question was that he did not know. It is an unfortunate start. I hope that the Minister will make good his position by providing some information this morning.

The Department of National Savings is one of the real British success stories in a rather mixed economic performance by the country generally. It provides a unique service for small savers. It enjoys a measure of public good will and confidence that any commercial or banking organisation would give its right arm to secure. It has been a unique help to Governments of all parties as the great majority of the cash that it receives from savers is passed on directly to Governments to ease the public sector borrowing requirement. The remainder goes to local authorities to help them with their problems.

It was a magnificent and welcome boost to Scotland when the Macmillan Government decided that the head- quarters of the National Savings Bank should be dispersed to Glasgow. It has been one of the greatest success stories of dispersal and has been used as an example to argue for additional dispersal of Government Departments.

The Minister will be aware that Scottish Members arguing for the Ministry of Defence and other Departments to come to Scotland have used the success of the National Savings Bank as one of their main arguments. The bank has about 4,400 employees in Glasgow. It has provided unique opportunities and career structures for young people wishing to enter the Civil Service.

In the mid-1970s a feeling of insecurity began to develop among some of the staff of the National Savings Bank as they saw the way in which the bank nationalisation debate was developing within the Labour Party. It all started in 1971 when the Labour Party conference, against the advice of the national executive, committed the NEC to bringing forward proposals for bank nationalisation. A study group was formed under the chairmanship of the hon. Member for Bethnal Green and Bow (Mr. Mikardo). In August 1973 it produced what might be termed an Opposition Green Paper called "Banking and Insurance ". It proposed a publicly owned banking corporation with powers to acquire the clearing banks. The home policy committee of the Labour Party was given responsibility for further work on banking and insurance.

In 1975 the home policy committee, chaired by the present Secretary of State for Energy, produced a paper that proposed the nationalisation of the big four. The debate developed and we heard Mr. Roger Opie, who I am sure the Minister will know, a fellow of New College, proposing sweeping nationalisation of the banks. As far as I recall, there was a call for the first time for the integration of the savings bank with the Giro.

The Government were disturbed about the effect of all the talk about bank nationalisation. For that reason, the Chancellor of the Duchy of Lancaster made a statement in the House in which he said that he could give a complete, simple declaration that the Government had no intention of nationalizing any company in the banking sector."— [Official Report, 19th May 1976; Vol. 911, 1473.] Despite this, in August 1976 the NEC published a booklet entitled "Banking and Finance." Among its many proposals was one which suggested the integration of publicly owned sections of the financial system by combining Giro with NSB.

At that stage we had the sterling crisis, and, although the Chancellor of the Duchy had given a clear assurance that bank nationalisation was off, it seemed that as the pound dropped enthusiasm in the Labour Party for nationalisation increased. The 1976 conference approved by more than a two-thirds majority the nationalisation of the big four, which made it official policy. This decision proved very unpopular with the bank unions. They were understandably concerned about the effect on jobs. So the Labour Party was landed with an official policy to nationalise the banks, which the Prime Minister had described as "an electoral albatross ". Obviously an escape route was sought from this embarrassing commitment.

In 1977 the Trades Union Congress rejected the proposals on banking and finance because of the strong feelings of the unions representing bank employees. Therefore, we saw a change of direction in the policies and attitudes of the NEC. I read in Labour Weekly of 18th March 1977 an article entitled "Blueprint for a State Bank" by the hon. Member for Tottenham (Mr. Atkinson). In this he put forward his support for the merger of Giro and the National Savings Bank into a State bank. It was obviously a useful means of bridging the differences within the Labour Party. A Treasury study group was set up and the NEC working party had discussions with the unions involved.

The latest development in the state of play was in August 1978 when we had the publication of two documents which were generally interpreted as an admission that the Labour Party was going off bank nationalisation. First, we had the NEC report to the 1978 conference which contained an interim report from the working party. It supported the merger of Giro and the NSB while recognising that important questions still had to be answered. The second document, entitled "Into the Eighties ", was an agreement from the TUC-Labour liaison committee which stated that there was a need to look again at existing institutions, notably Giro and the NSB, so that a new publicly owned bank could compete on equal terms.

Obviously, with all this going on since 1976, and with the Labour commitment to a merger between the NSB and Giro, there has been understandable concern in Glasgow. Such a merger would involve a massive change and would have devastating consequences. The more this has been looked at, the less the staff unions have liked it.

One of the two principal unions involved—the Society of Civil and Public Servants—summarised its fears in a pamphlet which it circulated to its members in October. I have a copy. It is headed "Jobs at Risk ". It explains how, at the Blackpool conference in 1976, the Labour Party firmly decided on a policy of nationalising the commanding heights of the economy. In the face of a carefully-orchestrated campaign of opposition, the Government were now seeking an escape route. A scheme was thus emerging to form a State bank by merging the activities of NSB and Giro. The pamphlet mentions that the most likely outcome of such a merger would be the creation of a small public corporation which would operate through the outlet of local post offices. On a more serious note it says that the merger would pose a formidable threat to the prosperity of the National Savings Bank, which is based at Cowglen in Glasgow, and would lead to very serious job losses. That was a pamphlet issued by one of the principal unions involved. Its fears are considerable.

The unions are scared about the consequences of the upheaval of joining a Government Department with a public corporation, namely, the Post Office. They are worried about the consequences of the Civil Service status of the employees. They are worried in particular about the effects on public confidence of a controversial proposal to set up a State bank. If we had a loss of public confidence in the National Savings Bank, this could have very serious consequences on the turnover of business.

They are very concerned about the possible effect of the removal of tax concessions, which is one of the most valuable aids available to the National Savings Bank. They are concerned about the inevitable rationalisation which could stem from such a move. They are also concerned about how post offices could cope with the diversity of business of a State bank. They are also concerned, as many people would be, about what appears to be the undesirability of upsetting something which is working extremely well in the public interest.

As a result of all this, they invited Glasgow Members of Parliament to a meeting. The general secretary of the Society of Civil and Public Servants made it quite clear that his society would oppose the possibility of the plan root and branch.

What is going on? I set out to try to find out. I put down a Question to the Minister asking whether there was a Treasury study going on. I was told "Yes ". Then I wrote to the Minister saying that, in view of the confirmation that a study group was looking at this possibility, my hon. Friends who are Scottish spokesmen for the party and myself would like a meeting with him. I received an answer that this, in his view, would serve no useful purpose. In the meantime, the Minister had written to the chairman of the staff side at the National Savings Bank, Mr. Adamson, stating—this was the assurance—that there is no question but that the Glasgow centre will continue in operation, whether or not there is a merger. What precisely does the Minister mean by saying that there is no question but that the Glasgow centre will continue "? What does that mean in terms of jobs? What is the nature of the assurance that he is giving? Is he giving the assurance that the Savings Bank will be there, the headquarters of a new department, or what? Will he try to spell out a little more precisely what he means by that assurance?

The chairman of the staff side, Mr. Adamson—who, as the Minister will know, is not a man noted for his moderate views—put out a statement saying that he was quite happy with this, that he thought there had been scaremongering going on, that a great deal had been made unnecessarily by some people in the NSB and outside, and that he wished to dissociate himself from it. The Minister will be aware that Mr. Adamson is no longer the chairman of the staff side. He will also possibly be aware that one of the major unions involved, immediately after that statement, publicly dissociated itself from it. The Minister will be aware that the SCPS is sending deputations to meet Scottish Members of Parliament of both major parties tomorrow in the House of Commons to try to find out more about what is going on. I can assure the Minister, as many of my constituents work there, that a substantial number of people did not find it very reassuring to read a letter from the Minister in which the only specific assurance was that there would be consultation and that the Glasgow centre would continue in operation.

The Minister specifically said that he would answer detailed questions if I wrote to him. If he will look at his letter of 16th November, he will see that he said: If there are still specific points on which you feel concerned, I will be happy to consider them if you would like to write setting them out.

The Minister of State, Treasury (Mr. Denzil Davies)

Would the hon. Gentleman say where in that letter I said that I would answer specific questions?

Mr. Taylor

I may be reading something into English which is not there, but I suggest that when the Minister writes and says that he is not prepared to meet one because it would not serve a useful purpose but then says: If there are still specific points on which you feel concerned, I will he happy to consider them if you would like to write setting them out ", that is, in the usual courtesy of parliamentary language, an indication that the Minister would be happy to try to cooperate in providing information.

Mr. Denzil Davies

I am sorry to intervene, but the hon. Gentleman seems to be in the habit of misconstruing English. I have not said in that letter—and he cannot point to it—that I would answer his specific questions.

Mr. Taylor

The Minister is quite right; he did not say that he would answer the question. But if the Minister refuses a meeting and then says that he will be happy to consider questions which I put to him, I think that he should treat them with some seriousness and courtesy, particularly bearing in mind the seriousness of the issue, the views of the union involved and the fact that for a considerable time we have been trying to find out exactly what is going on.

What sort of questions did I ask? Were they impossible, unreasonable questions? Here they are. Who is actually considering the possibility of the merger—is it a section of your own Department and can interested bodies make representations to it? That was the first question. I think the Minister will agree that there was no reply in the letter which he sent to me three weeks later. Secondly, When do you estimate that a decision will be made? This was the one question which the Minister did answer. He said: It is not possible to say ". Thirdly, I asked In considering the possibility of a merger, is it envisaged that the outcome, if agreed, would be a state bank competing with the joint stock banks? No answer. Would such a merged operation continue to operate the tax concession at present given to National Savings Bank investors? No answer. Would the new merged body have to operate through Post Office counters? No answer. Would employees of the National Savings Bank lose their Civil Service status? No answer. If the details of the plan are still not resolved, on what basis are you able to give the assurance that jobs in Cowglen would not be affected? No answer. What were the considerations which led to the initiative of the inquiry into the possible merger? No answer. I suggest that, while the Minister appears to be going on the detailed wording of his reply, it is not a particularly helpful response to Glasgow Members of Parliament asking about a very important employer of labour and a great success story.

I hope that the Minister will try to answer some of these questions this morning. There is now a situation of growing uncertainty. I should like the Minister perhaps to consider some other questions. Can he tell us why the Treasury is considering such a merger? Is it only because of the NEC, or is there some other reason? Surely that is not an unreasonable question to ask in relation to a major merger which could have a significant effect on a very successful Government department and, indeed, on a public corporation. It is not unreasonable, particularly when resources are limited, to ask why he is considering this merger.

It is also reasonable to ask what benefits the Minister envisages from such a measure, if it takes place. If the Government are spending a great deal of time and trouble thinking about a merger, they must have thought that some potential benefits were available to the community from it. Who is considering this? Is it just the Treasury or the NEC, or what is the relationship between the two? It is also fair to ask whether he can give an assurance —this is desperately important to the other banks in the private sector —that, if the outcome of the inquiry is the establishment of a State bank, there will be fair competition with the private sector.

Is the Minister willing to answer those questions? Will he be willing to meet myself and my two hon. Friends who are official spokesmen for the Conservative Party on Scotland? In 14 years of parliamentary experience, I have never had a refusal from a Minister to have a meeting, particularly on an issue as important as this. Does he appreciate the importance of an early decision? Uncertainty does not help.

My basic fear is that the welfare and prosperity of a successful, viable and respected Government department is being put in the melting pot for no other reason than a rather pathetic attempt to resolve an ideological conflict within the Labour Party, stemming from a policy decision on nationalisation at its conference.

It is time that this uncertainty was put to an end. Certainly, when official representatives of a trade union are taking the trouble to come to Parliament tomorrow to see representatives of the Scottish Labour Party and the Scottish Conservative Party, it is desperately important for us to be able to say something to them, and we should have some information about what plans the Minister has for an important Government department. This Government are meant to practise open government, concerned with consultation and with giving information. It is high time that the Minister gave us some indication of what is going on, and why it is going on.

5.15 a.m.

The Minister of State, Treasury (Mr. Denzil Davies)

The hon Member for Glasgow, Cathcart (Mr. Taylor) said that there has been some scaremongering about this matter. If so, it has not been alleviated by the interpretation—I know that he is not entirely responsible for what appears in the Scottish press, but I have read it—which he put on a straightforward parliamentary answer that I gave him.

Mr. Teddy Taylor

Give an example.

Mr. Davies

The examples are pretty clear. The way in which he released my answer and his comments to the press are a good example of how not to stop scaremongering.

The hon. Gentleman said that the National Savings Bank had been a great success. I would like to express my appreciation and that of the Government to the staff at Cowglen for all their hard work and enthusiasm, which has helped to make the move to Glasgow and the introduction of mechanisation especially so successful. I would also thank the Glasgow district council, which has given its full support to the venture.

At 31st October 1978 the amount invested with the NSB stood at over £3,000 million. Total deposits have grown by some 46 per cent. in the last five years. Much of this growth has been accounted for by the quite remarkable success of the investment account. Since 1973 the balance remaining invested has risen from just under £550 million in 0.8 million accounts to over £1,200 million in 1.08 million accounts. The ordinary account has also shown steady progress. This is a commendable achievement in the face of fierce competition for personal sector liquid deposits.

The success of the National Savings Bank has been in large part due to the ease with which business can be transacted through the medium of post offices. This effectively provides the NSB with the unique asset of over 20,000 outlets throughout the United Kingdom.

I now turn to the proposal for merging the National Savings Bank and the National Girobank. At the outset, let me repeat what I have stated on a number of occasions. The Government have taken no decision on the proposal and the National Savings Bank centre in Glasgow, in Cowglen, will continue in operation, whatever the final decision on the merger. I can give the hon. Gentleman all the assurances he seeks about the staff and the future of the operation. I say this because I am conscious of the deep concern among the staff, arising from the unreasonable interpretation which the hon. Member chose to place on the parliamentary answer I gave him recently. As the Minister responsible for the National Savings Bank, I have taken steps to reassure the staff concerned about their future in the letter that I wrote to them. But I should not like there to be any further misunderstandings as a result of anything said in the debate. I can give the hon. Gentleman all the assurances he seeks regarding the staff and the operation at Cowglen, whether there is a merger or not.

Mr. Teddy Taylor

Can the Minister give a clear assurance on one simple matter, which is important concerning computers—that if there is a merger the headquarters of whatever merger is established will be in Glasgow?

Mr. Davies

I can give the hon. Member the complete assurance that the headquarters of the National Savings Bank will be in Glasgow, even if there is a merger, and whatever form such a merger might take. There will be no change in the Glasgow operation. The hon. Gentleman looks surprised, but perhaps he has come late to this debate.

The idea of merging the National Savings Bank and the National Girobank is not new. The hon. Member mentioned the Labour Party national executive. I do not know whether he has read the Page report. In 1973 it noted the existence of these two somewhat complementary services operating across post office counters. The services are, of course, complementary. There is the deposit-taking operation of the NSB—the Glasgow operation—and there is the money-transfer operation of the National Girobank. If there was a merger it would not mean that one would have to go. The two would be maintained because they are an inherent part of any type of banking operation.

The Page committee suggested that in the longer term a merger between the two organisations might be one means of ensuring that neither the NSB nor the Giro would run into difficulties because of an inadequacy of their current individual balances.

The Carter report on the Post Office also mentioned the possibility of a merger, but while both committees favoured a merger in principle they were aware that there was a considerable number of practical difficulties on which a good deal of work would need to be done.

Finally, the merger was also recommended in an NEC document of the Labour Party, and my right hon. Friend the Prime Minister commissioned a thorough examination of the proposal. Since then extensive studies have been undertaken of the financial, managerial and technical aspects of the merger. The unions and the staff most closely concerned have been consulted.

Accompanied by my right hon. Friends the Ministers of State for the Civil Service and for Industry, I have seen the Department of National Savings staff side, the Society of Civil and Public Servants, which represents both NSB and Giro staff, and the Post Office unions. I have met them more than once at the Treasury. We have discussed all their problems and fears, and all the difficulties of a merger of this kind. We have taken careful note of their points and I have assured them —and I believe that they are happy with this assurance—that they will again be consulted before any final decisions are taken, if, indeed, final decisions are taken. I believe that those assurances have satisfied the members of the unions I have talked to and the employees at Cowglen to whom I have talked.

It has become apparent from the studies and consultations that the merger idea raises a number of complex issues. I do not deny that. I approach the matter with a wholly open mind. We are currently looking at these issues, but as yet we have not reached a decision either on the idea of a merger or on the form which a merged organisation might take. There is nothing I can usefully say at this stage about the implications of the merger proposals. We have not decided whether to have a merger. We have merely been looking at a number of possibilities.

In the meantime, I stress what I have said before. There is no threat to the future of the National Savings Bank in Glasgow or to the future of employment should a merger take place. Those closely connected will be consulted before any final decisions are taken.

I turn now to the future of the NSB, because I am sure that the hon. Member for Cathcart wishes to see the bank develop, as do the Government.

Mr. Teddy Taylor

How can the right hon. Gentleman say that the unions he met were satisfied with his assurances when he knows that the Society of Civil and Public Servants has since opposed the proposal root and branch? Does he not accept that?

Mr. Davies

The hon. Gentleman seems to make a habit of misunderstanding things. I never said that the union was not against the merger. I am well aware of its views. I believe that it is satisfied with the assurances I gave, first, that there would be no change in the Glasgow operation if there were a merger, and, secondly, that we shall be consulting it again before any decision is taken on the merger. It will be kept fully in the picture.

I turn to the future of the National Savings Bank. I do not know what the policy of the Conservative Party is, but it is certainly the policy of the present Government to develop the NSB as a very important force in the savings movement. A prime requirement for success for the NSB is a competitive rate of interest. As the recent announcement of a substantial increase in the investment account rate demonstrates, we intend to ensure that NSB interest rates remain competitive with those available on comparable investments. As with the other national savings media, the terms available on NSB accounts are kept under pretty constant review. We are currently looking at a range of possible methods of ensuring that the NSB continues to remain attractive to investors, perhaps —and this is an example of what could be done in future—by introducing, in due course, term deposits in the investment account service, thereby enabling the NSB to compete more fully with other institutions that take deposits outside the public sector.

In common with all national savings facilities, our broad objectives for the NSB are to provide a safe and attractive home for the savings of the personal saver, and at the same time—and this is extremely important and will perhaps become more important as time goes on—providing an alternative way of financing the public sector borrowing requirement outside the gilt-edged market. I firmly believe that it is extremely important that we develop national savings to assist in the funding of the Government's debt. There is a considerable future for national savings along this route.

With the aid of a highly mechanised system of administration, an enthusiastic and a competent work force and a competitive interest rate policy, the NSB will be able to contribute fully to the achievement of these objectives. Indeed, I foresee, as has happened over the last few years, a continuing growth in the strength of the NSB. The hon. Gentleman will welcome this because it will be a safeguard and will mean development in Glasgow, which is the headquarters of the NSB.

I reiterate what I have said. I am confident that the staff at Cowglen can look forward to a sound future. I can give the hon. Gentleman the assurance which he requires — that there would be no change in the operation at Cowglen if there was a merger, on which a decision has not yet been taken. There is no question of taking the headquarters of the NSB from Glasgow. That operation will continue and it will continue in full.

With those assurances, I hope that the hon. Gentleman will in future approach this matter in a more rational way and perhaps look at it more logically than he has done in the past.