§ Order of the Day for the Second Reading read.
§ LORD GREVILLE
, in moving that the Bill be now read a second time, said, the societies proposed to be amended by its provisions might be 427 generally described as societies formed for the purpose of mutual assurance among the working classes, the members making weekly or monthly contributions, in the expectation of receiving allowances in case of sickness, or provision for funeral expenses in the event of a death in the family, or securing a payment to the widow on the death of the subscriber. It was required that such societies should be registered, and it was an easy matter for seven men to form a society and register it. They then described it as "registered under an Act of Parliament;" and poor men, imagining that these words in themselves afforded some security for the soundness of the society, the integrity of its managers, and the certainty of future benefits, and that they were as safe as if the money had been deposited in the Post Office Savings Banks, paid their deposits for months and years, only to find, in the time of their trouble and need, that they had been cruelly deceived and robbed, and that it was impossible to obtain redress. Many cases of hardship had been brought under his notice, and in one, which was a fair sample of the rest, a man who had invested £23 gave notice of his intention to withdraw. After the lapse of two years he was informed that he could not get back his money; but perhaps he might find someone to purchase his interest in the society for the sum of £10. The fact was that no protection was afforded by the registration, and only recently a gang of persons were put upon their trial for starting these bogus societies, and the public were then surprised to find with what ease such societies could be started. He (Lord Greville) did not ask that the investors in, and subscribers to, these societies should have Government security as the depositors in the Post Office Savings Banks had; but he proposed that no society should be allowed to be registered unless its tables were certified by an actuary as sufficient to enable it to meet its possible obligations. That would be an additional protection to poor men by preventing the starting of societies which could not provide the benefits they offered. The necessity for some further protection of the provident working classes was shown by the fact that 150 of these registered societies had disappeared in the course of a year, and the aggregate 428 of the weekly or periodical payment to these societies probably amounted to £5,000,000 yearly. One did not like saying anything against his own Party; but he was very much surprised that the Liberal Party, who were always appealing to the working classes of the country, declined to take up a matter of this kind in the interests of the poor, thrifty, hard-working, honest working man. The matter was one affecting the whole community, because the more provident working people were, the fewer paupers would there be; and the burden of pauperism was sufficiently onerous to render it incumbent on them to do all they could to encourage habits of thrift and self-dependence among the working classes. He therefore hoped their Lordships would read the Bill a second time.
§ Moved, "That the Bill be now read 2*"—(The Lord Greville.)
§ LORD NORTON
said, he also concurred in the necessity of amending the legislation as regarded these societies, for a more important subject than this could hardly be brought before their Lordships. The great difficulty in legislating on the question of these societies was to promote their soundness without Government guaranteeing it, or seeming to do so. At the present moment, the whole working of the Friendly Societies Act turned upon the Registrar, which, he maintained, did more harm than good, for a guarantee was supposed to be offered by him as to the soundness of the societies, while practically he neither could nor should offer any security whatever. That officer, by the Act of 1875, prepared and circulated model forms of accounts and tables, and collected and published Returns; registered societies which sent their rules to him if he was satisfied that they complied with the conditions of registry, had tables certified by an actuary, and had an office, trustees, and quinquennial audit. The Act, however, failed to give effect to its intention. Two things seemed to him to be wanted—first, that the Registrar should be ready to give assistance by discretionary advice; secondly, that he should be able to enforce what coercive functions he nominally had; either by penalty, or by taking or temporarily suspending societies from his register. As to the first requisite, it was recom- 429 mended by Lord Iddesleigh's Commission, 1872, on the Report of which the Act of 1875 was drafted, that the Registrar should, at his discretion, give advice to promoters and managers, and popularize and publish information. Those societies were intended to encourage thrift and saving, and their privileges were only justified by their need of such encouragement. Private individuals, without official knowledge or power, often undertook the formation of friendly societies, though not their management. It was right that these societies should be self-governed; but the present Registrar did not give advice and aid to promoters of those useful institutions like his Predecessor, Mr. Tidd Pratt. Perhaps, however, advice unwillingly given would not be worth much. The second requisite was more important than the first which he had mentioned. It was that effect should be given to the coercive powers nominally given in the Act. The case of the Liver Society lately reported sufficiently showed the necessity for that amendment of the law. Its mismanagement came before Sir Stafford Northcote's Commission in 1874; and in the 10 years after that exposure its two secretaries pocketed to their own use, by their own confession, nearly £70,000. They altered rules, "Boycotted" interference, packed meetings, and became registered plunderers of 1,000,000 poor dupes of subscribers. When at last application was made to the Registrar, under the 23rd section of the Act, to look into the matter, he appointed Mr. Lyulph Stanley to report. The result of that Gentleman's inquiry was that since then nothing whatever had been done to improve the management of the society. They had all heard the allegations which had led up to the inquiry; and although the Registrar had received the Report of the Inspector sent to inquire into the matter, he only replied by expressing obligations for suggestions as to the reform of the law, in which he said he partly concurred, and he promised to consider whether any legal proceedings ought to be taken. The Bill, he (Lord Norton) feared, must be altered to meet such impotency on the part of the chief officer under the Act. To say, as it did, that no new society should be registered unless its tables were certified by an official actuary, did not meet the 430 case, and went too far in the way of Government undertaking a guarantee. The Bill should rather say that all such societies as were named in the 6th clause should imperatively be registered, and that failure to report revaluations and audits, at least once in every five years, to the Registrar, should incur the removal or suspension of the society from the Register, and the consequent loss of privileges during suspension. Amendments to that effect might be introduced in Committee. Insurance for sums at death not mentioned in the Bill required an additional clause for security against gross and dangerous abuse. Undertakers frequently got the whole of the sums so insured transferred to themselves for funeral expenses, to the total deprivation of the widow; and that dangerously discouraged all efforts of thrift and saving in the way of insurance. If the Government rejected the Bill as not entirely meeting the case, or for fear of giving too much guarantee to the societies, they were bound to do something without delay to prevent the Registrar doing much harm with little compensating good.
§ LORD SUDELEY
(for the Treasury), in moving the rejection of the Bill, said, it was identical with the one introduced by the noble Lord last year, which their Lordships rejected on the second reading. It was impossible not to feel sympathy with the views expressed by the noble Lord, in his desire to stop, at the outset, the formation of unsound societies, by obliging the tables to be properly certified by an actuary before the society was registered; but it was a very grave question how far legislation should be carried on those lines. Unfortunately, tables were not nearly so important as management. No one could deny for a moment that the failure of a friendly society, in which large numbers of the working classes might have for years contributed to make provision for themselves in old age and in sickness, was a calamity of a terrible and national character, and one against which every endeavour ought to be made to render it impossible. The great difficulty, however, was to what extent the State could interfere without producing a far greater amount of mischief in one direction than it produced good in another. The Government, after carefully considering the Bill, believed that the 431 proposals it contained would be a retrograde step, would have a most disastrous effect of stopping the formation of registered societies, and would do far more harm than good. It had been found, by considerable experience, that the idea of having to obtain and work with approved Government actuarial tables completely stopped the formation of societies. It might be a sentimental idea, and it might be a foolish objection, but it was none the less true, that these societies got frightened either at the expense, or the possibility of a higher table being used than was necessary; and the simple result was either that they did not form them, or it drove them from becoming registered, and the State lost all control. In 1870, as their Lordships were aware, a very important Royal Commission sat on this subject, presided over by the noble Earl opposite (the Earl of Iddesleigh), and, in the course of four years, went very fully into the whole matter of friendly societies, and perhaps there was no greater authority on the question than the noble Earl. They made a great many recommendations, but they made no proposal such as the one now under consideration, as they saw it would not work, for they had before them the experience of the failure of previous legislation on the subject. In different shapes this enactment was in force from 1819 to 1834, and again from 1846 to 1850; but in both these periods the number of enrolments of societies fell off so considerably that an Act had to be passed to repeal the enactment. Mr. Tidd Pratt and Mr. Ansell both gave very strong evidence before Committees of the House of Commons, and showed that the number of applications fell off one-half. Although evidence on the subject of compulsory actuarial certification was received by the Commission, the matter was not even referred to in their Report; but instead of that they reported that the same object could be attained in a different way, and they proposed that every registered friendly society should be required to submit its affairs to valuation once, at least, in every five years as a better method. They expressed their opinion that periodical valuations were far more important than the original tables in these words—We attach even more importance to properly conducted periodical valuation, and to 432 corrections made from time to time in the tables according to the results of those valuations than to the original tables themselves, and we consider that such valuations should be made compulsory upon all registered societies.That proposal was carried into effect in the Act of 1876, and thus, practically, the very result desired by the noble Lord (Lord Greville) of getting proper tables was now the law of the land, only the mode of doing so was different. It was true that for the first few years, until the quinquennial valuation took place, the tables might be wrong; but that soon righted itself. Perhaps he might be allowed to quote the evidence on the subject of the Chief Registrar, Mr. Ludlow, who was examined last year before the Committee which was sitting in the other House on National Providence Insurance—You think the State ought not to interfere to help those people?—I do not think the State ought to compel registration, and I do not think it ought in any case to compel the acceptance of particular tables of contribution at starting. … The table of contributions when the society is started is nothing but a working hypothesis, and until it is tested by the experience of the society it is virtually of no value.Taking societies whose tables are not sound, must it not be certain, in the judgment of men like yourself, that these societies must end in mischief?—The only cases in which they must end in mischief are cases where they are worked by dishonest people, because societies have a wonderful power of recovering themselves when they seem to be very low if they have got the right sort of men.Supposing that such a table of contributions as we have been speaking of were laid down by the State, what mischief would accrue?—Very great mischief, because there would be an undue reliance placed upon it, and no good would arise. It is just the same thing as supposing that the community is to be made thoroughly healthy by requiring that everyone shall have a dietary prescribed for him by the doctor. The first question is will it suit the particular man, and the second question is whether, having received it, he will throw it out of the window.The noble Earl opposite (the Earl of Iddesleigh) would probably confirm him (Lord Sudeley) in saying that there were few greater authorities living than Mr. Ludlow. That gentleman had been Chief Registrar for 10 years, and before that was Secretary to the Royal Commission, and previously had made friendly societies one of the great studies of his life. His opinion was very strong that mismanagement was the real great difficulty. They might have the best possible tables, but they could not insure 433 by them efficient control. Only the other day they had brought before them, in Mr. Lyulph Stanley's Report, the gross mismanagement of the Royal Liver Society, and yet they had the best tables based on actuarial valuations. There were also numerous actual failures recorded, where the tables had been quite sound. The United Assurance Society was one of these; and there had been several great collecting burial societies which had also failed, and yet they had all worked with certified tables from actuaries. It was quite possible, as alleged by the noble Lord opposite (Lord Norton), that the Government ought to have greater power to control and enforce proper regulations, and to see that there was honest management; but that was another question altogether, and was not contained in the proposal of the Bill before them. Further inquiry and investigation might be necessary; but he (Lord Sudeley) maintained that in any case the Bill of the noble Lord was most inopportune at that moment. Grave doubts were even entertained whether the proposals of the Commission for a quinquennial valuation had not themselves gone too far. Even the Chief Registrar gave evidence to that effect. He said—The Act of 1875, which it is the fashion to call weak, is, in fact, too stringent for the great bulk of the population. The obligation to return a periodical valuation is one which, I believe, stands in the way—enormously in the way—of registration by the separate societies. The cost of valuation is a bugbear to a small society. This obligation to value is, I believe, very much dreaded by societies, and the consequence is that in an increasing proportion the new registries of separate societies which there have been are confined to such societies as are exempted from valuation. It is certain that the number of new individual societies of the ordinary class is much less at present than it was 10 years ago.Whether that was the case or not, there could be no doubt that legislation on the subject of friendly societies was too important to be lightly dealt with, and without very full inquiry and examination. The Royal Commission showed that in 1875 there were, with wives and children, nearly 8,000,000 persons interested in the societies in England and Wales alone; and he believed the number was now, in 1886, close upon 10,000,000. The assets of these societies amounted to over £13,000,000, and the annual expenditure in benefits strictly 434 was £3,000,000, which was thus annually saved to the ratepayers. That proved that it was of the utmost importance that no check should be put on the formation of friendly societies and of their becoming registered. In conclusion, he thought that he had shown that the principle of the Bill was ill-timed, and was condemned by experience, and by the highest authorities, and that a similar provision had actually to be repealed by statute in 1850. The Government, as he had said, had come to the conclusion that it would do more harm than good, and he trusted their Lordships would decline to give it a second reading.
§ THE EARL OF IDDESLEIGH
said, he entirely shared with the noble Lord who had brought in the Bill (Lord Greville), and his noble Friend near him (Lord Norton), the sentiments as to the great importance of this subject, and as to the great importance of doing everything that could be done to improve and to secure the system of insurance by the working classes. There could be no doubt that that was a matter of the very highest importance to the great body of the working classes of the country; but, at the same time, it was a matter full of difficulties, upon which it was necessary that they should proceed cautiously, warily, and, as far as possible, without giving any false impression to those for whose benefit they were acting, for there could be no doubt that the interposition of the Government, in any way, did produce a certain amount of erroneous impression that the Government was responsible for the management of the societies it allowed to be registered. At the time of the Royal Commission of 1870, the view taken by Mr. Lowe, then Chancellor of the Exchequer, was that it would be better to do without registration altogether, in that it only led the working classes to believe that a security was given to them which was not really given to them. It was from a feeling that that was not the best way to treat the matter that the suggestion that a Royal Commission should issue arose. That Commission went very carefully into the matter, and came to the conclusion that it was not right to altogether throw the whole system loose and do without the Registrar; but that, at the same time, it was not right to take up such a position as would make the Government appear virtually respon- 435 sible for what it could not be responsible. He did not believe that the mischief in connection with these societies arose so much from insufficient tables. He thought rather that the point to be looked at was the administration of the societies than their original tables. The noble Lord opposite (Lord Sudeley) had said nothing about that; but, in his (the Earl of Iddesleigh's) belief, it was a much more important point than that dealt with in the Bill. In the case of the Royal Liver Society the tables were perfectly correct. They had the highest authority, and no question was raised as to any insufficiency in the funds required to meet the obligations of the society. There were other causes involved, and the Bill of the noble Lord would not affect those causes the least in the world. While he thought that no language could be too strong to describe those who had been guilty of the practices exposed in the Report in the case of the Liver Society, the question before them was—should they, or should they not, make the Registrar responsible for the soundness of the tables? He thought it would be a very great mistake on the part of Government and of Parliament if they were to abandon the position taken up by the Commission of 1870, which was the foundation of the Act of 1875. He quite agreed that there were some things in the existing Act which might be carefully reviewed, and that it might be found possible to give greater powers to the Registrar to interfere earlier and more effectually than in the case of the Royal Liver Society; but he did not think it would be an easy matter. Those who had read the Report in that case would perceive that the real difficulty arose from the fact that the society was spread over a great part of England, and that the administration was conducted at headquarters. He hoped the Government would take such lessons as they could from the evidence given in that matter, and would see in what way their powers could be extended; but he also earnestly hoped they would not be carried away by such a matter into a course which had nothing to do with the evils complained of, and would expose them again to a very great difficulty. As to the Registrar himself, he wished to bear his testimony to his great merits. A harder working official could not, he 436 believed, be found anywhere, and he could not believe that he had been in any way to blame, or that there had been any neglect of duty on his part. Whether the powers of that official should be increased was a matter for the Government to consider; but he did not see how anything of that kind could be introduced into the Bill. In the direction of direct Government action there was something to be done if the Post Office system could be improved. Under that system he believed something was really being done for the working classes in an unobjectionable and effective way. That was a matter to which the attention of the Government should be directed, and he hoped they would bear in mind as points upon which improvements might be made—first, the possibility of introducing stronger coercive measures for dealing with cases of abuse in the case of these great friendly societies when they arose; and, secondly, the possibility of improving and extending Government action by means of the Post Office system.
§ LORD GREVILLE
said, he did not think a conclusive case had been set up against the Bill; but after what had been said by the noble Earl opposite (the Earl of Iddesleigh) he should not press it further by dividing the House.
§ Resolved in the negative.
§ Bill (by leave of the House) withdrawn.