SECOND READING. (Hansard, 28 April 1891)

THE SECRETARY TO THE BOARD OF TRADE (Lord BALFOUR of BURLEIGH)
My Lords, I need not detain your Lordships more than a very few minutes in moving the Second Reading of 1578 this Bill. Its object is to amend some of the provisions of the Act of 1863, which is the principal statute relating to trustee savings banks' at the present time. The operation of that Act was the subject of a somewhat lengthened inquiry extending over two years by a Committee of the House of Commons. That inquiry was undertaken in consequence of the public mind being agitated by some serious failures of trustee savings banks that had taken place. Although this is an amending Bill, yet it does not amend the provisions of the Act of 1863 in any material point. Its main purpose is to provide means whereby the rules and regulations of the Act of 1863 can be efficiently carried out. I do not know that anyone finds serious fault with the provisions of the Act of 1863, and the conditions that are therein laid down for the management of savings banks. But it is obviously useless to lay down the most valuable provisions that can be devised if no authority is provided to see that those rules are carried out. Now, that is the case with regard to the Act of 1863. In it there are most valuable provisions and regulations laid down which everybody who cares for the prosperity of savings banks will, I think, admit to be in themselves salutary, but there is no power enacted to ensure that those provisions and regulations shall be properly carried out. The failures to which I have alluded of some of the savings banks arose, I may say, not from the insufficiency of the regulations, but because those regulations were disregarded. The leading provisions of the Bill provide for the appointment of a Committee—the Members of which are named in the Schedule—and that Committee is to draw up rules for the future guidance of trustee savings banks, and for the future guidance of a permanent Committee which is to be appointed to see that those rules and regulations are carried out. The drawing up of those rules and regulations may probably take some time, and require a certain amount of skilled knowledge. The names of the gentlemen mentioned in the Schedule will, I think, afford a sufficient guarantee that they will perform the work well. When the rules and regulations have been framed they are to be laid down before both Houses of Parlia- 1579 ment, so that Parliament may have the opportunity of sanctioning or refusing to sanction them. If the rules and regulalations laid down by the Committee are not properly carried out by the savings Banks, the National Debt Commissioners, with whom the money to be lodged in the savings banks is to be invested, and who are to pay interest upon it, may, if they think fit, close the accounts of the Trustees of any savings bank. The indirect, or rather the tolerably direct, effect of that would be that in those cases the savings banks could not be carried on. Another point in which the Act of 1863 is to be amended, and in this respect to be made a little more stringent, is this: At the present time it is the practice of some savings banks to publish lists of names of well-known individuals who act either as Trustees, or Chairmen, or Presidents, or in some way or other are connected, or supposed to be connected, with those savings banks, but whose office is purely honorary, who know little or nothing about the business of their banks, and pay little or no attention to it. That practice operates in this way: the depositors are lulled into a false security by the existence of those lists of names, but, as the owners of those names pay no attention to the business of the bank, they afford no real ground for the feeling of security and confidence which the publication of their names gives rise to. One of the provisions of this Bill is to the effect that if during a specified period no act is performed by the gentlemen whose names are so published they are to cease to hold office, and their names are to be no longer published in connection with the bank. One other point of sufficient importance for me to mention it to your Lordships is dealt with and altered in this Bill. At the present time neither in a trustee savings bank nor in the Post Office Savings Bank can the total amount depositedbyanyoneexceed£150, but interest may accumulate upon money so deposited up to £200, and no further. This provision has given rise to considerable confusion and difficulty. Supposing a depositor puts in £145, and his money then accumulates beyond £150, may he or may he not deposit the £5 necessary to make up his capital deposit to £150? That is one difficulty. Then a great deal of confusion and difficulty 1580 have arisen in keeping accounts of savings banks in distinguishing whether the money lying in depositor's names above £150 has really been deposited as capital or accumulated as interest. Accordingly, the Bill proposes to sweep away the distinction between money which has been deposited as capital and money which has accumulated as interest, and to allow any depositor to have in his name as much as £200, whether it is deposited as capital or whether it has accumulated as interest, but no interest will be allowed on any deposit beyond the sum of £200. There is one provision which is not in the Bill, which, in pursuance of a pledge given in the other House of Parliament, the Government will propose to insert in the Bill during its passage through this House. At the present time no one may deposit in the Post Office Savings Bank more than £30 in any one year, and hardship has arisen under this provision. Supposing, when some emergency arises, the owner of a deposit withdraws a sum for use in that emergency; when the emergency is past he cannot re-deposit in the savings bank, if he has the money, more than the £30. Supposing he has withdrawn for some purpose £50 from his account, he cannot, until the expiration of the year which is then current and the commencement of the ensuing year, re-deposit the whole of his £50; he can only deposit £30 in one year, and must wait until the next year to re-deposit the balance. That operates in some cases as a distinct discouragement to thrift, and the problem to be solved is how to give permission to a depositor who has really only withdrawn his money for a temporary emergency to re-deposit such an amount as he may wish without at the same time giving rise to the belief that these savings bank accounts may be treated as ordinary current accounts from which money may be withdrawn, and into which money may again be deposited, as if it was an ordinary current account with a bank. The object of the Amendment which I shall propose at the proper time will be to endeavour to draw a distinction between those two cases. As this, and indeed almost all the provisions of the Bill, are so much more matters for consideration in Committee, being merely upon details, I propose to say no 1581 more in moving the Second Reading now, except that I propose to take the Committee stage in the House on an early day, and then to allow a reasonable time before putting down the Bill for consideration by the Standing Committee, so that the details of it maybe fully considered by your Lordships. In these circumstances, I beg now to move the Second Reading of the Bill.
Moved, "That the Bill be now read 2^a." —{The Lord Balfour of Burleigh?)

LORD DENMAN
My Lords, it is clear from the statement of the noble Lord who has just spoken that this is a Money Bill, and that there are Amendments to be proposed which, of course, would not be accepted in another place. As a Trustee of a savings bank, I very much object to the whole of the powers of the Commissioners of the National Debt being transferred to a few individuals who are named in the Schedule to the Bill. The danger of the savings banks is that the interest allowed to them being rather below the Post Office rate of interest, gives the Post Office Savings Bank such an advantage that everybody is likely to go there and to desert the other savings bank. But your Lordships must recollect that in imposing all this additional trouble upon the Post Office it will be necessary to increase the staff of clerks, and the gratuitous services of managers, trustees, and others will be entirely disregarded. I think that this is a very dangerous Bill, and though I am generally in a minority, without a Teller, I hope I shall not be so on this occasion, and I beg to move that the Bill be read a second time this day 10 months.

LORD STANLEY OF ALDERLEY
My Lords, before asking the question which I desire to put, I should like to say that I am very glad to hear of the two important reforms in regard to savings banks which the noble Lord proposes in this Bill—that is to say, as to increasing the limit of deposits from £150 to £200, and as to giving powers for the purpose of allowing persons who may have withdrawn money for emer- 1582 gencies, or for merely temporary purposes, to replace it, notwithstanding the £30 annual limit. What I want to ask the noble Lord is whether the Government will either move or accept amendments for increasing the maximum amount of deposits which may be made in any one year? At present it is only £30 in this country, while in France and Belgium the amount is as much as £80 which may be placed in one year upon deposit. That is undoubtedly an encouragement to thrift. No doubt the limit of £30 has been fixed in the interest of the small banks; but as the Chancellor of the Exchequer has lately disregarded the licensed victuallers, I hope he will be able to disregard in this matter the clamour of the small banks.
On Question, whether ("now") shall stand part of the Motion, resolved in the affirmative: Bill read 2^a accordingly, and committed to a Committee of the Whole House on Tuesday next.