SECOND READING. (Hansard, 18 July 1904)

§ THE LORD PRIVY SEAL (The Marquess of SALISBURY)

My Lords, this Bill embodies mainly the recommendations of the Committee of 1902, over which Sir Michael Hicks Beach presided. Your Lordships are probably aware that although the security of Trustee Savings Banks and the Post Office Savings Bank is absolutely complete, inasmuch as it rests upon the credit of the country, yet certain minor financial difficulties have arisen in regard to the administration of the banks. There has been a considerable amount of talk about reducing the interest which is now paid to the depositors, but my right hon. friend the Chancellor of the Exchequer has resolved, after very careful consideration, that he will not, at any rate for the present, propose to Parliament any such drastric remedy. At the same time certain alterations are called for in the interests of economy, and those alterations are contained in the clauses of this Bill.

247 There are, in the first place, certain minor changes calculated to reduce the expenses of management, which are unduly high, and the points in regard to which would rather arise in Committee than upon Second Reading. There is also the provision of the important clause —namely, Clause 10. Your Lordships probably know that in the early days of the Post Office Savings Bank, savings banks were not very economically administered; that is to say, in order to promote thrift a higher interest was given to the depositors than was earned by the National Debt Commissioners themselves, and there was therefore a growing deficit. This was not met at that time out of monies provided by Parliament but was a perpetual charge on the capital. At about 1878 the deficit due to that cause had risen to £2,500,000. About that year Sir Stafford Northcote introduced a Bill which provided that in future this deficit should not accrue, but should be met by monies provided by Parliament. That did not deal with the deficit which had already accrued, and which amounted to the very large sum I have already mentioned. In order to deal with that deficit Mr. Gladstone established a system of annuities which, it was then calculated, would get rid of this £2,500,000 deficit in twenty-eight years.

That is the state of facts; and having regard to the rather, in one sense, serious condition of affairs—not serious for the depositors, for they are secured in any case, but serious for the country, because, as your Lordships know, we have not too much money to spare nowadays, and we do not want to increase more than is necessary the sum of money which is demanded of the taxpayers—it has been thought by His Majesty's Government that the best course now to adopt would be co defer the paying off of these annuities for a few years, and to use, not the capital sums which are paid into that sinking fund, but the interest, or part of the interest, in order to meet part of this liability to make good the deficiency which arises from the difference between the amount of money which is paid to the depositors, and the less amount of money which can be earned by the National Debt Commissioners. Clause 10 effects that change.

248 Of course, your Lordships' assent is necessary to this Bill, as it is to every other Bill before Parliament; but I am informed that, by our Constitutional practice, no Amendment on this head would be admitted, as the Bill deals with the amount of a charge thrown upon the taxpayers of the country. I have described, for Second Reading purposes, the important provisions of this Bill. There are a certain number of other provisions of a minor character, all of them of certain importance, which I shall be most willing to do my utmost to explain to any noble Lord who desires it when we come to the Committee stage. For the present, I hope the House will think that I have said sufficient in explaining the main provisions of the Bill.