HL Deb 16 December 1963 vol 254 cc18-27

3.19 p.m.

Order of the Day for the Second Reading read.


My Lords, the purpose of this Bill is to enable trustee savings banks to open current accounts for their depositors. I should like to mention that in the preparation of the Bill both the Treasury and the National Debt Office have been most helpful, but, of course, the Trustee Savings Banks' Association accepts full responsibility for the Bill. In addition, the matter has been the subject of lengthy discussions with the Committee of the London Clearing Banks in order to ensure that their interests are fully safeguarded, and I am informed that the provisions of the Bill have, in principle, been agreed to. Before coming to the Bill, I must declare an interest. I have the honour to be a vice-president of the Trustee Savings Banks' Association and a vice-president of a trustee savings bank. The noble Viscount, Lord Mackintosh of Halifax, whose great work for the Savings Movement will be known to everyone of us, would have liked to be present this afternoon but, unfortunately, is unable to do so. He has, however, authorised me to say that he, together with the National Savings Committee, heartily endorses the Bill; and with his great prestige in the Savings Movement, I am sure your Lordships will agree that that is most useful.

Trustee savings banks have a long history. Ever since 1817 they have been subject to Government control. It would, indeed, be fascinating to trace the changes in social habits during the past 150 years as reflected by savings by those using trustee savings banks. However, it will suffice to say that today there are nearly 9 million trustee savings banks depositors. There is one trend which is important and which has been encouraged by the Wages Act, 1960. I refer, of course, to the payment of wages and salaries by cheque, either direct to the employee or to his credit in a bank. May I trouble your Lordships with a few figures?

As I have already mentioned, there are are nearly 9 million depositors in the Ordinary Department of the trustee savings banks, and the average balance standing to the credit of those depositors is over £100. But the annual turnover is about £1,800 million; that is approximately double the total sum due to the depositors; and this turnover involves nearly 80 million separate transactions yearly. Nearly one half of those transactions are repayments, and under the existing procedure for the withdrawal of money from trustee savings banks, depositors are required to attend at the bank's counters and sign forms of receipt. Then, after the entries have been recorded in the bank books and counter records, they receive the sum demanded, either in cash or in the form of a cheque drawn by the bank payable to a third party.

My Lords, this procedure, in the second half of the twentieth century, is both cumbersome and inconvenient for both depositor and bank alike. It is evident that many present-day depositors would prefer to enjoy the means of making payments without first being obliged to attend at their bank office and there perhaps to stand in a queue before being served. The possession of a cheque book which would enable a savings bank depositor to make payments to a third party without the necessity of visiting his bank on every occasion is, therefore, a facility which he not only desires but deserves in this age of higher living standards. The introduction of a trustee savings banks cheque service is, I respectfully submit, a vital as well as a natural step in the development of the service which the trustee savings banks render. It is not a change of function but merely an extension of the means of repaying deposits.

For many years the Trustee Savings Banks, if requested to do so, have repaid sums by means of cheques drawn by the banks themselves. This is in itself a time-consuming procedure, and it is only natural that the banks should wish to afford the facility of personal cheque books to those depositors who require them. The trustee savings banks appreciate that a full range of banking facilities is available to those members of the public who choose to avail themselves of the services offered by the joint stock banks, and they have no desire to impinge upon the business of these institutions. Nevertheless, the trustee savings banks are desirous of providing their depositors with a withdrawal service which would be in keeping with the implications of a suggestion made in the Report of the Radcliffe Committee and which would be compatible with present-day requirements—a service which, if given, would be to the mutual advantage of both the depositors and the savings banks themselves.

This Bill, which is designed to permit the introduction of trustee savings bank cheques, has been drafted after lengthy discussion with the Committee of the London Clearing Banks, with a view to protecting the interests of the joint stock banks. It is not intended that the proposed cheque service should do more than provide an additional method of withdrawing money; and to that end the Bill provides specifically, first, that no overdrafts will be permitted; secondly, that no one engaged in a trade or business will be allowed to operate a cheque account for the purpose of such trade or business; and, thirdly, that no interest will be credited to cheque accounts. The latter provision is included to ensure that it will not be more advantageous for an individual to operate a cheque account with a trustee savings bank rather than with a joint stock bank. The provision will also enable a trustee savings bank to use the income derived from the invested balances of deposits standing to the credit of cheque accounts to defray in part the costs of operating the cheque service.

The Bill also provides for the setting up of a scale of charges to depositors for the provision of cheque books, which charges, together with the income to be derived from invested balances, will have to be sufficient to meet the entire cost of the cheque service; for it is not the wish of either the Government or the trustee savings banks themselves that the new service should in any way become a charge on public funds. The proposed cheque service is essentially a facility that is to-day desired, and required, by trustee savings bank depositors, and for which it is firmly believed they will be prepared to pay a fair and equitable remuneration.

I have covered most of the points in what I have ventured to submit to your Lordships, and therefore I will only briefly run through the clauses of the Bill. Clause 1 enables a trustee savings bank to receive deposits of money on current account repayable by cheque or other written order drawn by the person in whose name the account stands, and provides that no interest shall be paid on the account. It also states that the rules of a trustee savings bank must provide for the requirements set out in Schedule 1 to the Bill, namely, that no one concerned with the bank shall derive any profit from the operation of the current account service—apart from normal salaries and expenses; second, that current accounts shall be kept separately from Ordinary Department and Special Investment Department accounts; and, third, that statements of account shall be rendered to current account depositors at intervals of not more than six months.

Clause 2 provides that current accounts may be opened for suitable persons who are trustee savings bank depositors who either have a savings account with a minimum deposit, as laid down in the rules of the bank, or have had a savings account for not less than a minimum period of time, as laid down by the rules of the Bank, and who declare that the current account will not be used for trade or business purposes. Clause 3 provides that no overdrafts shall be permitted on current accounts. Clause 4 provides for the operation of a charges scheme to help defray the expenses of the current account service. Clause 5 empowers the National Debt Commissioners to require variations of the charges scheme or the cessation of the current account service. Clause 6 sets out the manner in which the operating expenses of the current account service shall be defrayed. Clause 7 provides for the investment of current account deposits. Clause 8 sets out the powers of enforcement of the terms of the Bill by the Trustee Savings Banks Inspection Committee and the National Debt Commissioners. Clause 9 provides for the minor modifications of the Trustee Savings Banks Acts, 1954 and 1958, as set out in Schedule 2, necessitated by this Bill.

Clause 10 provides for the payment to the Exchequer of any additional income accruing to the Fund for the Banks for Savings which is attributable to the current account service, and for charging to the Consolidated Fund of the United Kingdom any additional excess of expenditure over income on the Fund for the Banks for Savings which is attributable to the current account service. Clause 11 lists the interpretation of expressions contained in the Bill. Clause 12 provides that nothing in the Bill shall affect the operation of other enactments relating to the Ordinary deposits, referred to in the Bill as savings account deposits. Clause 13 cites the short title of the Bill and its extent to Northern Ireland, the Isle of Man and the Channel Islands.

My Lords, trustee savings banks have, as I have previously mentioned, given an honourable service to the public, mostly for small investors, over a period of more than 140 years. I respectfully submit that the provisions of this Bill will enable trustee savings banks more effectively and efficiently to run that service in the future. I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2a.—(Lord Burden.)

3.33 p.m.


My Lords, may I say that I had been hoping that my noble friend Lord Peddie would have been in attendance this afternoon, but it is probable that the debate has come on earlier than he expected, and he had other things to do. But I am sure that, had he been here, he would have been glad to suport my noble friend Lord Burden in the submissions he made in moving the Second Reading of this Bill. I think there is no need for me to speak in detail about it—the details have been given completely by Lord Burden. I should like to inform the House that as this affects many branches of the community, and in particular the small savers in the community, in whom my Party is always especially interested, I think that we are likely to find, if not unanimity among them, certainly a large majority who will support this Bill. I hope, therefore, that the House will give it a Second Reading.

3.34 p.m.


My Lords, may I just say a word about this Bill? Certainly I do not want to oppose its Second Reading, but I am a little worried by it in a way, because obviously it is going to make it much easier for depositors in trustee savings banks to get their money out quickly. One of the great points about the whole trustee savings banks system has been that it puts a brake, as it were, on people who have saved money and prevents them from spending it too quickly or too thoughtlessly. The Savings Banks Movement has been a remarkable success; in fact I feel that its success has not received sufficient recognition, particularly in the years since the end of the war. There has been a most remarkable phenomenon—an enormous expansion in the number of depositors in savings banks, not only in this country but in Western Europe generally, I understand; and there is an International Savings Banks Association which is doing exceedingly valuable work.

I appreciate that this enormous growth in deposits and the great increase in the number of depositors have given rise to some difficulty in the way of withdrawals. As Lord Burden said in his excellent introductory speech, it is rather a cumbersome process. But, of course, as I said just now, it was devised in the first place to provide a brake on the depositor in regard to his withdrawing his savings too quickly. A large part of the object of the Savings Banks Movement is that the savings should not be withdrawn too easily—possibly in connection with some rather wild-cat scheme which might attract a man's attention. It is true that he will require to have a deposit account before he can transfer his money into a current account; but if he can move his deposits to where they can be easily available to meet his cheque, then, as I understand it, there will, in effect, be no safeguard against a situation in which the whole of the savings, possibly of a lifetime, may be rapidly used up. I understood that at one stage in the discussions there was a proposal to put a limit of £50 on the amount which might be withdrawn. That was evidently found to be of doubtful value. But I think it rather a pity that that idea was not pursued because, obviously, some brake of that kind would have been useful.

On the whole, however, I am inclined to think that the convenience which this Bill provides more than compensates for the weakening which I am sure it is going to have on the savings banks system. In all the circumstances, I am not prepared to oppose the Bill—indeed, think I should be prepared to support it. At the same time, I shall watch with a certain amount of anxiety the development of the use of this scheme. If it were possible to give to the Registrar of Friendly Societies, whose work in this connection has been of outstanding value (nobody can study the awards in difficult disputes which arise in connection with savings banks deposits without appreciating the great value of the work which is done by the Registrar), power to make rules which would act at any rate to some extent, as an additional brake, it would be of great value. Possibly the Government might be prepared to consider whether something of that kind could be done: I daresay that it has already been considered. On the whole, I am prepared to support this Bill, albeit with certain misgivings.

3.40 p.m.


My Lords, I am glad that the noble Lord, Lord Chorley, having raised certain doubts, said when he ended his speech that, on balance, he thought the convenience which was going to be created overcame the disadvantages that he had in mind. I am sure that the noble Lord, Lord Burden, will consider the case that has been put to him by his noble friend. I am sure also that everybody in this House will welcome, first of all the Bill and, secondly, the way in which it was introduced by the noble Lord, Lord Burden. He clearly outlined the purposes of the Bill, and, without going into too much detail, ran us through the clauses in the Bill. I can assure the noble Lord that, so far as the Government and also, I am sure, both sides of this House are concerned, this Bill will attract the sympathy and support of everybody.

The noble Lord mentioned what great trouble had been taken to consult with other bodies concerned, and I think that it is because of the trouble taken that the Bill is as straightforward and clear a measure as we have before us today. I am very glad that the noble Lord made reference to Lord Mackintosh of Halifax and the National Savings Committee. Every one of your Lordships would like to pay a great tribute to Lord Mackintosh of Halifax for the immense job of work he has done on behalf of the Savings Movement, and the fact that this Bill has his own approval as well as that of the National Savings Committee obviously will commend it even further to your Lordships.

As the noble Lord, Lord Burden, has said, the Bill's purpose is to enable the Trustee Savings Bank to offer a cheque service to their depositors. The Trustee Savings Bank movement has a very long and honourable history which goes right back into the early years of the 19th century. I do not think anybody denies that the trustee savings banks over all those years have built up a fine record of service to the community. They are, I think we would all agree, a friendly institution and they have shown that the small saver can place his money in them with the advantages of complete security as well as complete liquidity. Wherever they operate these banks are contributing a fine service. They are helping the country not only as a source of finance but also through the work they do in promoting and encouraging savings and the habit of thrift. As the noble Lord, Lord Chorley, has said, the vast increase in the scale of savings in this country is something which we can all commend and welcome as it not only strengthens the position of the individual, but also strengthens the position of the nation as a whole.

As the noble Lord, Lord Burden, rightly said, over 9 million people hold accounts at trustee savings banks and I feel, despite the doubts expressed by Lord Chorley, that it is right in the conditions of to-day, when in fact much thought is being given to ways of improving our machinery for the transmission of money, that a cheque service should be available to those trustee savings banks which would like it. This is very much in line with the new right for wages to be paid by cheque. Incidentally, I myself, in another place, actually obtained approval of that House for an Order in Council to this effect. I am therefore sure that what the noble Lord is proposing is right. Each bank of course will be able, because of the permissive nature of the Bill, to consider the best interests of its own customers. I shall not, because the noble Lord has been into the details of the Bill, detain the House any further, but I would end by saying that I think this is a Bill which is genuinely designed to enlarge the services of what is already a great banking movement; and this is a small but very valuable measure which I hope will find a general welcome.


My Lords, before the noble Lord replies, I have listened carefully to the discussion on the Second Reading and particularly to the suggestion of the noble Lord, Lord Chorley. I hope that the noble Lord, Lord Burden, will think a great deal before he accepts Lord Chorley's suggestion. I fail to see why there should be this restriction proposed by Lord Chorley on savings bank accounts of this kind. Surely the depositor knows his own business best, and if he and the bank come to an agreement I do not see why the law should impose on him a maximum, and a very low maximum at that. Fifty pounds seems to me a ridiculously low maximum. People to-day are educated, and restrictions by law of these kinds imposed on them in carrying out their ordinary, day-to-day business seem to me to do nothing but harm. Therefore, I hope the noble Lord, Lord Burden, will think very carefully before he accepts any such suggestion.


My Lords, I should like first of all to thank noble Lords for the very kind reception they have given to this Bill; I particularly appreciated the remarks of the noble Viscount, Lord Blakenham, in welcoming the Bill on behalf of the Government. I am sure that the Executive Committee of the Trustee Savings Banks will consider carefully all that has been said in this debate, and I can assure my noble friend Lord Chorley that what he has ventured to say will also be considered carefully. Broadly speaking, I think one can say, however, in line with what the noble Lord, Lord Ogmore, has said, that once the savings habit has been developed—the psychology, so to speak, of savings themselves—it is not likely to be very much affected by the introduction of a new method which depositors can operate. It ties up with the payment of wages and salaries by cheque. Again I would thank your Lordships most sincerely for the reception which has been given to this Bill.

On Question, Bill read 2a, and committed to a Committee of the Whole House.