§ 4.10 p.m.
§ Lord JACQUES
My Lords, I beg to move that this Bill be now read a second time. This legislation stems from the Page Committee's Report on National Savings, which can be found in Command Paper 5273. The trustee savings banks, as part of the National Savings Movement, were subject to a searching study by the Committee, and the Committee's recommendations in relation to the trustee savings banks can be summed up as follows: first, the rationalisation of the 70 trustee savings banks of varying size into a smaller number of larger regional banks operating under a strong central authority; secondly, the expansion of the powers of the banks, accompanied by a liberation from detailed Government control; thirdly, the retention of trustee supervision and direction but with greater participation on the part of depositors.
In the main the recommendations were welcomed by the Government, by the trustee savings banks, and by the trade union representing the workers employed in the banks. As a prelude to this legislation an amalgamation scheme has been carried out and the banks have now been restructured, and there are 17 regional banks instead of the 70 banks of varying sizes. During the period of the amalgamation the public interest in the banks has not waned, as it often does when the local organisation joins up with some larger organisation. The number of accounts and the amount invested have continued to increase; at the present time the 17 banks have 1,500 branches; they have 12 million account holders, and the total of deposits handled by the banks is £4,000 million. This is a firm base from which to start a new era of life by the trustee savings banks.
844 The Government foresee that there will be three stages of a transitional period. The first would be from July 1974, when the recommendations of the Page Committee were accepted by the Government, and November 1976, which is the commencement of the next financial year of the banks. During that phase, or stage, the banks were to be restructured, and this has been, for all practical terms, completed. Secondly, entry was to be obtained to the London clearing arrangements, and this also has been done. A Bill was to be prepared by Parliament for Parliament; this had to be done, and we now have the Bill before us. But in addition, the banks themselves have a good deal to do in this transitional period. They have to prepare their staffs, their customers, and the equipment for the lending facilities which will come in the following stage and for which they have comparatively little experience.
The second stage of the transitional period is from November 1976 to November 1979, three years. During that period there will be a relaxation of detailed Government control, and the ordinary department accounts will then come to an end. In the third and last period, from November 1979 to November 1986. a period of seven years, there will be a repayment of the deposits of the banks in the Fund for Banks for Savings. This is spread over seven years so as to avoid market management and other problems. During the whole of this transitional period of 12 years the banks hope to build up their reserves so as to show, at the end of that transitional period, that they are able and fully capable of standing on their own feet. During the transitional period, the banks will be under the benevolent gaze of the Treasury for two reasons: first, the Government have a continuing commitment to look after the interests of depositors; and, secondly, the banks themselves have a continuous commitment to the maintenance of a ratio of investment in the public sector.
This Bill is very largely an enabling Bill. It amends and builds on the existing body of law. I now deal with the principal clauses. In Part I, Clause 1 deals with the establishment, the membership, the powers and duties of the Trustee Savings Banks Central Board. This is the central authority on which each of the regional banks will be represented. 845 The clause also transfers some of the powers of other Government agencies to the Central Board, particularly from the National Debt Commissioners and the Inspection Committee of the trustee savings banks. Clause 2 lays down the financial duties of the Board, and Clause 3 gives the Board a power to levy the banks to raise the necessary funds to cover its expenses.
In Part II, Clause 4 gives the banks a duty to comply with directions from the Central Board, upon which each of the banks is represented, and the clause also contains sanctions. Experience shows that sanctions, when provided, seldom have to be used; when not provided, they are usually very much needed. The Government believe that by providing sanctions, and having regard to their past experience with the banks, the sanctions will seldom, if ever, have to be used. Clause 5 provides for a scheme of depositor participation. In this connection I should mention the position of the Birmingham Municipal Bank. The West Midland Metropolitan Council decided that the Birmingham Municipal Bank should apply for trustee bank status. It will be a trustee bank for a short period independent of any other bank; during that period it will have trustees who are appointed by local government, and consequently it is necessary to provide for that in Clause 5. But very shortly after its conversion to a trustee savings bank it will be amalgamated with the West Midlands Regional Bank. Clause 6 provides for compulsory retirement age for trustees, and this will eventually come into line with the Companies Act. Clause 11 provides for the payment of fees to trustees.
Clause 9 is at the heart of the Bill in so far as it extends the powers. It removes any doubt on the ability of the banks to grant credit. The banks will continue their present cheque accounts, including the usual money transition facilities and standing order facilities, but from November 1976 they will be able to grant overdrafts and to make personal loans. The banks will of course be subject to the Consumer Credit Act, and furthermore the Treasury will approve the level and type of investment. I should say that it is not intended to permit the banks to give credit in the corporate sector.
846 Clauses 12 and 13, together with Schedule 3 and Clause 16, deal with the treatment of existing financial arrangements and can best be dealt with together. At present, except for "till" and overnight money, deposits in the ordinary department of the banks are invested in the Fund for Banks for Savings at the National Debt Office. In the second stage of the transition—that is, from November 1976 to November 1979—the banks will prepare their customers, staff and equipment for the new form of savings which will replace the ordinary department, but existing accounts will not be affected without notice. The Fund—that is, the Fund for Banks for Savings—is a fund which is guaranteed by Government and, due to a decline in the market value of Government securities, there is a deficiency on the Fund of £250 million.
To give the authorities time to reduce and eliminate this deficiency, repayment to the banks is to be phased over a period of seven years. It is intended that the banks shall be able to withdraw up to one-seventh of the capital plus the interest in each of those seven years of the final stage of transition. However, under Clause 13 and Schedule 3 the banks will maintain the level of investment in the public sector as it was at the beginning of the transition period, but since the level will be absolute, it means that as the banks continue to increase their business, the ratio of investment in the public sector will gradually fall. Treasury approval of the type and level of investment will be channelled through the Central Board, which may institute any further controls within the set limits.
come to the question of the tax arrangements. By a later Finance Bill, tax relief to depositors will continue only until the ordinary department accounts are closed, or shortly thereafter. There is also the question of corporation tax relief. Under the existing law, income from the Fund for Banks for Savings is tax free; a later Finance Bill will provide that income will continue to be exempt from corporation tax when received by the banks, but the expenses and interest relative to that income will not be available for set-off against other income. In this way, the trustee savings banks will progressively acquire the same 847 tax liability as their competitors. Clause 14 makes the conventional provision that after proper provisions has been made for reserves, the banks will, taking one year with another, endeavour at least to break even.
Clauses 17 and 18 deal with the need for keeping proper accounts and for the distribution of accounts. Clause 19 deals with the appointment of auditors. Clause 20 modernises the reporting system. It will no longer be necessary to make a weekly return to the National Debt Commissioners, but the banks will have to make a regular return to the Central Board, and they will supply information to the monetary authorities, but in exactly the same way as the other banks. Under Part III there are a number of clauses which make miscellaneous arrangements for rearranging functions within Government. These are mostly taking away functions from the National Debt Office and transferring them to the Registry of Friendly Societies.
Clauses 30 and 31 deal with employee superannuation. At present, the employees of the banks enjoy public sector terms, but in due course the banks will assume responsibility for devising their own superannuation schemes and for the investment of the funds. Proper provision has been made for the protection of employees; existing benefits and rights for those people in post at the beginning of the transition period are preserved, and we are informed by the trade union representing the workers that it is completely satisfied with the provisions of the Bill in relation to superannuation. Clause 32 provides for the transfer of the assets and liabilities of the Trustee Savings Banks Inspection Committee to the Central Board and this will include the employees' Superannuation Fund rights. I wish to pay tribute to the Inspection Committee and its staff who, over the years, have given very great service to the trustee savings banks and their depositors, and I hope that other noble Lords will join with me in paying this tribute. Clause 33 ends the relationship between the trustee savings banks and the National Savings Stock Register. Part IV of the Bill deals with general and supplemental matters including interpretation. Clause 38 enables the Treasury to bring in different parts of the Bill on different dates.
848 My Lords, this Bill heralds a new era for the trustee savings banks. It gives them an opportunity to become independent mutual organisations. It gives an opportunity for consultation, co-ordination and self-discipline to take the place of detailed Government control. It gives them possibilities of creating a national image without destroying their local roots, and for these reasons I commend the Bill to the House.
§ Moved, That the Bill be now read 2a. (Lord Jacques.)
§ 4.28 p.m.
My Lords, "this Bill heralds a new era "is what the noble Lord, Lord Jacques, said, and with that I wholeheartedly agree. Your Lordships will be grateful to the noble Lord for having explained the Bill, which, though not very big, is most important. It will, I believe, alter quite fundamentally the role of the trustee savings banks. There always seems to be an aura of mystique about the trustee savings banks, especially to those who have not had the advantage of coming into contact with them, and even to those who have. The aura is created in the questions: what is the secret of their success? Obviously they have had one. How can they possibly cope in the modern competitive banking system? Yet they do. Are they not possibly an anachronism belonging more appropriately to a by-gone age, an age of less affluence, of less learning, and an era when it was desirable to encourage savings among those whose weekly income could be counted in shillings, or even less? Yet they are not an anachronism. If, to those who know little about them, there is this curious feeling of amazement and mystery about the role and requirements of the savings banks, then I am bound to say that it remains even to some who do know something about them, including myself.
I have had the privilege of being a trustee of the East Anglian Trustee Savings Bank for the last 18 years, and I have been a vice-chairman of it for the last four years. Although it is correct to declare such interests, I should perhaps point out that mine is not, of course, a financial interest, because the role of a trustee is, or at least has been up to the introduotion of this Bill, an entirely unpaid and honorary position. When 849 I first became a trustee of the East Anglian Trustee Savings Bank in 1957, the funds that had been deposited by individuals with the bank were £27 million. By 1971, the funds had risen to £100 million, and three years later they had increased by a further 50 per cent., to £150 million. I hasten to add that to me those quite amazing figures owe nothing to the fact that I have been associated with the bank. They are not even so much an indication of the success of the bank as they are an indication of the need for such a banking system and its use when it is provided. Of course, right from the days when the first bank appeared, way back in 1810, this requirement has been shown to encourage small savings from small earnings. By 1860 the numbers of individual trustee savings banks had risen to 638. This year, as the noble Lord, Lord Jacques has said, in anticipation of the Bill, the number of savings banks has been cut from 70 to 17, yet they have funds of over £4,000 million.
One may ask—and I do, I believe with reasonable justification—where on earth all that money comes from. Quite simply, the answer is, from small savers. Incredible though it may seem in a period of roaring inflation, when everyone is complaining that they have not enough money to live on, the Economist points out that, in the first half of 1975, personal savings were running at £9,500 million a year, which is nearly 14 percent. of personal disposable income. I consider that to be a quite astounding figure. If one asks where in all this the trustee savings banks fit in, the answer is that, of the sum total of all national savings—which amount to £11,000 million—34 per cent. is found by way of the trustee savings banks. So they are shown to be required by depositors and to be used by depositors. The Government certainly require them because they used to use the depositors' money for funding their own functions, and these banks are a national requirement because they stimulate an old fashioned virtue which I, for one, thought had long since gone out of the window, though the figures show that that is not the case—that is, the virtue of thrift.
As the nature both of deposits and of depositors has changed and as society changes, so also do the trustee savings 850 banks need to change to meet the requirements of the future. We see that the banks have already amalgamated themselves to reduce their numbers from 70 to 17. No one likes amalgamation in so far as it means surrendering something which he feels to be part of him or with which he has been associated, but it is inevitable. The challenge of the next 20 or 30 years cannot be met with a proliferation of small banks. Equally, however, I am glad that the Government have decided to reject the temptation of a once-for-all sweep into a single bank. Had that been done, it is true that the resulting trustee savings bank would have been on a par in terms of finance with a bank the size of Lloyds Bank, but it would have put at severe risk the deeply personal relationship which the depositor has with his own bank. That is the very foundation stone and almost the raison d'etre for the existence of the trustee savings banks.
Under the new system, the old Trustee Savings Banks Association, which had no powers but was merely the mouthpiece of a number of totally separate entities, will go and will be replaced by a new Central Board with powers, obligations and duties both mandatory and permissive and the controlling hand of the Treasury, under the National Debt Office, will, to a large extent, go. I welcome this, but I should like to pay tribute to the National Debt Office and to the Treasury which, for something like one and a half centuries, have protected the depositors' interests. Those whose duty it was to run the trustee savings banks frequently found that protection to be a source of vigorous irritation, but of course the Treasury has never been anyone's friend. It had a job to do and, if results are any measure of success, it has not been unsuccessful. I believe that we should be grateful for the Treasury's efforts.
I know that the noble Lord, Lord Jacques, will not mind my adding just a puff of a nuance of a political observation on a totally non-Party Bill when I say that I could not restrain a slight smile when I saw a Government who have earned a reputation for considering that, on the whole, things work out much better when they are run by the State, divesting the State of its power over the trustee savings bank and telling the trustee savings banks to go off and run 851 their own show. The roulette wheel of politics shows up some odd quirks, especially on non-Party matters. That is all I have to say about that, except to emphasise that whatever Party had been in power the same or a similar Bill would have been introduced and that we are very grateful to see it being introduced by the noble Lord, Lord Jacques.
Equally, I am sure that the noble Lord will be glad to know that I welcome the demise or, strictly, the alteration of the nature of the trustees. Having—and in some cases in large quantities—the names of what, in common or rather unkind parlance, may be called "local worthies" on the board of a bank, even though they were unpaid and had virtually no power, had its place in the past in order to show less well informed potential depositors that this was no fly-by-night organisation but was one in which the locality had confidence and one in which they could with confidence repose their savings. While that image still requires to remain, I believe that the role of the trustees should and will alter very greatly. It is right that there should be fewer of them and that their role should become immensely more important and effective. They are the people who will guide and, indeed, ultimately be responsible for this organisation. In my view, they should not consist only of professionals, but their cutting edge should be required to be immeasurably sharper than in the past. If the best people are to be obtainable for this job and are to be asked to give of their time and to play an active part, it is essential that they should have some form of remuneration, and that the Bill allows. Failure to give this would simply mean that the trustee savings banks would be debarred from getting the best people. This is no reflection on the people who have been trustees in the past and who have given of their time and their effort. The past has its own requirements; the future has its requirements, which are different.
I should like also to pay tribute here to those people and especially chairmen of banks who have given literally days of their time—sometimes several days a week—to the reorganisation of these banks in anticipation of the Bill, mostly during the last 12 months. They have done so wholly voluntarily, not because 852 they wished to do the job but because they found themselves in an Office which virtually required them to do it, though they probably had no knowledge that such would be the case when they accepted Office. They have put a lot of work into this and I believe that the trustee savings banks should be very grateful for what has been done.
I should like the noble Lord, Lord Jacques, to say a little more about pensions. As I understand it, the staff of the trustee savings banks have at the moment superannuation benefits which are analogous to those applicable in the Civil Service. Those employed in trustee savings banks at present have, like civil servants, the advantage of index-linked pensions. When the Bill is passed, the onus will be upon the trustee savings banks themselves to continue those same commitments out of their own funds. I do not wish to enter into an argument about the rights or wrongs of index-linked pensions, nor in any way to suggest that pension schemes for those employed in the trustee savings banks should be anything other than as good as those which they have enjoyed prior to this new regime. I merely venture to suggest that in my humble opinion—which, because it is mine, has at least a 90 per cent. chance of being 100 per cent. wrong—this commitment could, if inflation continues at any reasonable rate, throw severe strains on the Bank for funding it in the future. I do not quite see where the money is to come from. If the noble Lord can throw some light on this point it would be a great help.
My Lords, the Bill will oven up a whole new era for trustee savings banks, in which they will be permitted to provide to the public an even greater service than they have done before, in changed conditions which require changing facilities. They will be involved, in some measure, in direct competition with joint stock banks. They will be able to provide cheque book facilities, demand saving accounts, investment accounts, fixed-term bonds, overdraft facilities and personal loans; always, though, the accent will be on the person, the individual. That is their requirement, and the noble Lord, Lord Jacques, re-emphasised it. That they will be able to do this is in large measure due to the fact that they have a mutual status. They are not companies trading for profit, but 853 are more in the nature of a self-supporting social service which operates in the interest of its members. It is the two-way relationship between the branch and the depositor which is the kernal of the whole organisation, and which I am glad to see this Bill seeks to protect.
It is this curious and unique organisation which prompted the comment that,the financial basis of the Trustee Savings Banks is so sound, and they are so firmly established and have in the course of their long history come to inspire such great confidence and, indeed, affection in the minds of many depositors, that we think it desirable that their activities should be more widely extended, their facilities better advertised and their popularity made even greater than at present.That was not said by me or by anyone else today, but in a report on the trustee savings banks by a Commission of which the noble Lord, Lord Bradbury, was Chairman in 1928—almost 50 years ago. I believe that those words are just as true today. I congratulate the Government in seeking in this Bill not only to preserve the fundamental concept of the trustee savings banks, but actually to promote it as well.
§ 4.43 p.m.
§ Lord BANKS
My Lords, like the noble Earl, Lord Ferrers, I should first declare an interest, because, as I have told your Lordships previously, I am a director of a firm of insurance brokers specialising in life assurance and pensions. Therefore, I may be said to have an interest in an alternative medium for small savings. I should like to join in thanking the noble Lord, Lord Jacques, for his very clear exposition of the provisions of the Bill. I must confess that when I picked up the Bill to look at it for the first time I was rather disturbed to find that the first thing it does is to set up a Board. It seems to me that we spend much of our time setting up boards of one kind or another. The British National Oil Corporation, the Policyholders' Protection Board, the National Enterprise Board, and the Scottish and Welsh Development Agencies are five such boards, which we have recently established, which come immediately to mind. One wonders how many statutory boards are at present in existence.
However, the Board to be set up under this Bill does not extend the power of the Government. It is in effect an instrument 854 for the diminution of the Government's power because it gives to the trustee savings banks a measure of self-government. Powers previously exercised by the National Debt Office and the Inspection Committee, for example, are transferred to the Central Board on which each of the trustee savings banks will be represented. The Explanatory Memorandum, and indeed the noble Lord, Lord Jacques, make it clear that the setting up of the Board, and the other provisions of the Bill, are intended to enable the recommendations of the Page Committee with regard to trustee savings banks to be implemented. The Page Committee had to determine what the future role of the trustee savings banks should be, and how that role should differ from that of the National Savings Bank, for example, as the Post Office bank is now called.
The Page Committee found that there were 73 trustee savings banks, varying from the London and South Eastern which had £257 million in deposits, to the Newburgh, in Northern Ireland, which had less than quarter of a million pounds in deposits. These institutions of varying size were providing an outlet for small savings, an outlet supported by a Government guarantee, subject to tight Government control, affording a limited amount of tax relief, offering limited banking facilities (£50 deposit being required before one could have a current account) and with no personal credit facilities in the way of overdraft or personal loans. They were governed by self-perpetuating boards of trustees. Yet there were over 10 million depositors, the majority of whom were in the lower income groups, and they had increased very considerably indeed in the period since the War.
They were in fact on the fringe of commercial banking, and the Page Committee had to reconsider whether there should be no change at all in the nature and the circumstances of these banks, or whether, at the other extreme, they should be turned over to private ownership and become fully commercial. The Committee decided on neither of these alternatives; it decided that they should become mutual banks, freed from much of the present Government restriction, and offering full banking facilities for personal accounts only. I am glad that the Government have accepted that this 855 mutual principle has a place in the banking field, as it has had for so long, for example, in the life assurance field. The Page Committee said—and I quote:A set of mutual Banks, similar in organisational form to building societies, seems to us an excellent way of promoting a competitive service for the financial needs of the small saver and depositor.I believe that it is good to have this competition with the clearing banks in the personal sphere; after all, the clearing banks are moving into other people's spheres—insurance broking is one example of that. The trustee savingsbanks are not likely to encroach on the existing customers of the clearing banks, but they will vie with them for the business of a whole new range of customers, because about half of the population still do not have a banking account.
In addition to the relaxation of Government control, the transfer of much responsibility to the Central Board, and the opportunity to provide full banking services, there is this requirement for larger units; and, as the noble Lord, Lord Jacques, said, the 73 have now become 17. Again this is following the recommendations of the Page Committee. The work of amalgamation has gone on among the trustee savings banks in the past two years. This Bill sets the seal of approval on that by laying down minimum levels of deposit which a bank must have before it can become a member of the new Central Board. Inevitably there will be regret at the replacement of the small local bank by the regional bank.
I share the view expressed by the noble Earl, Lord Ferrers, that it was very satisfactory that the Government decided to have regional banks rather than one national bank. I think the regional bank, as opposed to the local bank, is made necessary by modern requirements and by the need to provide the up-to-date service of a full-scale banking nature which is now envisaged. I have one complaint; that is, that every time a regional structure is set up for a particular service it almost inevitably differs from all other regional structures; and, as one who hopes to see the development of regional government in England, I regret this failure to plan 856 regional structures for different services on a co-ordinated basis.
Finally, there are the provisions with regard to trustees of individual banks, and I am glad that each bank is now to be required to submit a scheme for the appointment and removal of trustees by the depositors. I think that this brings them into line with the building societies and mutual life offices, and introduces the proper degree of democratic participation. With regard to the age limit, all age limits are bound to be arbitrary because people age at such differing rates, and they are bound to be unfair in the way in which they work. But it is difficult to see what else could be done if individual banks are not to be landed with boards of trustees who are very elderly and not able to cope with the requirements of the modern world. May I say, in conclusion, that I believe the Bill offers the trustee savings banks the opportunity to play a developing role in the financial life of the country. It is up to the trustee savings banks now to respond to that opportunity, and, personally, I am confident that they will.
§ 4.52 p.m.
§ Lord COLERIDGE
My Lords, as has been said, in the past the trustees of the savings banks have received no remuneration, but the Bill now before your Lordships' House envisages such a possibility. Therefore, as a trustee and chairman of one of the new regional banks, the South-West, and as a potential member of the new Central Board, I must, I think, declare an interest.
Noble Lords who have already spoken have said so much of what I would wish to say myself—and they have said it with much more authority and much more fluency than I could command—that it allows me to be very brief. This Bill, as we all know, results from the findings of the committee presided over by Sir Harry Page—a committee set up by the last Government, the findings of which were accepted not only by the present Government but also by the trustee savings banks as a package deal. There is, therefore, I hope, no area of political controversy in the Bill, and that is a source of great satisfaction to those of us in the movement who will have to make it work.
My Lords, this is not a Bill designed to rescue a faltering industry; nor does it 857 entail any additional expenditure by taxpayers. On the contrary, it allows what is a very successful operation, and one which has been in being for 160 years, to offer additional banking facilities to the modest saver, for whom the trustee savings bank movement has always traditionally catered. I do not believe that the Bill would, should or indeed will put us, the trustee savings banks, into direct conflict or competition with the joint stock banks, the clearers or, indeed, the National Savings Bank. We are not in the banking business to make money; we have no shareholders; we are, as has been said and as our American friends would describe us, a mutual bank. But we have some 11 million depositors to whom we would continue to offer that rather personal, friendly service—a service which will be greatly improved by our ability in the future to make, for example, personal loans and bridging loans, and to allow modest overdrafts. The Bill now before your Lordships will greatly help the trustee savings banks adequately to serve their respective communities, and I hope that your Lordships will feel able to support it.
§ 4.55 p.m.
The Earl of IDDESLEIGH
My Lords, I, too, should like to declare my interest. I am an unpaid custodian trustee of the South-West Trustee Savings Bank, and, in addition, I hold small balances in its ordinary and supplementary investment departments, so I suppose I can be said to have a small financial interest. I consider it would be impertinent of me to try to prolong this debate unduly when there is already such a high level of acceptance of this Bill from all sides of the House. I should merely like to stress that this Bill has the wholehearted support of the Trustee Savings Bank Association. The individual banks have been perhaps slightly disappointed that it was not introduced earlier, but the reasons, I think, are understood; and we in the South-West certainly are most grateful to the noble Lord, Lord Jacques, for introducing it this afternoon and for his very full explanation.
The powers that this Bill gives us are, by and large, the ones we required. In essence, it gives us the means to serve our customers; and, as your Lordships can imagine, the requirements of our customers have altered considerably in 858 the 165 years of our existence. The new powers will allow the trustee savings banks to get on with the business of banking—a role they have fulfilled to everybody's satisfaction, I think, during their existence. I am happy to speak from this end of the House on behalf of the Trustee Savings Bank Association, who welcome this Bill and all it contains, and to wish it a speedy passage on its way to becoming law.
§ 4.57 p.m.
§ Lord HOY
My Lords, I rise to support the Bill for many reasons, and I make no apologies for my connection with the trustee savings banks. I have been associated with them all my life—and I mean that in every sense of the word, for all the time I have lived I have had a bank account with the trustee savings bank. Indeed, I sometimes get a little disturbed when, for instance, I listen to the noble Lord, Lord Banks, speaking from the Liberal Benches and saying that this is a great opportunity for the trustees of the savings banks. I may remind your Lordships that we have been banking for 160 years. Indeed, at the end of the last year, as the noble Earl, Lord Ferrers, has said, we had deposits of over £4,000 million. Let me tell the noble Lord, Lord Banks, that, even in these days of inflation, in a Scotsman's opinion that is still a lot of cash; and I think it reflects the job that we have done over the years.
My Lords, I remember introducing in your Lordships' House at the end of last year a Bill to protect the trustee savings banks because of some little alteration in the law that would have placed us in a difficult position vis-à-vis the joint stock banks. Your Lordships agreed unanimously to the recommendations that were then made, and as a consequence passed the Bill. I am grateful to the Government, if I may record my thanks to the noble Lord, Lord Jacques, for taking up the Bill in another place, putting it in order and placing the trustee savings banks in the same position—there was no betterment; we did not want any privileges—as joint stock banks. What we did not want was to be in an inferior position. and that the Government ensured.
The only thing that worries me a little (and I am somewhat surprised, because we are very friendly) is to hear the noble 859 Earl, Lord Ferrers, say that there is a kind of mystique about savings banks and that people do not quite understand them. It may well be true of your Lordships' House, because your Lordships—and this is not critical of noble Lords—are, I think, very much better informed about, say, Lloyds, Barclays and the Westminster, which are the banks with which you have dealt; but I have always dealt with the trustee savings bank and I am more intimate with them. What we are saying today is that there will be a change in the organisation of savings banks. This Bill makes a very considerable change. When I heard it said that there will be a change with regard to trustees I thought that I should remind your Lordships that throughout the 160 years of trustee savings banks no trustee or member of a management committee has ever been allowed to receive a penny in payment for services he has rendered. I think that this institution, representing 160 years of unpaid service, is unique in the world today. And even today's change will mean only that any trustee attending a meeting will recoup his expenses. I cannot think of any other business of this kind which manages itself on the basis of rewards which are—I was about to say "mean" but that is not the right word—so small as those on which this bank is managed.
My Lords, when we are talking about this bank we had better appreciate just what service it has rendered to the country. Not only have we rendered a tremendous service to the savers of the country but, as I have said here and as I have said in another place also, we have produced savings—and ours are cash and not book entries! The money we record as savings is money coming from our depositors. I think it is not a bad thing to remind ourselves this evening that one out of every five people in Great Britain today have an account with the trustee savings bank. It is absolutely extraordinary to realise that throughout the whole length of England, Wales and Scotland, every fifth person has an account with the trustee savings bank. I do not think that this record can be challenged.
It is the greatest thing in the world today, and not only to the saver; for we have been able to use the deposits in the 860 interests of the savers, and central and local government have been the beneficiaries under this scheme. These banks have rendered a tremendous service to the country as a whole. I was a little surprised to hear a noble Lord say—I regret it was the noble Earl, Lord Ferrers, who said it—that the State has come to the conclusion that they could do it better than others. It is true that the savings banks are not in the Slater Walker class. We do not lose money. We are not allowed to. We are allowed to safeguard the savings of the people of this country.
In the reorganisation that is taking place we are saying that by force of circumstances we cannot go on forever with these small sectional banks. In other words, we must form larger groups to become even more comprehensive and more economical. But at the end of the day the job will not have changed, not at all! What we shall be doing is rendering a service to our depositors—no more than that—and to the State.
I want to say only this in conclusion. Along the road of these 160 years, it has not always been easy for the trustee savings bank. We have met our opponents, some of them, if I may say so, in the City. But recently we have encountered them in a more modern way. We ran a programme on television about how it would pay people to put their savings in the trustee savings bank. We had a very well-known contributor to television to do it for us; but the powers that be decided that this was a contravention of advertising standards. It was all right for a great sportsman to come on to the screen, half-naked, to sell some kind of scent to the public and say how good it was for them; but if a man appeared on behalf of the savings banks and told the people of Britain that it was good to have their deposits in the trustee savings bank, then the commercial authority decided that this was not quite right. Despite this we had 15 months of it. That advertising is about to go. Apparently, we have contravened the standards of commercial television. We do not complain about that. We have had to meet complaints all along.
My Lords, we ought to be proud of the part that the savings bank movement has played in the history of our country. When the Rev. Andrew Duncan began it all 160 years ago in Dumfries, he could 861 never have believed it would reach the stage it has reached today. I warmly commend this Bill to your Lordships.
§ 5.6 p.m.
§ The Earl of ELGIN and KINCARDINE
My Lords, it is a great pleasure to follow the noble Lord, Lord Hoy, because he is the epitome of all that has been spoken of today. I have heard from him on so many occasions of the strength of his convictions regarding not only his own contribution but also the whole contribution of the trustee savings bank to the nation. It is a pleasure to follow him, but I shall speak from another angle. I speak perhaps due more to the way in which I have seen the trustee savings bank over the past four years through the eyes of the National Savings Committee in Scotland. For us, one of the great things since reorganisation has been mooted has been the way in which the trustee savings banks have gone about their jobs. They have encouraged the whole aspect of savings. They were not despondent at all about the Page Committee Report. We, in national savings, were perhaps a little worried. But we have taken courage from the way in which the trustee savings banks have gone about their work, not in just being able to reduce themselves from 73 to 17, but at the way in which they did it, having the courage of their convictions. In the case of many other acts of regiorialisation and so forth, there have been bitter arguments when perhaps one wished to contract a service. These did not occur in the trustee savings banks. It was very much the reverse. Therefore I feel that, although they may have contracted and that many great names known all over the country will no longer exist, the force and strength of the trustee savings banks have been enhanced in the last few years.
I hope that in this reorganisation they will not accentuate too much their banking services. Although they have been encouraged to be, perhaps, a third force in banking, I hope that they will never forget that they are a very great force in savings. For it is—I think it was my noble friend Lord Ferrers who pointed it out straightaway—strength of small people together in good company that makes for the very important impact of the trustee savings bank and the National Savings Movement as a whole. It is in this way that the trustee savings banks can 862 encourage not merely the depositing of money; but, particularly in the schools, an understanding of the use of money. I hope that in the way in which they will look at the future they will not in any way be discouraged from working with the National Savings Movement in the education of young people towards understanding and the handling of their banking of money. This is the only way in which in the schools themselves, young persons will get the opportunity of understanding the use of money, of what it will do, of where the interest comes from and of the manner in which a useful bank service can be built up.
My Lords, many of us have spoken of the origin of this great movement and various dates have been given. But I can remember only last year standing outside the door of a small cottage in Dumfries. It had been 200 years since the door of that cottage had opened and the good Reverend Duncan had started his first savings bank. In your Lordships' own House about 170 years ago, when we first were passing the measure to establish the savings banks, they were commented upon by the editor of the Edinburgh Review. When one considers this was at the moment of the great Battle of Waterloo, one should pay some attention to what he then said:After the great glory of the recent military victory has passed away, arid after the impact of the new commercial strength of the country may perhaps have receded, it will yet appear that the Savings Banks will bring more happiness to the people of Britain".What was said 170 years ago is an essential ingredient of what we are trying to achieve here this afternoon; for more people to understand and use the trustee savings banks and generate a greater friendship, happiness and understanding of the bank in its new sense. This will bring more people to use these facilities for their benefit and happiness, for this is the greatest achievement the trustee savings banks and their predecessors have brought to this country in the past 200 years. I should like to give every support to this Bill and also hone that it will pass swiftly to fruition.
§ 5.12 p.m.
§ Viscount AMORY
My Lords, may I for one or two minutes join in the warm welcome which has been given to this Bill. I agree with every word of the eloquent observations of my noble friend 863 Lord Elgin. I also agree with the noble Lord, Lord Banks, that one of the best parts of this Bill is the words in the Explanatory Memorandum:The Bill provides for the progressive removal or transfer to the Central Board of controls now exercised by Government agencies.What a healthy change that is from the provisions we get so accustomed to now, when more and more functions are handed over to the control of the Minister of the Crown concerned! I entirely agree with the well-earned tributes paid to these banks by the noble Lord, Lord Hoy. If I had known where he had put his money all these years, I would have put mine there, too. I am sure it would have been in good company there.
The history of the trustee savings banks has been a success story. They are immensely successful today. We ought to be extremely grateful to all who have served those banks over the years, staff, trustees, and everyone concerned. My experience when I was a trustee—and I am sure that today it is truer than ever—was that they were invariably persons of the highest standards and integrity. I have only one note of melancholy to introduce this afternoon. For many years I have had the honour—and still have it at this minute—of being patron of the Trustee Savings Bank. My noble friend Lord Coleridge is the distinguished Chairman and my noble friend Lord Iddesleigh is a trustee. I fear, not for the first time in my life, that my horse is now to be shot under me. In spite of this high price, I should like to extend an extremely warm welcome to this Bill. It is excellent that these banks are now to be launched on a new period of further and expanded service to the country.
§ 5.15 p.m.
§ Lord JACQUES
My Lords, may I thank all sides of the House for the reception which has been given to this Bill. I do not think I can ever remember anything that I have brought forward up to now which has had so much support from all sides. I enjoyed the "crack" at the Government of the noble Earl, Lord Ferrers. He said the Government nationalised everything in sight, but nevertheless freed the trustee savings banks from Government control. Of 864 course the noble Earl is under a misunderstanding. We do not seek to nationalise everything in sight; it is not nationalisation that we adhere to. We adhere to certain principles: first of all, public ownership; secondly, democratic control; thirdly, service rather than profit. Those are the principles we are pursuing, and those principles are embodied in the trustee savings banks and will be even more embodied in them when this Bill becomes law. Consequently, the Bill has our full support, and I was not in any way surprised that a Labour Government have brought this forward.
On pensions, the purpose of the Government is to provide the structure which would facilitate the banks and the trade unions getting together to negotiate what they are going to do in the future. It is for the banks voluntarily to decide what they are going to do in those negotiations. The first stage of the negotiations has been completed in regard to existing staff. I believe that the principle of indexing has been accepted so far as they are concerned. There is an important second stage which will be concerned with new employees. But that is not a matter for the Government; it is for the banks and the trade unions. It is for the Government to fulfil their obligations of guaranteeing the deposits at some substantial cost, and to provide the facilities for the banks' future progress. But, after that, it is the responsibility of the banks. Once again, may I thank your Lordships for your support. I hope that the Bill will thus get an easy passage through the House.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.