§ 5.10 p.m.
§ Read a third time.
§ Clause 2 [Provision for charities]:
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie) moved Amendment No. 1:
Leave out Clause 2.
§ The noble Earl said: My Lords, I hope it will be for the convenience of your Lordships if, together with Amendment No. 1, I speak also to Amendment No. 5.166
Amendment No. 5: Clause 4, page 3, line 36, at end insert—
("(aa) when directed to do so by the Treasury (if they have not already done so under subsection (1) above), make arrangements for securing the formation of bodies corporate with such charitable objects as the Board in each case determine and the vesting in those bodies, whether or not for any consideration, of such shares or rights to shares in the new holding company as the Board in each case determine.").
§ The purpose of these amendments is to clarify the provisions inserted into the Bill in relation to the trustee savings bank charitable foundations. The amendment removes the present Clause 2 and replaces it with a new paragraph to subsection (4) of Clause 4. As the Bill stood before the noble Lord, Lord Jacques, successfully moved what is now Clause 2 at the Report stage, it made no specific provision for the endowment of the TSB charitable foundations. However, since the proposals for the future of the trustee savings banks were first announced in 1982, the trustee savings banks have made it clear that they intend to establish and endow these charities. The House, and indeed the Government, welcomed that intention. The noble Lord, Lord Jacques, suggested that it is only right for Parliament to place a duty on the trustee savings banks to that effect; and that is the burden of his Clause 2.
§ The Government are prepared to amend the Bill so as to introduce such a duty, and the amendment to Clause 4 has that effect. However, we do not feel able to follow the noble Lord in all the matters of detail which he set out in what is now Clause 2. It is important that these charitable foundations should have wide and flexible powers in order to carry out their functions satisfactorily over an indefinite period of time. For this reason, the Government believe it would be wrong for Parliament to prescribe in detail the precise form and purpose of the charities or their operational relationship with the trustee savings banks. We therefore propose to confine the duty to be placed on the central board to that of securing the formation of the charities and of ensuring that the charities obtain shares in the new TSB holding company.
§ The noble Lord's clause provides that one share in 11 should be vested in the charities. I do appreciate the thought behind that suggestion, but I think we must remember that it is also the objective of the trustee savings banks to achieve the widest possible shareholding among depositors and other small shareholders. Indeed, in his letter of 16th May (which the Government published in a Written Answer to the noble Lord, Lord Taylor of Gryfe, on the 4th July) Sir John Read announced that the TSBs had set themselves the target of over a million shareholders. The Government greatly welcome that statement and I do hope that others in your Lordships' House will also do so. However, to the extent that shares are allocated to the charities, they cannot be sold to depositors and other small investors.
§ In the view of the trustee savings banks, 5 per cent. of the equity is the appropriate figure for the endowment of charities, and the Government do not think it is right to press the trustee savings banks to go beyond that point. The trustee savings banks have accordingly given an undertaking, recorded in paragraph 6 of Sir John Read's letter of 16th May, that they will ensure that 5 per cent. of the share capital in TSB Group plc is distributed among the four regional 167 charitable foundations in proportion to the accumulated reserves of each of the existing trustee savings banks.
§ The Government, for their part, have given an assurance, which I am very glad to repeat this afternoon, that they will not initiate the vesting process under Clause 1(3) of the Bill until they are satisfied that the charities will be endowed with their 5 per cent. of shares.
§ The Bill makes no provisions for the details of the share issue generally; nor does it prescribe how the flotation is to take place. I think your Lordships will agree that these are matters which have to be left to those responsible to determine at the time, with the assistance of expert advisers. Similarly, it is not appropriate to prescribe by what means the endowment of the charities is to be achieved.
§ The House will also appreciate that to express in legislative form all the detailed matters on which the Government and the trustees savings banks are giving commitments would require provisions of disproportionate length and complexity. It would be wrong unnecessarily to limit the trustee savings banks' freedom to take the most appropriate course. I am advised that, in addition, there could be tax problems for the charities if the Bill specified that the charities were to receive a given number of shares. It is for all these reasons that the details are not set out in the amendments.
§ Finally, I know that the noble Lord, Lord Jacques, is anxious that there should continue to be persons associated with the trustee savings banks who bear the title "trustee". I understand that the trustee savings banks are reluctant to establish the charitable foundations in the form of trusts rather than in the form of companies having charitable objects, mainly because charitable companies would be more straightforward to administer, given the differences in the law relating to trusts under the various jurisdictions in which the trustee savings banks operate.
§ However, the trustee savings banks have agreed to provide in the articles of assocation of the charities that the directors of the charities shall be known as trustees. I am very happy to place this commitment on the record. I hope that the noble Lord will accept that on this, as on his other points, the trustee savings banks and indeed the Government have gone some considerable way towards accommodating his point. I beg to move.
§ 5.15 p.m.
§ Lord Jacques
My Lords, I rise to support this amendment. At the last stage I moved an amendment which would provide that for every 10 shares sold one should be allocated to charities and that the income from the shares should be administered by trustees appointed by the directors of the trustee savings banks. I should like to thank all those Members of your Lordships' House who supported me on that occasion.
I should like also to thank the Government for the way in which they have looked at this matter since. On two occasions they invited me to meet the Minister and his colleagues at the Treasury. At the first meeting 168 I made some suggestions and at the second meeting documents were produced to show that the Government had gone out of their way—I say that beyond all doubt: they had gone out of their way—in order to try to meet the point which I had made. The Minister has fulfilled the undertakings that were given at the time; he has produced the amendment that was agreed at the time; and I have no hesitation in supporting the amendment and in thanking the Minister for the way in which he has handled the matter.
§ On Question, amendment agreed to.
§ Clause 4 [The Central Board and the reorganization]:
The Earl of Gowrie moved Amendment No. 2:
Page 3, line 23, after first ("or") insert ("the consideration due (where any is to be due)").
The noble Earl said: My Lords, I hope it will be for your Lordships' convenience if with this amendment I also speak to Amendments Nos. 3 and 4.
Amendment No. 3: Page 3, line 25, after ("is") insert ("whether on the part of all or any description of acquirer").
Amendment No. 4: Page 3, line 26, leave out ("is").
§ At Report stage the noble Lord, Lord Houghton of Sowerby, argued that the TSB Central Board should have the power to issue shares on different terms to different classes of person. The noble Lord suggested in particular that it would be appropriate to offer cheaper shares to depositors and staff, although he accepted that the Bill should leave the decision whether to use this power to the central board.
§ I explained at that time that the Government were confident that the Bill as drafted provided the necessary power. However, the noble Lord, Lord Houghton of Sowerby, very reasonably argued that the Bill could usefully contain a rather more conspicuous indication of the width of the central board's power; and I undertook to look at the point again. I should make it clear that parliamentary counsel has confirmed that it is not necessary to amend the Bill in order to achieve the noble Lord's purpose. Nevertheless I should like to accommodate the noble Lord so far as I can, and Amendments Nos. 3 and 4 are intended to go at least some way towards meeting his point.
§ I should make it clear that there is a further amendment to Clause 4 which goes somewhat beyond what the Bill previously provided. Amendment No. 2 introduces the possibility that the central board might actually give shares away by extending its power to cover that eventuality. It may be necessary for the TSBs to use this power to endow their charitable foundations, depending on the method of share issue and endowment which is finally chosen nearer the time. It is also consistent that the range of options available to the central board, including as it does the power to sell shares at different prices, should actually extend to giving shares away, although I should emphasise yet again that the Bill is drafted in terms of powers and not duties, and that it is up to the central board to decide whether or not to use the power. My Lords, I beg to move.
§ Lord Houghton of Sowerby
My Lords, I should like to say that I am very grateful to the noble Earl for the 169 amendment and for making the position clear beyond any doubt at all. This is a very pleasant afternoon and it is rather a unique occasion that noble Lords on this side rise one after another to thank the Minister and support him in what he said and what he has moved. We should like to have more of this. So we shall see whether it can perhaps be arranged.
I should also like to offer a word of gratitude to Sir John Read and his board for the way in which they have tried to meet points that were made at the earlier stages of the Bill. This morning, as a form of recreation, I read the report of the debate on the Second Reading in your Lordships' House on 4th March, which seems a long time ago now. We have come a very long way from the criticisms that some of us made of the Bill in the form it was in when we gave it a Second Reading. I am sure that in general, apart from in particular, we should express our appreciation of the combined efforts of the noble Earl and the board of the trustee savings bank to make the Bill fully acceptable to your Lordships' House. I am very glad about that.
For my own part I fully realise after much more thought and consultation that to have defined in the Bill certain terms, or the extent of the issue of shares on preferential terms to depositors and staff, would probably have imperilled the whole value of the equity from the point of view of the flotation. The noble Earl will remember that at Second Reading I did not press for that to be done. What I asked for was undisputed clarity that the board would have the power to do anything along those lines that it thought should be done; and that is made clear in the amendment now. I think, therefore, that I have to be satisfied with that in all the circumstances. There are other considerations that have to be borne in mind—timing, conditions of the flotation, and many other things which are included in Sir John Read's recent letter to the Chancellor of the Exchequer which I think all show the right spirit. I am quite content with the outcome and shall look forward to seeing what happens to the trustee savings bank. As a member of very long standing, I may have a personal interest, to finish up with.
§ On Question, amendment agreed to.
§ The Earl of Gowrie moved Amendments Nos. 3 and 4:
§ [Printed earlier.]
§ The noble Earl said: My Lords, I beg to move.
§ On Question, amendments agreed to.
Following is the text of the amendments (Nos. 3 and 4):
Page 3, line 25, after ("is") insert ("whether on the part of all or any description of acquirer").
Page 3, line 26, leave out ("is").
§ The Earl of Gowrie moved Amendment No. 5
§ [Printed earlier.]
§ The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 1. I beg to move.
§ On Question, amendment agreed to.170
Following is the text of the amendment (No. 5):
Page 3, line 36, at end insert—
(" (aa) when directed to do so by the Treasury (if they have not already done so under subsection (1) above), make arrangements for securing the formation of bodies corporate with such charitable objects as the Board in each case determine and the vesting in those bodies, whether or not for any consideration, of such shares or rights to shares in the new holding company as the Board in each case determine.").
§ Schedule 1 [Transfer provisions: supplementary]:
The Earl of Gowrie moved Amendment No. 6:
Page 13, line 42, leave out ("Economic Development") and insert ("the Environment").
§ The noble Earl said: My Lords, this amendment corrects a technical reference to a Northern Ireland department which should be the Department of the Environment rather than the Department of Economic Development. I beg to move.
§ On Question, amendment agreed to.
§ Schedule 2 [Taxation]:
The Earl of Gowrie moved Amendment No. 7:
Page 15, line 28, leave out first ("of') and insert ("in").
§ The noble Earl said: My Lords, this amendment corrects a very small drafting error in the capital gains tax provisions of Schedule 2. I beg to move.
§ On Question, amendment agreed to.
The Earl of Gowrie
My Lords, I beg to move that this Bill do now pass.
Your Lordships' House has held an interesting series of debates on the Bill, not wholly without incident where the Government have been concerned. We have discussed the issues at length and I shall not, therefore, take up too much time on the substance of the Bill. This afternoon your Lordships have approved a series of amendments which clarify the outcome of our discussions at Report stage.
I hope that your Lordships will bear with me if, before the Bill leaves the House, I refer very quickly to two other matters which were discussed also at Report stage. First, the noble Lord, Lord Taylor of Gryfe, successfully moved an amendment at Report stage to Clause 1(1)(a)(i) to exclude TSB (Scotland) from the Bill. However, I believe that the noble Lord appreciates that simply to exclude TSB (Scotland) from this Bill would leave it in an awkward and possibly dangerous state of limbo, since the Bill makes no alternative provision for the future of TSB (Scotland). Indeed, the Bill contains provisions to repeal the legislation on the basis of which TSB (Scotland) at the moment operates.
Following Report stage my right honourable friend the Chancellor of the Exchequer asked the TSBs to discuss with the noble Lord what changes might be made both to the Bill itself and to the TSBs' proposals for the position of a future TSB (Scotland) banking company within the group; what changes, therefore, might meet the concerns of the noble Lord. Lord Taylor. I was glad to learn that the noble Lord and the TSBs were able to reach agreement on this point, an agreement recorded in notices which they issued to the press in May.
171 However, it is right that the TSBs' further commitment should be placed on the record. It is for that reason that I arranged last week for the text of Sir John Read's letter to my right honourable friend the Chancellor of the Exchequer of 16th May to be published in the Official Report as an annexe to the Government's Written Answer to a Question by the noble Lord, Lord Taylor. I shall not repeat the contents of that letter. But I should like to stress that in the Government's view these further safeguards are to be welcomed and that, together with the amendments this House has already discussed today, they represent a substantial package of improvements to the proposals in response to the arguments put forward at Report stage. I hope that the noble Lord will be able to indicate that he is indeed content.
The normal procedures of your Lordships' House do not, however, allow the Government to propose the amendments which are now needed to deal with the future of the TSB (Scotland). I feel, therefore, that it is only right that I should make it clear that the Government will in due course propose these amendments in another place. I should also be less than wholly frank were I to disguise the fact that the Government could not allow the Bill to proceed to Royal Assent with the present Clause 3 in place, as this cuts across the purpose of achieving as wide a distribution of shareholding as possible among depositors and other small investors, without offering any tangible benefit to depositors and staff. Again, for procedural reasons, the Government are not able to bring forward an amendment in your Lordships' House, but we shall do so in another place in due course.
I should just like to say that I for one very much want to wish the TSBs well for their future as the Bill leaves this House. My Lords, I beg to move.
§ Moved, That the Bill do now pass—(The Earl of Gowrie.)
§ 5.30 p.m.
§ Lord Taylor of Gryfe
My Lords, since I have taken a lively interest in this legislation—indeed, I think the amendment which I moved frustrated its smooth progress at Report stage—it might be appropriate if I were to say a word as the Bill passes from this House today, particularly since the agreement which I and others have negotiated with the TSB has been described by the Scottish Nationalists as a "spineless surrender". So I think it is appropriate that I should say a word in defence of our position.
I should first like to say a word or two, without delaying the House unduly, about the history of this Bill. The proposal to change the structure and function of the TSB was announced in August, 1982, as it was obvious at that time that the present structure was not appropriate to what had become a clearing bank. It was no longer part of a national savings organisation. Discussions to give effect to these changes took place and legislation was introduced in the Commons in January, 1985. It was given a Second Reading on 14th January by 204 votes to 37. During its progress through the House of Commons, there was introduced an amendment on 20th February similar to the one which was carried in this House. It was defeated in the House of Commons by 137 votes to 29 and at no time 172 was there any apparent national agitation on the part of the Scottish Nationalists following that defeat.
The Bill reached this House intact and I moved an amendment at Committee stage which was defeated by 113 votes to 76. I secured a reversal of this vote at Report stage by 67 votes to 54. I mentioned those facts to confirm that while technically I and my supporters from all parts of this House secured a victory, I was conscious in the subsequent negotiations that Parliament had already approved the legislation as it stood and that my amendment could, in fact, be eliminated in the House of Commons or at Third Reading.
I should like to pay tribute to the Government and to the TSB, as other speakers have done this afternoon, for the way in which they handled this difficult matter because following the vote the Government asked the chairman and officials of the TSB to meet me to discuss any proposals which might allay some of the fears which had been expressed during the debate. It was suggested that, because of the parliamentary timetable, five years' planning for the necessary changes in the structure were now in jeopardy. As we said at the Second Reading of this Bill, we had no desire to upset these arrangements which appeared to us to be sensible, but we were concerned about the independence of the TSB in Scotland.
It was quite clear that the Government and the TSB had seriously underestimated the strength of feeling in Scotland on this matter, and I still believe that an independent TSB (Scotland) was viable and could have somewhat enlivened the Scottish financial scene. It is a pity that the great debate, which took place in Scotland following the passing of my amendment, had not taken place during the three years when this matter was under consideration.
I invited noble Lords from all parts of the House to join me in discussions with the TSB. The noble Lord, Lord Grimond, and the noble Baroness, Lady Elliot, were present and felt that the TSB had gone a long way to meet our objections. Of course, we could have rejected any proposals and held out for "no surrender", as suggested by the Scottish Nationalists. This would have been a meaningless gesture, gaining nothing at all for Scotland. We were advised that the trade unions, including the employees of the TSB in Scotland, were not in support of our position. A quick survey of the pension funds and financial institutions in Edinburgh revealed no enthusiasm for the hiving-off of TSB (Scotland).
In these circumstances, we sought an agreement in the best interests of Scotland, and although the undertakings which have been given are not the whole meal, they are certainly more than half a loaf. There are assurances concerning the independence of Scottish management. The central board and the TSB (Scotland) are unanimously of the view that TSB (Scotland) can, should and will continue to function as an independently-managed Scottish bank within the Group. The Government agreed to amend the Bill so as to put it beyond doubt that the four separate banking companies to which the Bill refers shall be registered independently, and the head office of each of these banks will remain in the country where it is registered.
173 Each board will appoint its own members and there will not be nominees of the central board in London, which is one of the matters that we raised during the debate. This will be subject of course to the approval of the parent board, but the articles will not provide for the parent hoard to appoint members of the individual banks' boards. Provision will be made for 75 per cent. of all directors to be resident in the country from which they operate.
We were much concerned about the community aspect of the TSB, keeping in mind its long tradition of community involvement. We were delighted to learn of the setting up of a charitable trust and of the provision which it will make for representation on the national board. This should ensure that the members of the national board will not simply be a collection of businessmen, which is important, but will also be representative of Scottish commercial and cultural life.
Close liaison between the local board and the national board is assured by the appointment of the chairman and chief executive of the regional board onto the central board, and any change in the status of TSB (Scotland) or of the other boards will require parliamentary legislation. An assurance has been given that the group board will refrain from acting to reduce the net worth of the separate banking companies. All of these provisions, which are contained in the letter from Sir John Read and which has been repeated in Hansard, are welcomed by the group in this House who supported my amendments. We feel satisfied that we have protected the interests of Scotland and wish the TSB Group and the Scottish TSB every success.
This is in no sense a spineless surrender. It is a sensible agreement arrived at by patient negotiation. I should like to thank Members from all Benches in this House for their support and consideration of these matters. I should also like to thank the Government for the very patient and sensible way in which they have handled this matter. I certainly feel that this House has performed a very useful function in correcting some of the extremities of this Bill and arriving at a basis which I am sure is acceptable in Scotland, and which I hope will ensure the further success of the Trustee Savings Bank nationally and in my own country.
§ Lord Stoddart of Swindon
My Lords, there is no doubt that when the Trustee Savings Bank Bill originally came to this House there was little expectation that it would leave this House so amended. I should like to thank the noble Lord, Lord Taylor of Gryfe, for explaining the current position and I have to say, from the point of view of the Opposition, that we are far more satisfied with the Bill as it leaves this place than we were when it came here. We explained our position from this Bench, particularly in relation to TSB (Scotland), and I am now satisfied, as is the noble Lord, Lord Taylor, that the position in relation to Scotland and the other TSB banks is much more secure and independent than it would have been under the original Bill.
I also believe that this House has shown its worth over this Bill. It is not a Government Bill in the sense we normally know one. I said repeatedly from this Box 174 that this was not a Bill in which the Government were trying to get money by denationalisation. They were in fact bringing forward a Bill to produce a better arrangement for the trustee savings bank. It was the kind of Bill on which this House was able not only to exert its influence but to show its expertise from all parts of the House. I was most impressed by the knowledge that was shown by so many noble Lords, not only about finance and about the Bill itself but about the trustee savings banks, from their own personal experience whether as trustees or as customers.
I should like to join in the thanks to the noble Earl and to the Government for the receptive manner in which they have dealt with some of the amendments. I mention in particular the amendment of my noble friend Lord Jacques. I believe that that is a great improvement to the Bill and will certainly help to continue the convention that the trustee savings banks do indeed care about people and about people who are unfortunate. We are very pleased at the Government's attitude and the Government's receptivity to the ideas which have been put to them.
In conclusion, I should again like to join the noble Lord, Lord Taylor of Gryfe, in saying that this Bill was improved by the combined operations of noble Lords in this House. There was no pressure from outside the House before the Bill came to it that Scotland should be excluded from the Bill. It was the concern expressed by Peers in this House and by Members of the other House which brought about the changes which will be beneficial to the Bill. Like the noble Earl opposite, I should like to wish godspeed to the Bill and every success to the trustee savings bank movement in the future.
§ Baroness Elliot of Harwood
My Lords, I want to make a very short speech. I apologise to the noble Earl, Lord Gowrie, for not being here when proceedings on the Bill started, but I was told it was going to be at six o'clock and I was in another meeting.
I should like to add my thanks to the noble Earl and to the Government for having accepted these various amendments. In particular, I should like to thank the noble Lord, Lord Taylor of Gryfe, who with myself and one or two others had a meeting with Sir John Read, the head of the TSB. At that meeting the noble Lord was very persuasive, and the way in which he succeeded in getting Sir John Read to agree to the suggestions that he made was wonderful. We are much indebted to the noble Lord, Lord Taylor, for the way in which he handled the whole matter.
This is an occasion when, as a Scottish Peer, I should like to thank the Government for the fact that they have responded so well. The Bill will now go through, I hope with great success for the future, backed by members of different parties in the House.
§ 5.45 p.m.
§ Lord Mackie of Benshie
My Lord, I should like first of all to congratulate the noble Lord, Lord Taylor of Gryfe, and others on their successful negotiations with the Government to retain a Scottish entity. The noble Lord detailed the position he was in, and from a not very strong position his negotiating skills and persuasion have done a very good job with the Bill as 175 it is. However, I cannot agree with the entirely cosy atmosphere which has permeated the discussion so far. My noble friend Lord Banks tenders his apologies to the House. A long-standing engagement of some importance has taken him away; otherwise he would have been speaking on the Motion that the Bill do now pass.
My noble friend had down an amendment which he regarded as half a loaf which was successful and which would have allocated 25 per cent. of the shares to the depositors. That, I am afraid, will disappear. I should like to reiterate the position of the new TSB company. The fact is that they are going to form a very large and very powerful group. We are not told how much they are going to raise, but let us say it is £1,000 million. The funds which they possess, with reserves, amount to £711 million and then there are the net assets of the life assurance fund, which come to £653 million. Add £1,000 million and one has a group with assets bigger than those of the Midland Bank, whose shareholders' funds appear in the latest report to come to £1,685 million.
This is a powerful group. It is a great thing for the managers, who are obviously able men because they have already made a considerable success of the TSB operation as it is. They have done extremely well and I hope that with this extra capital they will continue to do well. It is not, however, always the same thing with extra capital. Perhaps the canny way in which they have had to proceed has helped the success of the bank, but I have no doubt that these able men will do extremely well.
I come to the point of why they are going to benefit. Without any doubt the benefit is going to the people who invest. The people who invest are not going to be the depositors entirely; in fact the depositors are going to be a small part of it, as far as one can see. The depositors, so the TSB reckons, may form a large number of shareholders, but the TSB does not reckon that they will put up something like 10 per cent. of the total money. This means that those people outside who invest will receive £700 million of reserves plus the other assets, and they retain their own money.
A friend of mine is a stockbroker. He has no interest in politics—I do not think he has much interest in public affairs at all—but he is a very good stockbroker. He said to me, "George, this is the finest thing since sliced bread. You put your money in, you get all the reserves and you still have your own money. I strongly advise you, if you are not a depositor, to find one and go in with him". I think this is true. That is the view of a practical working stockbroker.
The Government have said that they have looked but cannot determine the position in law. They have asked the lawyers and they cannot determine who are the owners of this large amount of money. But a number of lawyers in Scotland—I shall not take on the legal profession—have said to me quite clearly that the money belongs to the trustees in trust for the depositors, and although they may be contradicted, they say quite definitely to me that they would uphold this in any Scottish court. Certainly the Government and the group must think that there is something in it before they start throwing sops and 5 per cent. to charitable foundations, and taking other measures of 176 that kind. But that does not appear to me to be right; it appears to me and to others in Scotland to be a somewhat scandalous operation.
It seems to me also that there is no reason why a simple Bill should not have produced not another big clearing bank public company but a mutual bank. There is no reason why this Bill should not have produced a mutual bank. Then I would not have had to say these very nasty things—and I mean them to be nasty—about the Bill as it stands.
My noble friend Lord Banks moved an amendment for a 25 per cent. allocation for depositors. I understand from the explanations that the TSB board will have some power to vary the price of the shares, but it will be a power and not a duty. I need say no more except that we cannot view this Bill with anything but disapproval. In short, we do not believe the way that it has been drafted is right.
§ Lord Bruce-Gardyne
My Lords, I had not intended to intervene on this Motion this afternoon but I must confess that I was slightly provoked by the comments we have just heard from the noble Lord, Lord Mackie of Benshie. As I explained to your Lordships when we debated these matters before, I am myself a director of the central TSB and so naturally I took some pain at the way in which the noble Lord chose to break the harmony of what hitherto had been, so far as I am aware, unusually amicable proceedings in your Lordships' House this afternoon.
Before I return to the noble Lord's remarks, I shall add my congratulations to my noble friend and to my right honourable friend the Economic Secretary for the efforts they have made to achieve the compromise solutions we have had before us today. If I may do so without being improper, perhaps I may extend my congratulations to the noble Lords, Lord Taylor, Lord Houghton and Lord Jacques, for the way in which they have managed to achieve those compromises. It has been an admirable exercise on all sides.
All I would say to the noble Lord, Lord Mackie, is, first, that we have of course discussed extensively on previous occasions the arguments of the mutuality route as opposed to the Companies Act company route. I have never had any doubt, and I have no doubt now, that the accountability of the TSB of the future as a plc will be far more effective to shareholders in the format of a Companies Act company than it could ever be in the shape of mutuality. I must say to the noble Lord, Lord Mackie, that it is not always apparent that those who are depositors in a mutual society, such as some of the building societies, feel that their interests are necessarily particularly well covered by the mutual system which prevails in such societies. There are substantial objections to the mutuality route in any case.
Finally, I would say to the noble Lord that while the scale of individual participation by depositors in the share issue will of course depend on a number of factors, including the circumstances of the market at the time when the flotation occurs, I put it to him that many people would have made predictions similar to those which he has made about the allocation of shares between the great institutions and individual depositors in the case of British Telecom. The outcome was of course wholly different. One had there 177 a share issue that was overwhelmingly dominated by small, private individual participants.
We have been reminded by my noble friend this afternoon of the commitment and determination of the TSBs to achieve the widest possible shareholding; a shareholding which will go a long way towards matching again the achievement of British Telecom. I believe that the doubting Thomases—if I may call the noble Lord, Lord Mackie of Benshie, a doubting Thomas this afternoon—will be proved confounded when the moment comes.
§ Lord Ross of Marnock
My Lords, I merely wish to express my appreciation for the changes which the Government have made in respect of this Bill. My noble friends Lord Jacques and Lord Houghton should be glad that their voices have been heard, their advice taken, and that something has been done. Maybe it is not everything they wanted, but it shows that their continued interest in the Trustee Savings Bank movement has borne some fruit in relation to the changes which have now been made.
What we have here is, I am afraid, just another bank—but a bank which will use, as it has been using, the great traditions of the Trustee Savings Bank. Last week, I heard every night in Scotland a fruity voice in a television commercial telling me how this bank started 175 years ago in a little shop in Dumfries. The captions and graphics showed us how it was now going through the roof. What that television commercial did not explain is that it is now a different bank.
I must say that I share some of the criticisms which the noble Lord, Lord Mackie of Benshie, very well and rightly expressed. Let us not deceive ourselves. There are those in the Trustee Savings Bank movement—and I speak of those who have been in the movement for years and not those who are to buy themselves into the bank, and buy themselves into very considerable benefits as a result—who share those fears. They share the regret that the bank's deeply-rooted tradition in the community is gone. It is not good enough to speak about the employees of the bank. The bank does not exist for its employees. It exists for its depositors. As to the idea that it all started 175 years ago, that has all gone.
I was one of those who supported the amendment of the noble Lord, Lord Taylor of Gryfe. It was an amendment originally put down in another place by Mr. James Craigen. We made the mistake at that time—or the noble Lord did—of lifting that amendment as it was, and yet certain aspects of it were defective. I am not entirely happy with the compromise. I was not a party to the compromise. That was probably my own fault. I believe that the noble Lord, Lord Taylor, disappeared to America just after the debate we had—
§ Lord Taylor of Gryfe
With respect, my Lords, I was in this country and I invited the noble Lord, Lord Ross of Marnock, to join in negotiations.
§ Lord Ross of Marnock
I know, my Lords, but the noble Lord disppeared for some time. When he came back, I was not available to take part in any discussions.
178 It is not good enough to say that we have half a loaf and that that is better than no bread. That half a loaf will not be all that satisfactory in relation to that for which we originally argued—that is, a Scottish bank with complete independence, with its roots in the community, to serve Scotland. We have instead something that is to some measure cosmetically dressed up. It is an improvement on what it was; but when I hear suggested something about a letter or about amendments which are still to come, I must point out that it is the Bill that matters. It is the Bill that we finally see. A letter has not statutory value, and any promises made in a letter can be departed from. There are no guarantees in a letter. Did I understand the Minister to suggest that amendments will be put down in another place?
The Earl of Gowrie
My Lords, I said that for procedural reasons it was not possible for me to accept certain of the proposals consequent upon the defeat of the Government in this House at this stage of the Bill. We accepted the defeats and we shall therefore amend accordingly in another place.
§ 6 p.m.
§ Lord Ross of Marnock
My Lords, that means we shall eventually see the Bill back in your Lordships' House and we can then see how that amendment measures up to what was promised in the letter, and the question of a certain measure of parliamentary control. Therefore, to that extent this is not the last word. We can make our study then as to how far this compromise has gone. However, let us face it, this is a compromise and it is not one that will entirely meet the wishes of those people in Scotland who have been concerned about the future of the Trustee Savings Bank (Scotland).
§ Lord Grimond
My Lords, as an original signatory to the amendment to which attention is now being given by the Government, I should like to add my congratulations to the noble Lord, Lord Taylor, and also to those who supported him in the Conservative and Labour Parties. I think, in view of what has just been said, that it might be as well to set the record right. The noble Lord, Lord Taylor, invited me and, I think, the noble Baroness, Lady Elliot, the noble Earl, Lord Selkirk, and indeed the noble Lord, Lord Ross of Marnock, to meet the representatives of the savings bank. If I am wrong, no doubt I shall be corrected. Certainly the noble Baroness, the noble Earl. Lord Selkirk, the noble Lord, Lord Banks, and Lord Taylor, and myself met the representatives of the savings bank. It was perfectly open, so far as I know, for the noble Lord, Lord Ross, to attend that meeting. Again, no doubt I shall be corrected if I am wrong.
At that meeting we had a discussion and there was virtual agreement on the general lines on which the matter should proceed. I wish to emphasise that the departure of the noble Lord, Lord Taylor, to America, which took place afterwards, had nothing whatever to do with that meeting or with the agreement. In fact, the agreement was confirmed in a letter and it was agreed that in due course the matter should come back to your Lordships' House, which it has now done.
179 It may well be that some of us would have preferred that the Scottish savings bank should have been entirely independent, but it must be said that we have gained a great deal under the leadership of the noble Lord, Lord Taylor. It must be said also that possibly any interest in Scotland began rather late in the day.
I also want to thank the Government. If the noble Earl, Lord Gowrie, goes on behaving like this, the name of Gowrie might become respectable again north of the Tweed; I should not like to give any guarantee on that, but it is just possible. I should like to emphasise what has already been said about what we have achieved. There is to be virtual independence of the Scottish savings bank. It is to have its chief office in Edinburgh and the directors are to be appointed in Scotland. It can neither be absorbed into the general savings bank nor be sold off without an Act of Parliament.
To my mind those are extremely important safeguards which have been obtained and I am sure that the noble Lord, Lord Taylor, is right in saying that had we simply thrown out the whole Bill we should have got nothing at all. As I said, it might well have been more desirable to have an independent bank. If the Airdrie savings bank is to be independent there is a strong case for having an independent Scottish savings bank. To my mind there was no great interest in Scotland until the noble Lord, Lord Taylor, effectively raised this matter in your Lordships' House and I think we must thank the Government for having got so far.
I should like to make two general points which, it may surprise your Lordships to know, I have actually made before. One is that Scottish patriotism need not be concerned only with a Scottish Parliament. I happen to be in favour of a Scottish Parliament but I am also very much in favour of Scottish institutions. I believe that it is essential that we should now build up the financial centre at Edinburgh as a very important part of Scottish life. Secondly, I hope that this will wake up the Scots to the importance of what is happening over privatisation. The nationalised industries are Scottish as well as English and they should have adequate consideration. I hope that the Government will look again at their proposals for the privatisation of gas to see if it is possible to have a Scottish gas corporation.
In any case, I think we have raised the matter effectively. We have a great deal of independence for a Scottish savings bank. The thanks of Scotland—and, indeed, of all countries—are due not only to the noble Lord, Lord Taylor, who was a prime mover, but also to the Government and to Sir John Read, the chairman of the Trustee Savings Bank. A reasonable compromise, although not acceptable in total to all of us, has been reached on this point. I leave mutualisation aside because we have yet to hear what may be the ultimate result of that; but so far I consider this a considerable triumph for Scottish patriotism and for common sense.
My Lords, despite the preponderance of Scottish noble Lords in the House this evening, I should like to add my good wishes to the Bill as it goes 180 its way and to congratulate the Government on what they have achieved with the help; in a variety of ways, of other noble Lords.
When the noble Lord, Lord Taylor, tabled his amendment on Report it came as a great surprise to many people to hear the arguments which were put forward, as did the fact that the amendment was passed. There are those of us—and I have declared an interest previously as a past chairman of the Trustee Savings Bank—who have heard all along how each bank was peculiarly individualistic: that the Trustee Savings Bank in the South-West reckoned it knew exactly how to run its business; that the Trustee Savings Bank in the South-East knew how it wanted to run it business; that the Yorkshire Trustee Savings Bank was desperately independent; and that the only thing that held these banks together was the corporateness of the central board. When the noble Lord, Lord Taylor, brought forward his amendment one felt that it was rather like a record being brought down from the shelf and dusted down—we had heard it all before.
Of course, the Trustee Savings Bank (Scotland) was, and is, fiercely independent and by having his amendment passed the noble Lord fair put an Exocet into the Bill. I congratulate the noble Lord, Lord Taylor, that he is—if I may say so without being patronising—big enough to realise that this would not have been workable and that he has been prepared to discuss with the Government and the Trustee Savings Bank how best to come to an accommodation. He has said that it is no spineless surrender and I am sure that it is not. The fact is that we now have a Bill which has, for the first time, drawn these acutely individualistic banks together under one umbrella.
I hope that the Bill will succeed and go forward, because the Trustee Savings Bank has been through a very exciting period of time. I, for one, hope that it will continue to go through an exciting period because I am certain that it has a great future in front of it.
§ On Question, Bill passed, and returned to the Commons with amendments.