Trustee Savings Banks Bill

HL Deb 21 March 1985 vol 461 cc648-60

3.20 p.m.

The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Gowrie.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1[Preliminary]:

Lord Taylor of Gryfe moved Amendment No. 1: Page 1, line 9, after ("banks") insert ("other than Trustee Savings Bank (Scotland) Limited which is hereby excluded from this Act").

The noble Lord said: This is a serious amendment to an important Bill. I can only express my regret that a matter of such importance in Scotland is taken on a Thursday afternoon, when it is extremely difficult to arrange for interested Members of your Lordships' House to be present.

Noble Lords

Why?

Lord Taylor of Gryfe

We are not a professional Chamber. It is difficult to arrange transport and hotels as well as there being other difficulties, if the business of your Lordships' House is switched from Tuesday afternoon, for which you have made arrangements, to a Thursday afternoon, when most people who live in Scotland hope to get home some time that day. That is all.

Lord Denham

Would the noble Lord be kind enough to give way? We try hard not to have Scottish business on a Monday because it is appreciated that it is difficult for certain noble Lords in certain parts of Scotland to get down to London by the time the House sits on a Monday; Tuesday is more or less all right; Wednesday is a debating day, and not a day for Bills. If we cannot have Scottish business on a Thursday, it means that Scottish business would have to be kept to only one day in the week. There are certain noble Lords who live in rather distant parts of England who have just as much difficulty as noble Lords from Scotland.

Lord Taylor of Gryfe

I thank the noble Lord the Chief Whip for that statement, but I must say that in trying to encourage interest in this matter among Scottish Peers I have found some difficulty. I hope that what I have said will be noted, and that it will not prejudice the consideration of this important question at this stage.

The purpose of the amendment is to remove the Trustee Savings Bank (Scotland) Limited from the Bill. This is not an exercise in Scottish nationalism: it is a rational proposition which can be supported on good economic as well as on social grounds. If we remove the TSB (Scotland) from the Bill we shall require further legislation at a later stage to decide on the structure of the TSB (Scotland), and I am not going to discuss that. The question of the structure of the TSB arises in subsequent amendments.

I am going to suggest that the TSB (Scotland) is sufficiently large to operate and provide a full banking service—a financial advisory service, personal cheques and loans, credit cards, and so on. It has deposits of £1.25 billion and advances to customers exceed £360 million. What we are talking about is not a small fringe bank but a well-established bank. Indeed, the present bank is the successor to the original Trustee Savings Bank which was founded in Dumfries more than 170 years ago. The bank does very well; it is not one that is in difficulty. It is a bank which is extremely active and extremely successful. The surplus last year was £32 million, an increase of 27 per cent. on the previous year. Despite the competition from other banks and building societies, it has made a sizeable impact in the mortgage credit market.

Here we are talking about whether this important bank, well founded, well managed, should be centralised in London. The Bill provides that the bank should become part of TSB (Holdings) Limited in London; and the directors of TSB (Scotland) will not be elected by their shareholders, nor will they be elected by the depositors, but will be appointed by the central board of the TSB in London. To that extent it is a sizeable and fundamental change in the structure of the TSB.

In looking at the Bill one sees that there is a lack of understanding of the importance of Scotland and of Edinburgh as a financial centre. The Royal Bank of Scotland was founded in 1727, and the history of Scottish banking goes hack to 1695. In fact, the Bank of England, as most of your Lordships probably know, was founded by a Scotsman, and the establishment of the Scottish banks preceded that of the Bank of England quite substantially.

There has been in Edinburgh in the past few years a growth of interest in Edinburgh as a financial centre. The Royal Bank of Scotland has assets of £5 billion, the Bank of Scotland has assets of £6 billion, and the Clydesdale Bank—which is a totally-owned subsidiary of the Midland Bank—has £2.5 billion. There is considerable financial power in Edinburgh at the moment. Indeed, Edinburgh is regarded as the second largest financial centre in Europe, after London. I can speak from my own experience of hosting regular investor presentations of overseas companies who come to Edinburgh in order to attract investor interest from the accumulated funds of the insurance companies and the pension funds which operate out of Edinburgh.

If you take the major insurance companies which are national named—the Scottish Widows; Scottish Provident; Scottish Mutual; Scottish Life; Scottish Equitable; Scottish Amicable; the Life Association of Scotland; and Standard Life—these are all major international insurance companies, and all of them are based on Edinburgh. May I say in relation to subsequent amendments on this matter that all of them are mutually owned.

The funds under management in Edinburgh are estimated to be something like £30 billion; that is, under management of the financial institutions that exist. There is no question that if we establish the TSB (Scotland) based in Edinburgh we are inhibiting them in any way from discharging their full responsibilities as a bank. They can operate full banking services in the same way as the three major Scottish banks operate at the present time.

The Minister may recall that just a few years ago there was a bid for the Royal Bank of Scotland. The bids by the Hong Kong and Shanghai Bank and the Standard Chartered Bank for the Royal Bank of Scotland were referred to the Monopolies Commission. The Monopolies Commission ruled that it did not make good sense to have the Royal Bank of Scotland acquired by the Standard Chartered Bank or by the Hong Kong and Shanghai Bank.

3.30 p.m.

The Monopolies and Mergers Commission said that it made sense for that important financial institution to remain in existence, independent and operating out of Edinburgh. In these circumstances it would suggest that we are making a fundamental error if we take the Trustee Savings Bank of Scotland—which has a proud record, is solidly based in the community in Scotland and is widely recognised as an efficient organisation—and move it to become part of the TSB holding company in London. I suggest that that is socially unwise and is perhaps not good banking. It would centralise it, and some of the dynamism needed to create an effective instrument operating out of Edinburgh could be diminished by its being part of a centrally-controlled institution.

In your Lordships' House in the past few weeks we have been discussing the National Heritage (Scotland) Bill. Many noble Lords are genuinely interested in maintaining some of Scotland's heritage: the handsome buildings, the art treasures and other aspects which we treasure in Scotland as being part of our tradition and history. I suggest that the banking and financial institutions are equally important in maintaining the traditions of our country. It would be quite wrong to transfer this important community-based institution to a centralised London control. I believe that Scotland will be diminished and perhaps the institution itself will be reduced in its stature.

I invite noble Lords to consider this important matter, and I shall give two quotations which might appeal to the Minister. The first is from a man called Malachi Malagrowther who wrote on the proposed change of currency in 1826 when there was a move to centralise currency in London. As your Lordships will know, the Scottish banks still have the right to issue their own pound notes. What I hope will appeal to the Minister is the fact that this strange description is a pseudonym for the well-known novelist Sir Walter Scott. Sir Walter Scott wrote: This banking system, as conducted in Scotland, has been attended with the greatest advantages to the country. The facility which it has afforded to the industrious and enterprising agriculturist or manufacturer, as well as to the trustees of the public in executing national works, has converted Scotland from a poor, miserable and barren country into one where, if Nature has done less, Art and Industry have done more than in perhaps any country in Europe, England herself not excepted". The David Hume Institute, commenting on this interesting pamphlet written by Sir Walter Scott, said that it made a powerful appeal in defence of the individual and his community against the arrogant, blundering interference of central government". The other witness that I call to our defence in Scotland is another writer not unknown to the Minister—Karl Marx. Karl Marx, in reviewing the economic and financial situation in the United Kingdom, said: While indeed her contradictions, her antagonisms, the class contradiction and so on, reached an even higher degree than in any other country in the world, all the same Scotland never experienced a real monetary crisis such as has existed elsewhere. In defence of my argument I call Sir Walter Scott and Karl Marx, and perhaps I may be able to convince the Minister of the unwisdom of the step contained in the Bill. I beg to move.

Lord O'Brien of Lothbury

Before the noble Lord, Lord Taylor of Gryfe, sits down, did I hear him correctly? I thought he said that the Bank of Scotland was formed before the Bank of England. In fact, it was formed a year after. While Mr. Paterson, a Scotsman, played a large part in the formation of the Bank of England, he certainly did not found it unaided. I may remark that an Englishman. I think called Mr. Holland, played a similar role in the formation of the Bank of Scotland.

Lord Bruce-Gardyne

I should declare a double interest. First, as I mentioned on Second Reading, I am a director of the Central Trustee Savings Bank. Apart from that, I share a close connection and affinity with the land of my birth and upbringing, on whose behalf the noble Lord, Lord Taylor, spoke. Indeed, for all of a decade I represented in the other place one or two Members of your Lordships' House from Scotland who are to be found on both sides of the Chamber.

I listened with great interest to the presentation of his amendment by the noble Lord. I should not dream of dissenting from anything that he said, either about the capacity of the TSB (Scotland) to go its own way or about the vital importance of the banking sector in the Scottish economy: both those points are well taken. I was a little bemused about the reference to "arrogant. blundering interference of central Government", because if your Lordships were minded to accept the amendment its effect would be to ensure that TSB (Scotland), unlike TSB England and Wales, remained subject to the "arrogant, blundering interference of central Government".

I could not help noticing in the noble Lord's speech the absence of any reference to the views or wishes of those who are currently employed in or are depositors of TSB (Scotland), or who are involved in the management thereof. I confess that I am not altogether surprised, because the impact of the adoption of the amendment, as I understand it, would be that depositors and employees of TSB (Scotland), unlike their counterparts south of the Border or in Northern Ireland, would be denied the opportunity to participate on a preferential basis in the launching or flotation of this great enterprise. I am not clear that they would view that exclusion with vast enthusiam. Indeed, it is my impression that the TSB (Scotland)—I stand open to correction by the noble Lord—is entirely happy and, indeed, enthusiastic about the form of privatisation for the entire enterprise proposed in this legislation.

Of course I accept that it is important to preserve the Scottish identity of TSB (Scotland), but I am not at all clear, from my experience representing a constituency north of the Border and previously having been brought up north of the Border, that there is an over-weening sense that the Clydesdale Bank does not have a Scottish identity because it belongs to the Midland. I suggest that that is not necessarily the overriding consideration. To my mind, such evidence as I am aware of is that TSB (Scotland) is an enthusiastic participant in this venture to carry it out from under the "arrogant, blundering interference of central Government" and to enable it to participate in the freer and more open world as a genuine competitor with the established High Street banks. I venture to suggest to the noble Lord. Lord Taylor, that there might he a certain amount of keening in Scotland if your Lordships were actually to accept his amendment this afternoon.

Lord Grimond

May I start by saying that I wholly support my noble friend in his amendment? I would like to take up one or two of the points made by the noble Lord, Lord Bruce-Gardyne. First of all, I think my noble friend made it clear that if his amendment is accepted—and I hope it will be—that is not the end of the story. There will then have to be a new Bill dealing with the Trustee Savings Bank in Scotland. Speaking for myself, I wholly accept the general lines of the existing Bill, and would hope that when a Bill dealing with Scotland is introduced it would indeed free the Trustee Savings Bank in Scotland from some rather antiquated restrictions and from the heavy hand of centralisation. I personally hope it would bring in neutralisation. But at any rate I wholly accept—and I am sure my noble friend does—that a new Bill would be required and that it would free the bank in the way the present Bill does from many restrictions.

Secondly, the noble Lord, Lord Bruce-Gardyne, said, as I understand it, that he thought there had been not much consultation either with the employees of the bank or indeed the depositors. But governments are not bound to undertake consultation in all circumstances. I strongly suspect that very little consultation went on with the employees of Telecom or indeed with the users of Telecom; that did not prevent the Government from privatising it.

The noble Lord, Lord Bruce-Gardyne, then said he did not think that there was much dissatisfaction in Scotland because the Clydesdale Bank is a subsidiary of the Midland Bank. That may or may not be true, but it is certainly true that there was great alarm in Scotland when there was the possibility that the Royal Bank of Scotland would be taken over. There was very considerable anxiety throughout Scotland and eventually the proposal was—in my view, rightly—vetoed.

Lord Bruce-Gardyne

I apologise for interrupting the noble Lord, and I am most grateful to him, but would he not concede that at the time of the argument over the future of the Royal Bank there was a most active and enthusiastic group in Edinburgh who were actually promoting vigorously the acquisition of the Royal Bank of Scotland by the Hong Kong and Shanghai Bank?

Lord Grimond

That may be so, but moving, as I do, rather lower down the scale than the active bankers of Edinburgh, I notice that among the humbler people in Scotland there was considerable anxiety that they would be taken over either by the Hong Kong and Shanghai Bank, or one of their predators. I think there was a genuine and widespread feeling throughout Scotland that we wished to retain the independence of our own banks.

I would only underline one or two points which have already been made by my noble friend. The savings bank movement began in Scotland and it will undoubtedly be a great blow if it is centralised in London. I personally believe this country is much too centralised and that when what is called the "Big Bang" takes place either next year or even sooner, and we find the City of London is dominated by a whole series of conglomerates, many of whom in turn are dominated from outside this country, there will be considerable anxiety and a great need for institutions which are not sucked into the large-scale amalgamations of the City of London, and institutions which cater specifically and primarily for small investors and small depositors. I very much hope that Edinburgh will not only establish its position as the second financial centre in Europe but, in particular, form an alternative to what I foresee happening in the City of London.

I ventured at the Second Reading to point out that to my mind one of the unsatisfactory features of this country is that, owing to centralisation and to the prejudice, in a way, against equity investment, the channels about which people think when they are considering what to do with their savings are almost entirely confined to building societies, the savings movement and perhaps unit trusts. There is practically no method by which they can invest their savings in local enterprise.

3.45 p.m.

We are far worse off than any major country in the world in that regard. We have far fewer local banks and this has added to the general prejudice against equity investment at all. I very much hope that the Trustee Savings Bank, now that it is free from many restrictions, will not only continue to acquire local savings but will offer people an opening for investment in local industry. I believe that would be more easily done if the Scottish Savings Bank were separate from the English. I think it will have to have many of the same powers and I would hope that, whatever form of ownership comes about in Scotland, it would be largely Scottish and would give an opportunity to the Scottish people not only to deposit in their own savings bank but actually to own it.

I would also hope that it may be a step towards that freer banking of which Malachi Malagrowther, as my noble friend said, was such an admirer. Therefore, I hope that this amendment will be given serious consideration. It would seem to me to be wholly in accord with the Government's thinking. It is not, if I may say so, in antagonism to the present Bill; it merely says that the principles of the present Bill should be applied separately in Scotland from England. This is a first step in that direction and I should have thought that the Government would have no objection to it. Therefore, I am very glad to support my noble friend and I hope this Committee will give him a favourable reply.

Lord Houghton of Sowerby

This is a matter which is not confined to Scotland, because the root of it is what assent has been sought and given for the proposals in the Bill. In particular reference to Scotland, my experience in government was that where a case could be made out for a separate Bill, not necessarily separate treatment for Scotland but a separate Bill for Scotland, the Secretary of State was always anxious, for all sorts of reasons, to have a separate Bill. That is why we have so many Acts of Parliament relating to Scotland which are not dissimilar to corresponding Acts of Parliament relating to England and Wales. I would have thought that Scotland was an identifiable, nationalistic part of the kingdom and its sensibility to separateness and separate identity would have required special considerations.

Here there are three interests to be taken into account. One is the management—it is named possibly "trustees", but management. What has the management in Scotland to say? Secondly, there are the employees of the Bank in Scotland. What have they to say? They are highly unionised and have no doubt expressed a point of view. Then there are the depositors who have been ignored completely, it seems to me, throughout the whole piece.

I wish to know whether there have been special consultations with depositors in Scotland. After all, people who are about to be deprived of their birthright surely can make some claim to be consulted. I have been trying to find the reference, but I read that a notable member of the Trustee Savings Bank in Scotland said that the true ownership of the Trustee. Savings Bank of Scotland lay in the graveyards of Scotland. I think there is a great deal to be said for that. There are not many banks elsewhere who can lay claim to any graveyards anywhere from the point of view of the loyalty of their depositors and their account holders.

I stressed on Second Reading the emotional aspects of the Trustee Savings Bank. I hope that before we allow Scotland to remain in the Bill the Minister can satisfy us that there is an overwhelming case for keeping it there and that there would be serious difficulty in the way of the separateness. From the facts given by the noble Lord, Lord Taylor of Gryfe, it seemed even to the casual listener, I think, that Scotland is well able to stand on its own feet when it comes to financial, banking and insurance matters. But the question of consultation is bound to arise later on when we come to deal with other matters. I think that Scotland is a special case and there ought to be an especially convincing answer.

Lord Stoddart of Swindon

I listened carefully to what was said by the noble Lord, Lord Taylor of Gryfe, when he moved the amendment. I found his arguments very convincing, and those arguments were expanded by my noble friend Lord Houghton of Sowerby, who, quite rightly, noted that Scotland is and always has been in a particular position. It is not in the same position as any other region of England and not in the same position as Wales. It has a history of nationhood and therefore it deserves special consideration. Indeed, bearing in mind that the trustee savings bank movement started in Scotland, it is a little odd that they should now find themselves in the position that in future they will be controlled from London. I am quite sure that that will be the case. They certainly will not be controlled from Edinburgh.

As the noble Lords, Lord Taylor of Gryfe and Lord Grimond, noted, there is perhaps too much centralisation in this country at the present time. It would be good for the country as a whole if there were some dispersal from London of the control of financial affairs and of banking. I can quite understand why people in Scotland will resent, and resent very much, the movement of control of their affairs in regard to the trustee savings bank movement from Edinburgh to London.

The noble Lord, Lord Bruce-Gardyne, said that there would be difficulties in the way of this, but I can see no reason at all why, if the Scottish TSB is excluded from this Bill, it could not be reorganised in a further Bill. There is no bar to that. I would urge the Minister to consider very carefully indeed, very closely and very sympathetically what has been said during this debate, a serious debate, and I hope that he will lend support to this amendment.

The Earl of Perth

I was quite unaware that this proposal was coming up as an amendment in today's Committee stage. Having heard the noble Lords, Lord Taylor of Gryfe and Lord Grimond, I must say that I am very much on their side. There is always a tendency to centralise the banking facilities, all the financial power, in London. There was some discussion about the Hong Kong and Shanghai Bank trying to take over the Royal Bank. There were people in Scotland who were in favour of that, but for one reason only: that the Hong Kong and Shanghai Bank had undertaken that they were going to move their headquarters from London to Edinburgh. That was a completely different thing from the proposed takeover by the Chartered or anything else. What was being done was moving financial power to Scotland rather than to London. I do not understand why it is not possible to have for Scotland a separate Bill in favour of the Trustee Savings Bank (Scotland). As we have heard, with all the financial power that we have in Scotland, we are perfectly capable of standing on our own feet and I think that we ought to be allowed to do so.

The Earl of Gowrie

I feel that this is one amendment on which, as Jeeves said, "I think I will be able to give satisfaction". The fact is that TSB (Scotland) Limited will be a separate subsidiary within the TSB group and the bank will he managed in Scotland where the present TSB (Scotland) already plays a most effective role. The holding company in London is not a bank and is not expected to interfere at all in the management of regional banks. I certainly agree with the noble Lord, Lord Taylor of Gryfe, and others about the immense importance of Edinburgh not merely as a British financial centre but as a world financial centre.

As for arguments about the contributions to the Scottish economy, the historic role of TSBs has been to collect savings to finance the operation of central Government in London. This is the birthright for Scots, so to say, which the noble Lord, Lord Houghton, was asking me to defend. It seems to me a rather unsatisfactory birthright, and now it seems to me that Scotland is going to get an altogether better arrangement. So I do not feel that I am making a fundamental error, as the noble Lord, Lord Taylor, said. With respect, I suspect that he may be, because I do not think that it is a satisfactory role for TSB (Scotland) simply to finance Government in London. Under the new arrangements the TSB Scotland will be able to play a much more positive role in the Scottish economy, as my noble friend Lord Bruce-Gardyne has argued. TSB (Scotland) and the four earlier Scottish TSBs, which amalgamated into TSB (Scotland) in 1983, took their own decision to support the present proposals and if they had wanted more or less independence, no doubt they could have arranged that. If the new TSB group wishes to change its structure, for example by selling TSB (Scotland) to Scottish shareholders, it will be, I would say to the noble Earl, Lord Perth, perfectly free to do so and it would not need a Bill to do so.

Perhaps I may say to the noble Lords. Lord Grimond and Lord Houghton, that the trustees of TSB (Scotland) were consulted and they fully support the present proposals—the trustees, of course, act on behalf of the depositors—and so, indeed, do the unions involved, including the unions in Scotland. I would claim that it would not be in the interests of TSB (Scotland) or, indeed, of Scotland as a nation, to be excluded from the Bill alone among the present TSBs, to continue on the present outdated constitutional basis which, in so far as it favours central Government, could surely be said to be favouring England.

Lord Grimond

I only want to check that I heard the noble Earl correctly. Did he tell your Lordships' Committee that if the board of TSB (Scotland) want to sell their bank, they can do so without the authority of their holding company? Could they, for instance, sell the whole bank to the Chartered Bank, as was proposed by the Royal Bank of Scotland?

The Earl of Gowrie

No. What I said—and I must weigh my words most carefully—was that if the new TSB group wished to change its structure, for example, by selling TSB (Scotland) to Scottish shareholders, it would not need legislation to do so. But we have no evidence that it will wish to change the position because, as I have been arguing, there will be a much more dynamic role for the TSB as part of the financial structure of Edinburgh than there was before this Bill was put before your Lordships. I really feel therefore that not only the Committee but maybe even the shade of Sir Walter Scott might be pleased with me in this regard, and I hope the noble Lord will not press his amendment.

4 p.m.

Lord Taylor of Gryfe

I welcome this opportunity of clearing up some of the points as regards the intentions of the amendment. If you exclude the TSB (Scotland) it does not mean that the TSB (Scotland) which would then exist would be in the same relationship to the Treasury as in the existing TSB structure. That would be so for a limited period until you have a revised constitution and structure incorporated in a Bill governing the TSB (Scotland), with answerability to the Bank of England and with all the freedom from constraints that presently exist over TSB operations. We are not saying that the TSB (Scotland) should just stay as it is at the moment and in the same relationship as the TSB UK.

I am much in favour of some of the changes suggested in the Bill which give the TSB in general freedom to operate as a bank and as an additional force in the banking field. That should be clear. The other point was raised by the noble Lord, Lord Bruce-Gardyne, when he said there is assent, support and even enthusiasm for this in Scotland. That is not so. That has not been tested and the noble Lord has no right to claim that is so. A group of trustees, self-appointed, or appointed by the Treasury—good men and true—sitting in a smoke-filled room, may approve of this Bill but there is no consultation among the depositors who have created the £700 million worth of reserves which have been built up in this bank over the years. There has been no question of inviting the depositors in Scotland to give their opinion of the changes. Indeed, the Glasgow Herald of yesterday contains a letter from a depositor of over 50 years. The letter from a Mr. Christie Graham from Edinburgh says in substance: I have been a depositor of the TSB (Scotland) and I always regarded it as my Scottish bank. I went to the AGM and we were not asked to approve this change: we were asked simply to encourage investment in the new constitution". So, with due respect to the noble Lord, Lord Bruce-Gardyne, certainly the management may have a view about this; but I am not so sure that I could go along with him completely on that point, or the staff either.

However, there has been no attempt to consult the people who are virtually the owners of this bank (that is, the depositors) on the steps which are now proposed. I am sure the noble Lord, Lord Bruce-Gardyne, recognises that this change would not deny the opportunity of the very lively Scottish institutional investors and investment managers to invest in the TSB UK in the same way as they invest in British Telecom or other securities in the exercise of their judgment. To approve this amendment would not inhibit them from investing in the TSB flotation nationally or in the subsequent TSB (Scotland) flotation.

This is an important matter. We are talking about centralisation; and I hope that we would address ourselves as to whether there is a great advantage in centralising these financial services at the same time as the city of Edinburgh is building up a centre of financial expertise through its banks, its funding institutions, its merchant banks, and so on. We have no right to centralise this in London in the light of these circumstances. It contributes nothing in my view to the safety of the depositors or the expertise of the financial management. In the circumstances, I regret that we cannot reach an agreement with the Minister and I propose to divide the Committee.

Lord Stoddart of Swindon

Before the noble Lord sits down, there is one question which I should like to ask him arising from the noble Earl's statement about the position of the TSB (Scotland) in relation to the sale of shares. As I understood the Minister, he said that the TSB (Scotland) would be able to sell shares to Scottish shareholders. Perhaps he will correct me if I am wrong.

The Earl of Gowrie

What I said was that the TSB group if it wishes to change its structure, could sell TSB (Scotland) to Scottish shareholders. The fact of the matter is that Lord Taylor (and perhaps I may deal with his point at the same time, if that is satisfactory to the noble Lord on the Opposition Front Bench) is making a point on centralisation and wishing to divide the Committee on an issue of centralisation which is simply not founded, because what may not be understood by the depositor whose letter the noble Lord movingly read out, is that the TSB has not been, in any practical terms, a bank at all up to the present. It is now proposed that it should be able to behave like a bank; and the management and operations of the TSB (Scotland) will actually be adding to Scottish banking activity rather than subtracting from it. As a good Scot therefore I am very surprised that the noble Lord, Lord Taylor, should think this an issue on which he should divide the Committee.

Lord Taylor of Gryfe

I am sorry to delay your Lordships, but may I ask the Minister to confirm that if he believes that the TSB (Scotland) will exercise independence, he can explain the constitutional relationship between the holding board and the board of the TSB (Scotland)? In a Scottish bank the board is elected by the shareholders. In this case the board of that bank will be appointed by the central board in London. Is that so?

The Earl of Gowrie

We are trying to change the present outdated constitutional basis of TSBs generally. The arrangements for Scotland cannot be made, whether or not they are satisfactory in relation to the present suggestions which appear to have been widely welcomed in Scotland, if TSBs retain their present position and are not changed in the way suggested by the Bill.

4.8 p.m.

On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 76; Not-Contents, 113.

DIVISION NO. 1
CONTENTS
Amherst, E.	Bottomley, L.
Attlee, E. [Teller.]	Brockway, L.
Aylestone, L.	Bruce of Donington, L.
Barnett, L.	Burton of Coventry, B.
Beaumont of Whitley, L.	Campbell of Eskan, L.
Beswick, L.	Caradon, L.
Birk, B.	Carmichael of Kelvingrove, L.
Boston of Faversham, L.	Collison, L.

David, B.	McNair, L.
Diamond, L.	Meston, L.
Donaldson of Kingsbridge, L.	Mishcon, L.
Elwyn-Jones, L.	Molloy, L.
Evans of Claughton, L.	Mulley, L.
Ezra, L.	Nicol, B.
Falkland, V.	Oram, L.
Fisher of Rednal, B.	Paget of Northampton, L.
Fitt, L.	Phillips, B.
Gaitskell, B.	Plant, L.
Gallacher, L.	Ponsonby of Shulbrede, L.
Gladwyn, L.	Rathcreedan, L.
Graham of Edmonton, L.	Ritchie of Dundee, L.
Grimond, L.	Rochester, L.
Hampton, L.	Sainsbury, L.
Houghton of Sowerby, L.	Seear, B.
Hughes, L.	Shackleton, L.
Jacques, B.	Shinwell, L.
Jeger, B.	Simon, V.
Jenkins of Putney, L.	Soper, L.
John-Mackie, L.	Stallard, L.
Kennet, L.	Stedman, B. [Teller.]
Killearn, L.	Stewart of Fulham, L.
Kilmarnock, L.	Stoddart of Swindon, L.
Leatherland, L.	Taylor of Blackburn, L.
Llewelyn-Davies of Hastoe, B.	Taylor of Gryfe, L.
Lloyd of Kilgerran, L.	Wallace of Coslany, L.
Longford, E.	Wells-Pestell, L.
Lovell-Davis, L.	Winterbottom, L.
Mackie of Benshie, L.	Wootton of Abinger, B.

NOT-CONTENTS
Airey of Abingdon, B.	Home of the Hirsel, L.
Alexander of Tunis, E.	Hylton-Foster, B.
Belhaven and Stenton, L.	Iddesleigh, E.
Beloff, L.	Inglewood, L.
Bessborough, E.	Kimberley, E.
Boyd-Carpenter, L.	Kings Norton, L.
Brabazon of Tara, L.	Kinloss, Ly.
Broxbourne, L.	Lane-Fox, B.
Bruce-Gardyne, L.	Lauderdale, E.
Buckinghamshire, E.	Lloyd of Hampstead, L.
Caithness, E.	Long, V.
Cameron of Lochbroom, L.	Lothian, M.
Carnegy of Lour, B.	Lucas of Chilworth, L.
Cayzer, L.	Macleod of Borve, B.
Cork and Orrery, E.	Malmesbury, E.
Cottesloe, L.	Mancroft, L.
Cullen of Ashbourne, L.	Margadale, L.
Dacre of Glanton, L.	Marley, L.
Davidson, V.	Marsh, L.
De La Warr, E.	Maude of Stratford-upon-Avon, L.
Denham, L. [Teller.]
Digby, L.	Merrivale, L.
Effingham, E.	Mersey, V.
Ellenborough, L.	Montgomery of Alamein, V.
Elliot of Harwood, B.	Morris, L.
Ely, M.	Mottistone, L.
Faithfull, B.	Mountgarret, V.
Fanshawe of Richmond, L.	Mowbray and Stourton, L.
Ferrers, E.	Nelson of Stafford, L.
Ferrier, L.	Noel-Buxton, L.
Fortescue, E.	Nugent of Guildford, L.
Fraser of Kilmorack, L.	Onslow, E.
Gardner of Parkes, B.	Orr-Ewing, L.
Gisborough, L.	Penrhyn, L.
Glanusk, L.	Peyton of Yeovil, L.
Glenarthur, L.	Porritt, L.
Gowrie, E.	Portland, D.
Gray of Contin, L.	Rankeillour, L.
Gridley, L.	Reay, L.
Hailsham of Saint Marylebone, L.	Renton, L.
	Richardson, L.
Halsbury, E.	Rochdale, V.
Hardinge of Penshurst, L.	Rodney, L.
Hayter, L.	Rugby, L.
Hertford, M.	St. Davids, V.
Hives, L.	Saltoun, Ly.
Holderness, L.	Seebohm, L.

Semphill, Ly.	Trefgarne, L.
Skelmersdale, L.	Trumpington, B.
Soames, L.	Ullswater, V.
Somers, L.	Vaux of Harrowden, L.
Stamp, L.	Vickers, B.
Strathcarron, L.	Vivian, L.
Swansea, L.	Ward of Witley, V.
Swinfen, L.	Whitelaw, V.
Swinton, E. [Teller.]	Windlesham, L.
Terrington, L.	Zouche of Haryngworth, L.
Teviot, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.15 p.m.

Viscount Long

My Lords, this is an appropriate moment to take the Statement. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.