§ Mr. Arnoldasked the Chancellor of the Exchequer what arrangements he proposes to make for recompensing those savers affected by the recent industrial action by staff employed by the department of national savings; and if he will make a statement.
§ Mr. LawsonIndustrial action by certain staff employed by the department for national savings (DNS) lasted from 23 February to 3 May 1979 bringing to a temporary halt a number of national savings services. Every effort is being made to recover. The administration of national savings certificates, save-as-you-earn (SAYE) and the National Savings Bank is now largely back to normal. Dividend payments issued by DNS should be up to date by the end of this month. 303W Given the large volume of work involved, the arrears of premium savings bond prizes will however not be cleared until the end of the year despite the introduction of a temporary prize structure for the draws in respect of September to December inclusive.
The Government very much regret any worry, inconvenience or hardship caused to savers as a result of the strike and, as I have already made clear in my answer to the right hon. Member for Heywood and Royton (Mr. Barnett) on 25 May [Volume 967, c. 304], we have undertaken to recompense those savers whose payments were delayed as a result of the industrial action. The terms on which recompense payments are to be calculated reflect the fact that, in addition to any anxiety or inconvenience caused by the uncertainty and delay, the delays in receiving payments may have involved some savers in extra costs because payments did not arrive when expected, although this of course does not apply in the case of premium savings bond prizes. It has therefore been decided that recompense will be payable in the form of interest at a rate of 17 per cent. on all delayed repayments of national savings certificates, National Savings Bank investment deposits, premium savings bonds and SAYE contracts and on any delayed dividends on stocks and bonds on the National Savings Stock Register (which includes British savings bonds). These recompense payments will be reduced by any amount of interest or increment which may have accrued automatically during the period of the delay. The interest rate of 17 per cent. compares with overdraft rates of about 16 per cent. during the period when monies were owing.
In the case of premium savings bond prizes where, by virtue of the unexpected nature of the payment, savers could not have incurred any extra costs, the rate for calculating recompense will be 8 per cent.
In all cases interest will be payable for the period between the date on which the payment of capital and/or interest would normally have been paid and the date on which payment was finally made. The department for national savings will automatically be paying recompense where this is at least 50 pence and in such cases no individual claims will be required. Specific applications by savers to whom recompense of less than 50 pence would 304W be payable under the scheme will be met in full, but given the high costs of handling these payments in relation to the amounts involved, I hope that there will not be too many claims for very small sums.
The foregoing arrangements will apply to all DNS services except the NSB ordinary account where, because of the availability of demand withdrawal facilities at Post Offices, savers will in most cases have been able to secure access to their money. Nevertheless, applications for recompense under the scheme will be met from holders of NSB ordinary accounts who can satisfy the department that they were unable to obtain the repayments they required.
In order to help ensure that the recompense fully covers any extra costs incurred, the Government propose that the recompense payments will be exempt from tax. Authority for this exemption is sought in a new clause which has been tabled today for addition to the Finance Bill at Report Stage.
The necessary administrative arrangements for making the payments are now being made. Payment of recompense in respect of savings certificates, National Savings Bank investment accounts, SAYE and premium savings bond repayments will start within a month or so. The very large numbers of dividends and PSB prizes will require the preparation of new computer programmes and payments will not therefore begin until towards the end of the year. It is hoped that all recompense payments will have been paid by early next year.
The total costs of the recompense, which will fall on the department for national savings vote (class XIII, vote 12), is estimated to be in the region of £2½ million. Every effort will be made to absorb these costs within the existing DNS cash limit though given the fact that they are an unexpected burden arising during the current year some claim on the contingency reserve and an adjustment to the DNS cash limit may be unavoidable. Any unavoidable additional expenditure would form the basis for a winter Supplementary Estimate that would be laid before Parliament in due course.
I believe that these arrangements give a generous measure of recompense to 305W those affected by the recent regrettable strike at DNS and hope that they will make good any damage to the standing of national savings.