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Savings Banks Bill

Volume 40: debated on Tuesday 18 May 1920

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Order of the Day for the Second Reading read.

My Lords, the most important object of this Bill is to make provision for the continuance, after the expiry of six months from the end of the war, of the present suspension of the limits which in normal pre-war times applied to deposits in the Post Office Savings Bank and in Trustee Savings Banks, and to remove the limits which applied and still apply to investments in Government stock through the medium of a Savings Bank. The pre-war limits on deposits were suspended at the end of 1915 (by Treasury Order under the War Loan (Supplemental Provisions) Act), and it is proposed that this freedom from limit should continue, power being reserved to the Treasury to reimpose a limit if it at any time seems advisable.

General arguments in favour of the removal of limits on deposits and investments are the absurdity of discouraging thrift, and the recent development of the Post Office register, where, since the issue of the 4½ per cent. War Loan, there has been no limit on holdings. The Bank of England and the Bankers Clearing House have been consulted with regard to the provisions of the Bill and offer no objection. The Bill also provides for an increase in the rate of interest that may be paid by the National Debt Commissioners to Trustee Savings Banks, at present, under Statute, 2¾ per cent. per annum. The Banks, backed by the National Debt Commissioners, have represented that an increase is necessary in view of the great increase in expenses of management. The Post Office are overhauling their Savings Bank regulations, and provision is made in this Bill to extend the power of the Postmaster-General to enable him to make regulations on certain minor points hitherto uncovered. No alteration of practice is intended.

Further, the Bill proposes to remove the existing limit on the amount which a Savings Bank depositor may deal with by way of nomination. This is in line with the removal of the limit on deposits, but would be desirable even if that were not contemplated. The present arrangement under which a depositor can only nominate half his possible (pre-war) holdings has often confused an unsophisticated depositor. As a corollary to the abolition of the limit on deposits the limit of £1 imposed on the fees chargeable in respect of the Registrar's awards in disputes about Savings Banks deposits is removed by the Bill. The Bill also contains provisions for the change of the name "War Savings Certificates" to "National Savings Certificates," a change earnestly desired by the Savings Committee, who have already dropped the word "War" from their title.

I ought, perhaps, to point out to your Lordships that the reason why the Government are anxious to get this Bill passed through all its stages before Whitsuntide is that the Savings Bank's half year begins on May 20, and if Parliament thinks proper to enable this Bill to become an Act by that date the changes will be made as from May 20, It is for that reason and for no other that I ask your Lordships to allow this Bill to be read a Second time to-day, and I will put it down for its further stages to-morrow. It is a Bill that I think your Lordships will agree is a minor Departmental measure, and it certainly provoked no debate in another place. I hope, therefore, that it will pass through all its stages by Wednesday.

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

My Lords, I confess that I am never any good at finance, and I certainly have not gathered, as I ought to have done, the great importance of the Bill from the speech of my noble friend. It may be a Bill of urgent importance, but I did not gather it from him. I gathered rather that it was one of those useful Bills which contained desirable amendments in the law, and one that required the scrutiny that all Bills require, but otherwise, though a desirable Bill, it was not a very important one and could not be regarded as very urgent. I did not learn that anything very serious would happen if this Bill were not passed before the Recess. Of course, if the noble Lord were able to say that very serious consequences would result if the Bill were not passed before the Recess, I should perhaps take a different line, but if I am correctly advised that it is one of those useful Bills which nevertheless require scrutiny then surely the Government would be well advised to take the Second Reading now and not press the Bill any further. I suggest to my noble friend as a suitable arrangement that he should not press the matter any further until after the Recesss.

After what my noble friend has said, I suggest that if the House would be good enough to read the Bill a second time this afternoon I will communicate with the Treasury and ascertain from them whether it really is important that the Bill should pass by Wednesday, and inform the House of their view.

My Lords, as a matter of comment upon the greater or less importance of this Bill and its title to be regarded merely as a minor Departmental measure, I perhaps may be allowed to remark that it affects the total maximum amount which may be deposited by an individual depositor. It also affects the future rate of interest to be paid upon deposits in savings banks. As the honorary president of a trustee savings bank I am bound to rejoice in anything which increases the prestige and resources of such an institution, but it is to be observed that the maximum rate of interest, and again the maximum amount that may stand to the credit of the depositor, has hitherto been regarded as a matter to be solely regulated by Parliament itself, and if this Bill passes it will become a matter regulated by the Departmental authorities, subject only to what may be called the negative approval of the Houses of Parliament by the expiration of a certain period from the day during which a new Executive Order is laid upon the Table of the Houses of Parliament. That may be right or it may be wrong. I merely wish to draw the attention of your Lordships to the fact that it is yet one more step in the direction of substituting Departmental and bureaucratic authority for Parliamentary authority. I have still to learn that the rate of interest to be paid upon deposits has to be changed so frequently or with such an amount of levity that we should be compelled to sanction this great facilitation of procedure. It has not been thought desirable in the past, and I do not quite understand why it is necessary now.

There is one rather ominous provision in this Bill which is that whereas the limit upon this maximum amount which a depositor may have to his credit is to be removed there is a power of discriminating between classes as regards the exercise and enjoyment of the privilege, for privilege it is. I wish your Lordships thoroughly to understand that it means that the depositor has the capital value of his investment guaranteed to him by the State. It is not like the holder of Consols, who may see the capital value of his investment rise or fall with the state of the market. The depositor in a savings bank has his capital absolutely guaranteed to him, and so long as he chooses to leave it there he is sure to be able to get his capital out again in full, while on the other hand the State is liable, I believe at four days' notice, to have to find him his money to whatever sum it may amount. I do not think that is exactly a minor Departmental purpose.

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