Yes, according to the definition of capital expenditure which is given in this Clause.
It deals with annuity sums and capital and"lump"sums—that is the word used —as a capital expenditure. Indeed, it is the very capital expenditure which we are transferring from the Commissioners to the Post Office and apparently the liability arising with regard to these fidelity bonds, which is the first purpose referred to in Section 5 of the 1929 Act about which I am asking. Apparently these fidelity bonds are to be transferred from the Commissioners to the Post Office. It would be interesting to know why that is being done. That is the effect of this Clause.
The second purpose which is dealt with here is:
When security is given in the last-mentioned form"—
That is, the fidelity bond—
the annual premium on the bond shall be paid by the trustees.
I am not quite certain about this. Is that payment of the annual premium within Clause 2 or is it not? Is that still to be paid by the trustees or is it now to be paid by the Post Office? It goes on to say:
and the trustees shall be entitled to recover from each person covered by the bond such proportion of the premium as that person's annual salary bears to the total amount of the annual salaries of the persons covered by the bond.
It may be that that is the answer to the question which you, Sir Charles, asked me a short time ago. The capital nature of these bonds arises upon their forfeiture and it may be on the forfeiture of the bonds that the transfer takes place. I am bound to say that I have had great difficulty in construing this. It is an important matter since it involves public expenditure and it is for that reason I am asking for explanations on these various matters.
The next purpose is the security required by paragraph (f)—this is of the first Victorian Act. the Savings Bank Act of 1891—
to be given in respect of the amount received on account of special investments shall not be separate from the security required by the said section…and accordingly the said paragraph (f) shall have effect as if the word 'separate' were not contained therein.
I ask the Minister to tell us about the nature of these securities with which we are dealing. Are they still a current liability or are they a current asset— could I have the attention of the Minister for a moment? I am referring to that item amongst the purposes which is set out in Section 1 (3) of the 1929 Act, and asking whether the items there set out are assets or liabilities and as to the terms on which they are to be transferred.
The next paragraph deals with an obligation as to the opening of the savings banks, and I do not think that it is affected by the legislation which we are now asked to introduce.
Clause 2 repeals Section 5 of the Savings Bank Investment Act of 1863 which provides that one half of the securities held by the Commissioners for savings banks shall consist of securities the interest of which is chargeable on the Consolidated Fund.
Now I come to Section 4 (1) which provides that:
The Commissioners shall in every year out of the amount by which the gross amount of the interest accrued during the preceding year on the securities standing in the names of the Commissioners to the credit of the Fund of the Banks for Savings appears by the account laid before Parliament under section seventeen of the Customs, Inland Revenue and Savings Banks Act, 1877, to have exceeded the gross amount of the interest paid and credited in that year to trustees of savings banks, apply, in accordance with the directions of the Treasury, such sums as the Treasury may from time to time authorise …in the first place, the expenses incurred by the Inspection Committee in the exercise of any powers conferred by the enactments relating to trustee savings banks; …in the second place, the expenses incurred by the Commissioners in the execution of the said enactments.
This is the provision for servicing the fund. How is that provision affected by this Clause? Is the liability to service these funds transferred from the hon. Gentleman's Department to the Commissioners? Do they stand where they were. or what?
The second provision is that:
Section fifteen of the said Act shall have effect as though the surplus of the interest accrued above the interest paid and credited were diminished by the sum so applied and subsection (2) of section four of the Savings Banks Act, 1891, shall have effect as if a reference to the amount available under subsection (1) of this section were substituted for the
reference to the amount available under subsection (1).
That looks as though this is a surplus which is subject to transfer by this Section.
We should all be interested to hear from the Minister whether this assumption is right. Am I right in assuming that this is transferred? Perhaps the Minister would prefer to answer that question later. I fully sympathise with him. This is a highly complicated matter and it is difficult to appreciate precisely how the very complicated provisions of three Acts of Parliament which set up the Savings Bank are to be variously affected by these transfers.
I do not think that we need refer to Section 6, which is merely an amending Section. But Section 7 appears to be important and, indeed, extremely obscure. Here again it is very difficult to interpret whether the alteration of the words in Section 5:
any capital expenditure incurred in providing premises wholly used by the …Commissioners
is affected by the power of surplus special investment capital provided by Section 8. Are premises an investment of capital? They normally are, of course, but here I should have been a little surprised if the intention was to transfer all these matters.
Section 8 contains important words and I should like to know the effect on them of what we are to do in this Bill. They are:
Subject as hereinafter provided, the trustees of a trustee savings bank may, with the consent of the Commissioners, apply a part of the surplus capital held by the bank on account of special investments towards the purchase of land.
The purchase of land presumably includes these premises. I am not sure of that and I think the position should be made clear. It may be that these premises are put in a category separate from the investment fund. Sometimes when one alters the words to different words one does not appreciate all the circumstances that they arise.
The hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) has very great experience of how the alteration of words in a statute very often has most unexpected results, and I am not certain whether the results which the alteration of these words have on
Clause 8 has been altogether appreciated by the Minister. Here we have the provision:
…part of the surplus capital held by the bank on account of special investments towards the purchase of land or the provision of buildings for the purposes of the bank,"—
that seems to bring it right in here—
and section four of the Savings Banks Act, 1904, as amended by this Act, shall have effect accordingly.
Then there are the provisos, and it may be that they save the situation. I am not certain, but the Minister will doubtless give us his views when we reassemble to discuss this on a future occasion, or perhaps we may have the advice of the Law Officers of the Crown on what is a rather difficult matter. The proviso which I think may be relied on provides that
(a) the Commissioners shall not give their consent in any case if the amount proposed to be applied would, when added to any sums already applied under this Section (excluding sums applied towards the purchase of any land or the provision of any buildings which have been sold), exceed twenty per cent. of the surplus capital as shown on the last annual valuation.
Here there is a limitation of investments in land including the bank's own premises, and as far as I can make out 20 per cent. of the deposits. If the liability in respect of building is transferred to the Post Office, it effects the investment line which has been laid down for a number of years and which, of course, is a factor of some importance in the depositors' security. I can remember that in 1939 an alleged threat to the security of Post Office deposits played a notable part in the General Election. To what extent are we doing that very same thing by the alteration of these words?