Provisions as to the Trustee Savings Banks Central Board

Orders of the Day — Trustee Savings Banks Bill [Lords] – in the House of Commons at 12:00 am on 8th March 1976.

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Photo of Mr Giles Radice Mr Giles Radice , Chester-le-Street 12:00 am, 8th March 1976

I beg to move Amendment No. 5, in page 21, line 14, at end insert— '(e) three representatives of employees elected through trade union machinery'. I rise briefly to disturb the tranquil passage of the Bill. So tranquil has it been that I did not notice its movement through the House. I believe that it had only one morning in Committee. I have been asked to move the amendment by the National Union of Bank Employees, which represents 98 per cent. of employees in the Trustee Savings Banks. The remaining 2 per cent. of employees pay to a charity, as agreed between the employers and the union.

It is a modest amendment asking for three employees to be elected to the central body through the national trade union machinery. I am not asking for a fifty-fifty split, which is what the trade union movement might ask for. This union is moderate and well respected for its reputation in industrial relations. All it wants is a modest step forward. It would also like the provision to extend to the Regional Boards. There is a general argument for having employee representatives on boards, and I introduced a Bill on that subject in the last Session. I am not making that point now. All I am saying is that the time has come to inject into this rather sedate establishment—which is so sedate that one-quarter of its members are over 70—the views of those who actually work in the movement. The workers represent a wider view than the view held by those people who are now on the Board. They represent the views of the small investor.

A contraction from 72 to 17 banks provides an ideal opportunity of looking at the situation. Even if my hon. Friend cannot accept the amendment, I urge him to consider carefully the ideas behind it, because they come from the union which represents 98 per cent. of the employees in these banks. I ask him to consider their ideas in the light of the Bullock Committee's recommendations—when they are received.

10.15 p.m.

Photo of Mr Michael Marshall Mr Michael Marshall , Arundel

I was interested in what the hon. Member for Chester-le-Street (Mr. Radice) said in proposing this amendment. I did not have the pleasure of serving on the Committee, but the hon. Gentleman will know that in my mind this Bill immediately brought together the whole question of the piecemeal legislation which we are attempting to put through the House both in this Bill and the Post Office (Banking Services) Bill which is now before another place.

There appear to be three immediate objections to the amendment. The first is that, despite the hon. Gentleman's blandishments, this is discriminatory legislation. The hon. Gentleman claims to be putting forward an argument in favour of the 98 per cent. of employees who are members of the National Union of Bank Employees. To that extent, I understand the basis of his argument, but it does not weaken the argument against the discriminatory proposal which he has made. If we are to consider those who should be represented at the level which he has in mind, we cannot single out employees of banks who are trade unionists. We must also consider employees who are not trade unionists. The hon. Gentleman has no right to suggest that there is some inalienable right in trade unions to be represented in the way that he suggested.

Secondly, the amendment appears to be totally arbitrary. What is the basis on which three employees is the number chosen? Why should it not be one, two or some greater number? We have had no justification for the quantification put forward by the hon. Gentleman.

Photo of Mr Giles Radice Mr Giles Radice , Chester-le-Street

The purpose of the amendment is to get the principle of employee representation on the Central Trustee Savings Banks Board accepted.

Photo of Mr Michael Marshall Mr Michael Marshall , Arundel

The hon. Gentleman suggests that he wishes to have the principle established. But it is still up to him to put forward a clear-cut idea for this number in relation to the composition of the Board overall. It is not sufficient to suggest that we should accept this specific amendment to establish the principle.

My final objection is to the piecemeal legislation envisaged by the amendment. In recent weeks we have had to look at what the hon. Member for Thornaby (Mr. Wrigglesworth) has rightly described as piecemeal legislation coming before this House at a time when we know that the Government plan to bring forward supervisory legislation relating both to the Trustee Savings Banks and the Post Office Giro Bank as it will be. Against this background of future legislation and the feeling that we are in this bizarre way raising an important point of principle, I do not think that it would be right for us to accept the amendment.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Teesside Thornaby

The hon. Member for Arundel (Mr. Marshall) is nit-picking in speaking against the amendment in terms of the proportion of trade union members who shall be on the Board.

I support the amendment. The National Union of Bank Employees has such strong support in the Trustee Savings Banks that, if staff are to be represented on the Central Board, it is clearly the body from which the representatives should come.

I see from the evidence which the National Union of Bank Employees put before the Page Committee in 1971 that the procedural agreement between the union and the TSB Employers Council was signed and agreed in 1947. It goes back a very long time. The NUBE has a substantial body of support which has been recognised by the TSB management. I can think of few industries or organisations which have procedural agreements going back that far and which have so much support from the employers. Therefore, a strong case can be made for this proposal. If the Minister feels that he cannot accept this specific amendment, I hope that he will at least be prepared to discuss with the Central Board the composition of both the regional trustees and the Central Board itself.

There is the option under Schedule I to have four people co-opted to the Central Board. It may be that if the amendment cannot be accepted the Board will carefully consider the possibility of putting on one or two of the four co-options from the trade union movement, and possibly from the National Union of Bank Employees. I hope that the Board and the Minister will give careful consideration to that proposal.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

I hope that the House will reject the amendment. I should like the Minister to reject it rather more forcibly than I think he will.

I have watched the progress of worker participation, industrial democracy and all the rest of it with some interest. Over the past 12 months I have had the pleasure of serving on two Standing Committees which have written industrial democracy into the operations of constitutional bodies.

First, we set up the Scottish Development Agency. It is a wonderful new State body which is splashing around a great deal of money on administration but not on jobs or anything to help Scotland. A clause was inserted to the effect that companies to which the Agency gives money have an obligation to follow a path of industrial democracy. I asked repeatedly "What on earth is industrial democracy?" The Minister replied that the Government were still considering the matter and having

I am also having the pleasure of taking part in the debates on the Bill that seeks to nationalise the shipbuilding and aircraft industries. There is a clause which provides that a new nationalised corporation will have to apply industrial democracy. I and a number of Labour Members have been cross-examining the Minister at some length in Committee about what is meant by industrial democracy. We still do not have the slightest idea.

I believe that worker participation, whether in this Bill or any other, will be something like devolution—namely, something which everyone is in favour of as long as it is painted with a broad brush and not examined in detail. It is a concept that will horrify many people when specific schemes are discussed.

The hon. Member for Chester-le-Street (Mr. Radice) had the guts to bring forward a Bill setting out proposals for industrial democracy. Happily the Bill died a death because of an assurance from the Government that they would set up yet another committee.

I oppose the amendment on a number of specific grounds. First, it is monstrous that a Bill that seeks to provide the TSB with more freedom to operate in what is called a highly sophisticated banking system should have an obligation placed upon it that does not apply to other banks. The TSB will be competing with other banks for investors' money, yet it is to be saddled with something called worker participation. It is a formula which will cast a great deal of suspicion in the minds of the conservative-minded investing public.

In trying to introduce proper competition on a fair and equal basis, it is wrong to put an obligation on a group of banks which is not faced by other joint stock banks. I hope that the Government will be careful, in advance of their splendid Committee, about going ahead with industrial democracy plans until they have thought the matter through.

A number of trade union leaders have been thinking about industrial democracy and worker participation. Three of the principal trade unions have come out with strong reservations. I think they realise that if employee participation works at factory level it will be the beginning of the end for the organised trade union movement in its present form. More and more trade union leaders and branch officials are coming to that conclusion. If industrial democracy is successfully applied, the place for the trade union below district level will disappear.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Teesside Thornaby

Is the hon. Gentleman not aware that this proposal was specifically made by a trade union which wants the representation which the amendments seeks to provide?

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

Yes, I accept that the National Union of Bank Employees may want it, but other trade unions which are looking at this matter very carefully—the hon. Gentleman should refer to some recent statements by trade union leaders—are becoming rather lukewarm about a proposal about which they were enthusiastic at one time.

I have to this proposal the same objection which I have towards the terms of reference of the Bullock Committee. There is a world of difference between what one might call "employee participation" and trade union participation. Although there may be 98 per cent. union membership in the Trustee Savings Banks, there is a principle here that I would not want to give away. I have the feeling that some left-wing members of the Labour Party—I do not count the hon. Members for Thornaby (Mr. Wrigglesworth) and Chester-le-Street—who are pushing industrial democracy are really interested in trade union control of industry and commerce and not so much in employee participation. There is certainly scope in industry and commerce for more participation and better communication, but industrial democracy is a different concept. If we were to start by specifying a scheme, we should be making a mistake.

I know that hon. Members do not like to be reminded of the Common Market because of the damage it is doing to our people, but the hon. Member for Chester-le-Street, who was an enthusiast for the Common Market, should be aware that these dreadful Common Market people are bringing forward a new regulation which will have supremacy over our own law. I know that you, Mr. Speaker, take great interest in democracy in Britain and that you will be as horrified as I am that a Common Market law can take precedence over our own law. Even if all hon. Members of this House voted for something, it would have no relevance if the Common Market approved a regulation which was different.

The Common Market is deeply engaged in discussion, with the help of the splendid Commission, aimed at drawing up specific proposals on employee participation, industrial democracy, and what-have-you. It would therefore be silly if we brought forward plans to apply to British institutions if the Common Market is to come along with something different and make us overhaul and overturn what we have done. That would be quite wrong in this situation. It would be wrong to approve any detailed plans for British industrial democracy, particularly in the Trustee Savings Banks movement, at present, especially when that movement does such a good job in its present form.

I have been here for 11 years—as someone reminded me, longer than a life sentence. I have seen a lot of grandiose ideas experimented with. I have seen people who wanted to overturn the world setting up committees and holding inquiries. It usually works out for the worse. Let us not rush into anything without thinking of the consequences. I hope that the Minister will do what he should do. He should not just say that he is sympathetic to the idea, that it is a good idea, but that there are technicalities. I hope that he will simply throw it out.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I oppose the amendment. I wondered how my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) would bring in the Common Market, and it was fascinating to hear how he did it. I hope that the Trustee Savings Banks under the Bill will be allowed to make the same sort of progress that they make in Europe and elsewhere.

I must take the hon. Member for Chester-le-Street (Mr. Radice) to task. I would not like him to be thought correct in calling the Trustee Savings Bank movement sedate. I do not think that any organisation with an annual turnover of £9,000 million can be called "sedate". I do not know whether he himself is a small depositor in one of the Trustee Savings Banks, but I am, and I am very satisfied with the standard of management provided by the movement.

I join my hon. Friend the Member for Glasgow, Cathcart in saying that it would be a pity if the amendment were passed in isolation while the Bullock Committee is still delving. It would be unfair to single out the Trustee Savings Bank movement as a guinea pig. It would be wrong because at a time of total transformation, when the Trustee Savings Banks are going from a sheltered, cloistered life under the benevolent protection of the Treasury into the wide open world, which I am sure they are capable of doing, they should not be given this extra burden. It might upset the small depositors about whom the hon. Gentleman professed to be concerned.

Therefore, whether he does it in beguiling terms or in tough terms, I hope that the Financial Secretary will advise the House to reject the amendment.

10.30 p.m.

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

A number of appeals have been made, but in an ingenious speech the hon. Member for Glasgow, Cathcart (Mr. Taylor) managed to deal not only with the Trustee Savings Banks but with the Common Market and capital punishment.

My hon. Friend the Member for Chester-le-Street (Mr. Radice) urged me to give the right reaction to his proposal and asked me to consider the ideas behind the amendment. I go further and say that not only am I prepared to consider them but I accept many of them, as did the Government when they asked the Bullock Committee, while Accepting the need for a radical extension of industrial democracy … and accepting the essential role of trade union organisations in this process, to consider how such an extension can best be achieved, taking into account in particular the proposals of the Trades Union Congress report on industrial democracy as well as experience in Britain, the EEC and other countries. That is precisely what we are doing. We have asked Lord Bullock and his distinguished Committee to make a full examination into all these matters. Therefore, I must accept the point made by the hon. Member for Hampstead (Mr. Finsberg), although I would not go so far as to call the Trustee Savings Banks sheltered, cloistered institutions.

The Bullock Committee has all the terms of reference that my hon. Friends the Members for Chester-le-Street and Thornaby (Mr. Wrigglesworth) wish it to have. It is expected to report this year, so implementation of its report could well be in the time scale of the first three years of the new structure of the Trustee Savings Banks.

My hon. Friend might have reminded the House that there was a very good reason for choosing the figure three, because it was the figure given by the National Union of Bank Employees in its representations on the Trustee Savings Bank legislation in April 1974. Since then, however, it has been overtaken by the establishment of the Bullock Committee and the much wider consideration that will now be given to the matter, of which I have great hopes. I trust that my hon. Friend, who has done so much work in this area, will be able to produce many arguments in our debates which will lead to its widespread acceptance in principle and possibly in detail.

I accept the point made by my hon. Friend the Member for Thornaby. As he rightly said, there is nothing in this legislation to stop employee representation going ahead as soon as the legislation is passed. The Trustee Savings Banks may see merit in going ahead even before the Bullock Committee reports, but that must be a matter for them to decide rather than that it should be imposed. Any other consideration will be more suitable following the production of the Bullock Report and the consequences likely to flow from it.

Perhaps with those assurances my hon. Friend the Member for Chester-le-Street will not press the amendment.

Photo of Mr Giles Radice Mr Giles Radice , Chester-le-Street

In the light of what my hon. Friend has said and the sympathetic way in which he put it, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Mr David Knox Mr David Knox , Leek

I beg to move Amendment No. 2, in page 21, line 26, leave out "£100 million" and insert "£40 million".

The hon. Member for Stoke-on-Trent, Central (Mr. Cant), whose name is attached to the amendment, has asked me to express his regret that he could not be here tonight. He has a pressing constituency engagement.

The aim of the amendment is to lower from £100 million to £40 million the level of cash liabilities to depositors which a Trustee Savings Bank must have to qualify for a seat on the Central Board. The amendment would increase the number of members of the Board from 17 to 18.

The hon. Member for Stoke-on-Trent, Central and I are concerned mainly with the North Staffordshire Trustee Savings Bank which has been referred to on a number of occasions in our debates on the Bill. Since the Second Reading and Committee stage, the trustees of the North Staffordshire bank have met representatives of the Trustee Savings Banks Association and the discussions were friendly and constructive.

The trustees were assured that the Central Board would not use its powers to force the North Staffordshire bank to do anything it considered inadvisable or to amalgamate with another bank unless the trustees so wished. The trustees were also assured that their bank would not be forced to use data processing services or equipment it did not wish to use.

The trustees felt that the attitude of the Association was very helpful compared with their previous threatening attitude to which the hon. Member for Stoke-on-Trent, Central has referred. As a result, the trustees of the North Staffordshire bank are happy to participate in the new set-up—which is a very different attitude from that which they were showing at an earlier stage.

I wish to express the trustees' thanks to the Financial Secretary. We do not know exactly what happened, but we gathered that he has been of great assistance. However, there is still one problem. Under the Bill, the North Staffordshire Trustees Savings Bank would not have a seat on the Central Board because its cash liabilities to depositors do not exceed £100 million. At present they are £44 million. The amendment would give the bank a seat on the Board where it would be able play its full part in the future development of the Trustee Savings Bank movement and in decisions which might affect it.

The amendment is not unreasonable. If it would upset the balance on the Board, I could understand any objections, but 17 regional banks with balances ranging from £622 million for the South-East Regional Bank to £104 million for the Midlands Regional Bank will serve on the Board. If the amendment is not accepted, the North Staffordshire bank will be the only regional bank not represented on the Board.

The hon. Member for Stoke-on-Trent, Central and I accept that the North Staffordshire bank is smaller than any of the other banks, but that serves only to confirm our view that it should have a seat on the Board. It would be one amongst 17 bigger banks, but it would not be in a position to upset the plans of the bigger banks. As a member of the Board it would be able to remind other members of the interest of smaller banks and, in particular, of its own interests.

I hope that the Financial Secretary, who has already been helpful in this matter, will accept the amendment.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I am sorry not to agree with my hon. Friend the Member for Leek (Mr. Knox), but it would not be wise for the House to accept the amendment. The Trustee Savings Banks are entering a new and highly competitive field, and the minimum size of a regional bank was set at £100 million liabilities to ensure its viability. In the past, the range of Trustee Savings Banks has been from £300 million to £500,000. The Central Board was created to provide for banks of an average size of £220 million. The only bank which does not fall within that range for technical and legal reasons is the Channel Isles bank, but even that is only just below £100 million. If North Staffordshire were allowed a seat on the Board, its depositors would continue to receive a service which is less comprehensive than that of any other Trustee Savings Bank.

In Committee I gave figures showing the amount of interest paid to depositors as a percentage of balances. North Staffordshire paid 5·51 per cent., the Aber- deen Trustee Savings Bank paid 668 per cent. and the average of all Trustee Savings Banks was 6 per cent. However good the North Staffordshire Trustee Savings Bank is, its depositors are getting a lower return than are depositors with other banks. They would be in that continuing situation if the Financial Secretary gave way and reduced the figure from £100 million to £40 million.

There has been an enormous amount of discussion in the movement. I am authorised by the Trustee Savings Banks movement to say that no pressure has been exerted on any bank. If the amendment were accepted, many other banks with liabilities below £100 million might wish to become separate banks and try to unscramble the federations that have been built up over the past few months.

I hope that the Financial Secretary will advise the House not to accept the amendment, or that my hon. Friend will see fit to withdraw it. I understand his feelings of local loyalty. Nothing I have said means that the work done by the North Staffordshire Trustee Savings Bank should be run down in any way. It would be of great advantage to the depositors with North Staffordshire if the bank were to offer the full range of services. That may well come if the trustees of North Staffordshire accept that the eligibility for a seat on the Central Board should be £100 million. The trustees may find bedfellows, and there may be an amalgamation or federation which would satisfy everyone, producing the £100 million criterion and giving the added benefits to the people who matter, not the trustees but the depositors.

10.45 p.m.

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

The hon. Member for Leek (Mr. Knox) kindly referred to my role in the meeting of the Trustee Savings Banks Association and the North Staffordshire Trustee Savings Bank. I was delighted, as was the hon. Gentleman, at the co-operation which resulted from that meeting, co-operation which will obviously be fruitful in the future. But now we are faced with the further point—whether the North Staffordshire Trustee Savings Bank or any other should get a seat on the Central Board if its deposits are below £100 million but exceed £40 million. This is a very different matter. As the hon. Member for Hampstead (Mr. Finsberg) pointed out, there will be a number of regional groupings which will wonder why they accepted those groupings when an alternative would have been available to them.

Another reason for amalgamation was to construct larger units which could offer the new facilities which include overdrafts, personal loans and other forms of technical service for which substantial deposits will be required. That was in accordance with a recommendation of the Page Committee which the Government accepted as being in the interests of the Trustee Savings Bank movement generally. The Government accepted that the Board had to be fairly compact. The hon. Member for Leek might say that one more member would not make much difference, but that he forgets the many other Trustee Savings Banks which might use the possibilities opened up by the amendment.

The sum of £100 million was not just plucked out of the air. It resulted from a long round of consultations and negotiations with Trustee Savings Banks all over the country. The negotiations could be reopened at this stage only with great difficulty and to no advantage.

I appreciate the generous reference by the hon. Member for Leek to my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant), who is unable to be here this evening. I must, however, come down on the side of the hon. Member for Hampstead who says that the depositors must come first. The rights of the trustees and the part they play in the movement must be recognised, but in this reorganisation the interests of the depositors must come first. On reflection, I am sure that it will be agreed that those interests would best be served by considering not only local loyalties but the position of depositors who will enjoy a better service and whose money will be more fruitfully used if the changes proposed in the Bill are made and if there is no derogation of the kind the hon. Gentleman is proposing.

Photo of Mr John Forrester Mr John Forrester , Stoke-on-Trent North

I would first thank the Financial Secretary for his help in achieving cooperation between the Central Board and the North Staffordshire Trustee Savings Bank. The hon. Member for Leek (Mr. Knox) has covered most of the points, but I was concerned about the magic figure of £100 million. The hon. Member for Glasgow, Cathcart (Mr. Taylor) gave me the impression that it might have been imposed on the Financial Secretary by Brussels.

Of course the interests of the depositors must come first in all the deliberations, but the hon. Member for Hampstead (Mr. Finsberg) appeared to be saying that we could not reduce the amount to £40 million because then North Staffordshire might become and remain independent and others might be tempted to follow suit, whereas if it were not reduced North Staffordshire might later be forced into an amalgamation because it was not big enough. I know that all negotiations have been voluntary, but is my hon. Friend hoping that in future North Staffordshire will not be big or viable enough to withstand the pressures of the Central Board?

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

Perhaps I can set my hon. Friend's mind at rest. Hon. Members accepted my assurance in Committee that there had been no arm-twisting, no undue pressure on the North Staffordshire Trustee Savings Bank. We were considering the interests of the depositors, but if the bank wished to stay as it was, that would be allowed. There might be serious consequences from this proposal for the depositors, which I am sure my hon. Friend will also consider.

Photo of Mr David Knox Mr David Knox , Leek

In view of the Financial Secretary's help, it would be churlish to press the amendment. Therefore, reluctantly, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.