Although the view of the Treasury is unequivocal and does not encourage any possibility of variance, J P Hilton wrote to the Secretary
to the Treasury on July 20th 1922 in an attempt to change their opinion:
I beg to refer to your letter of the 6th instant, written
on behalf of the Lords Commissioners of His Majesty's Treasury, and to say that I have taken an opportunity of bringing the same before
the Chairman of the Bank Committee (Councillor Appleby) and Mr Neville Chamberlan, MP, who attended the interview at the Treasury
on the 15th ultimo.
After giving careful consideration to the reply of the Lords Commissioners, I am desired to write you fully
on the points raised, as both Councillor Appleby and Mr Chamberlain feel that their statements at the recent interview with Sir John
Baird and the Representatives of the Treasury do not appear to have been fully appreciated.
Accordingly, I submit herewith for
the consideration of Their Lordships a further statement which it is hoped will make clear any doubtful points. In particular I am
to call attention to the statement concerning the present practice in collecting Water Rates, to which it is believed no exception
cab be taken by Their Lordships, and to point out that a similar practice could be followed in respect of Rates if the Officials of
the Bank were authorised to receive and give receipts for moneys paid in Rates.
As requested, I have pleasure in sending you
a copy of the last audited Statement of Accounts.
Facilities for payment of Rates.
The decision of the Lords Commissioners appears
to be based on a misapprehension, as to the practice now operating, and it is desired to bring before them in greater detail the proposals
put forward on behalf of the Municipal Bank.
Water Rates.
The City has a population approaching one million, spread over an area
of 43,000 acres, and in the past Water Rates have been payable at one Central Office. This has entailed either a visit to that Office,
or a remittance through the post, and in the latter case despatch by the Department of a receipt through the same medium at a cost
of 1½d each to the Rate payer and the Corporation.
The arrangement now in existence provides facilities for the Water Rate payer
to call at the nearest Branch of the Municipal Bank and pay his money there in exchange for a formal receipt. The amount is paid direct
into the credit of the Water Department's Account at their Bankers and the transaction does not pass through the books of the Bank.
In consideration of the services rendered by the Staff and the use of the Office, the Water Department pay a sum based on the
number of the transactions with a minimum of £500 per annum. This arrangement has provided a convenience to the Water Rate payer;
has enabled the Water Department of the Corporation to effect economies and to reduce their Staff, and also has been advantageous
to the Bank's depositors by providing a contribution towards the working expenses of the Bank. Arrangements are made for the receipt
of the Water rates at times other than the evening hours which are largely used by the Depositors.
Experience has proved that
many people who call to pay Water Rates become depositors at the Bank.
Collection of Rates.
The arrangements now in existence
are that the depositor who has sufficient money standing to his credit may call at the Branch at which his account is open, and sign
a form instructing the Bank to pay over to the Rates Department the amount due and to charge the same against his account. The Head
Office of the Bank is then advised by the Branch, and periodically the total rates received are paid over to the Rates Department
who are furnished with a list of the Rate payers and the Department then forward an official receipt to each of them.
It is possible
for the depositor to call at the Municipal Bank, withdraw the necessary amount and take or forward it to the Rates Department of the
Corporation; but it will be very difficult to convince Depositors that this round-about way is necessary.
The present practice
entails little, if any, more work upon the Bank Staff, and is from experience a considerable advantage to the Bank as small Rate payers
are opening accounts for the purpose of saving money to meet the Rate Demands as they come in every half year, and there is no doubt
that if they become accustomed to saving for one person, they will save for another and thus the thrift habit will be developed.
At
the present time, on account of the increased rents, a larger number of houses are outside the compound limit and many landlords are
calling upon their tenants to pay their Rates direct. Other Municipalities have serious trouble with the collection of small Rates,
and one large City had recently to issue over 12,000 summonses against defaulting Rate payers. Other cities are considering the organisation
of staffs of collectors, smaller towns have started a system of saving by stamps or coupons, and it is suggested that the machinery
provided by the Municipal Bank forms an ideal organisation for the payment of small Rates.
At the present time no arrangement
has been made for the receipt of Rates by the Bank; but if the system could be put into force the Rating Department would be prepared
to deal with the question of a contribution towards the working expenses of the Staff of the Municipal Bank.
It should be made
clear that the account of the depositor is not earmarked in any way as being for the purpose of paying rates.
It was not until
August 19th 1922 that the Treasury replied. Despite the Bank having explained in some detail how the system of collecting water accounts
was absolving thousands of ratepayers from the need to travel into Birmingham city centre twice yearly, and the Rates system was assisting
the lowly paid save for a major item of expenditure, no concessions were made in the Treasury's opinion, and no offers made to amend
the Bank's Regulations to legalise the collection systems.
I have laid before the Lords Commissioners of His Majesty's Treasury
your letter of the 20th ultimo with further reference to the questions raised by the deputation that attended the Treasury on the
15th June last.
In reply, I am to say that My Lords regret that the further explanations in this letter in no way alter the position,
which is that the Bank in carrying out rate collecting operations is acting beyond the powers conferred on it as a Savings Bank by
the Act under which it is constituted. My Lords regret that They cannot in these circumstances modify the terms of Their letter of
the 6th July.
During this period in 1922 when the Bank was exchanging the above letters with the Treasury, Water accounts were
continued to be accepted over the Bank's counters, and the limited system in operation for the payment of Rates was continued. This
continuance was despite the statement of the Treasury that "the arrangements .... are not covered by the powers which Parliament has
conferred upon the Bank, and must be discontinued".
Changing the Regulations to provide the Bank with the necessary powers to
collect accounts required an Act being approved by Parliament, but promotion of such an Act would have required the prior approval
of the Treasury. In 1924 it was intended to take steps to obtain Parliamentary powers to remove some of the restrictive provisions
which applied to the Bank, and also to secure wider powers, but the dropping by the City Council of a general powers Bill frustrated
that intention. In 1925 no Bill was promoted by the City Council, but in 1926, the General Purposes Committee of the Council again
considered the question of promoting a Bill in Parliament, and the Town Clerk asked the Bank Committee whether it had any proposals
to submit for inclusion. Accordingly, the General Manager was asked to produce a report on the question of obtaining additional powers.
This report (dated June 18th 1926) covered 11 separate topics, including:
6 Collection of Corporation Accounts.
The Bank
have been collecting Water Accounts for some years, and for twelve months Electricity Accounts also, while an arrangement has been
in operation for payment of Rates through the Bank. The Treasury have always taken the attitude that these functions are outside the
scope of the Act, and therefore illegal. The Bank has always contended that being a Corporation Department, and the Staff being officers
of the Corporation, it is competent for the Corporation to employ the officers and use the buildings for such purposes. A slight drawback
is admitted in respect of Rates, as the Overseers are a separate Statutory Body from the Corporation. The recent Act, however, which
abolishes Overseers after March next, would bring Rates within the contention the Bank puts forward.
To incorporate a Regulation
empowering the Bank to receive or pay moneys on behalf of the Corporation is, according to the Treasury, ultra vires as repugnant
to the intention of the Act, and they stated in July 1922 they would not approve of any extension of the functions of the Bank. They
contend that the Bank should confine its activities to Savings Bank business, and be carried on with the sole aim and intention of
benefitting depositors, finally directing that the practice instituted must be discontinued. The Bank has ignored the direction, but
the Town Clerk has pointed out that in view of the Treasury's powers to make regulations, a certain risk is being run which can only
be met by legislation.
If the Bank is to be carried on, as the Treasury state, "with the sole aim and intention of benefitting
depositors," then that argument can be applied with considerable force to the inconsistencies of the Treasury in respect of restrictions
the Bank seeks to remove, and in respect of wider powers sought. Again, collection of Rates and Corporation Accounts unquestionably
confers benefits upon depositors, inasmuch as by providing convenient facilities the Bank is saving the depositors labour and expense.
The
Overseers have not contributed, as yet, a single farthing towards the expenses of the collection, but it is the intention of the Bank
Committee to deal with this matter in a few weeks.
Money taken in respect of Water and Electricity Accounts is paid to the City
Treasurer, and does not figure in the Accounts of the Bank. Rate money does go through the Accounts as a receipt and out as a payment.
Mr Chamberlain, in April 1922, expressed his disapproval of the method of dealing with Rates, but was of opinion that objections could
not be sustained by the Treasury to the method adopted for dealing with Water Accounts. The Ministry of Health, who are responsible
for the audit of accounts of the Overseers, were approached on the question, and expressed the view that there appeared to be considerable
advantages in adopting the scheme put forward by the Bank, and so far as the Ministry was concerned assent would be given to any departure
from existing Regulations to give effect to the proposals. The Minister further welcomed the proposals as a means to encourage prompt
payment of Rates. The Minister, it may be stated, was not the present Minister, whose support is assured.
Summarised, the advantages
may be stated as:- (1) economy in administration by avoiding overlapping in collections; (2) the machinery to accumulate, week by
week, sums to meet the half-yearly demand is already present in the Savings Bank, and the payment over to the appropriate Department
of the amount due is a natural part of the system; (3) the concentration of work in various departments of the Corporation at two
periods of the year creates staff difficulties and inconveniences to payers, whereas by spreading the collection over thirty Branch
Banks the difficulties are eased and the inconvenience removed; (4) the saving of expense (postage or tram fares) to the payers, as
well as trouble in coming from outside districts into the centre of the City to the different Corporation Departments.
At the
date of the General Manager's report (June 1926) the Minister of Health was Neville Chamberlain. The founder of the Bank was later
Chancellor of the Exchequer (November 1931 to May 1937) and Prime Minister (May 1937 to May 1940) and in these various posts would,
no doubt, have been a useful ally of the Bank in its disputes with the Treasury.
The General Manager's report was considered at a Special
Meeting of the General Purposes Sub-Committee held at the Council House on Monday, June 28th. Present were the Lord Mayor (Alderman
Percival Bower), Alderman Lovsey (Chairman), and Councillors Baldwin-Webb, Gelling, Poole and Stephens. The minutes of the meeting
record that the Lord Mayor stated that "in his view it was desirable to consider whether it would be politic to allow the present
position in regard to the Bank's powers to be disturbed in view of the Treasury's attitude in regard to the Bank and the possibility
that they might endeavour to impose still further restrictions should debatable issues be raised. In his opinion there were certain
matters which might be put forward with a fair chance of success and on the other hand there were other questions which it might be
undesirable to press at the present time. The Sub-Committee acquiesced in these views and then proceeded to consider the proposals
contained in the General Manager's report."
One of the issues that it was decided not to proceed with was that of collections. The
Sub-Committee resolved that "no steps be taken at the present time to secure specific powers with regard to acting on behalf of the
Corporation in the collection and payment of moneys and accounts; but that the General Manager be directed to consider the general
question of agreeing a suitable basis with the Departments concerned for the reimbursement of the Bank in respect of the work carried
out on their behalf."
In his reports to the Bank's General Purposes Sub-Committee for the years 1923 to 1927, the General Manager remarks
how unwieldy this system is and pins his hopes for an improvement on the passing of a Rating and Valuation Act. He also comments on
more than one occasion that the Overseers "have not yet made any contribution to the Bank in respect of services rendered or stationery
supplied".
The Rating and Valuation Act 1925 appears to have come into force on April 1st 1927 as J P Hilton states that:
The
Overseers ceased to function at the end of March, 1927, their places being taken by the Rating and Valuation Committee, now a standing
committee of the City Council. It is hoped that it will soon be possible to arrange for collection of rates on lines similar to those
for other Corporation accounts, and that the citizens will have one more boon conferred upon them, and the Corporation be enabled
to effect one more economy.
The relevant part of the 1925 Act was as follows:
The council of every county borough and the council of every urban and rural district shall be the rating authority for the borough or for the county district, and from and after the appointed day no authority or person other than the council shall have power to make or levy any rate within the borough or district.
As from the appointed day all powers and duties of the overseers of the poor in relation to the making, levying, and collection of rates, and of any other person who by virtue of any local Act has powers in that behalf, shall in every rating area be exercised and performed by the rating authority.
However, it was not until October 1929 that a system on the lines used for Water, Electricity, and Gas
was introduced. The financial year ended March 31st 1930 is therefore the first in which statistics relating to the collection of
Rates are recorded - the figures for that year being 10,187 accounts with a total value of £74,335. And in his report of February
14th 1927, the General Manager was able to state that: The question of remuneration for this work of collection has been amicably
settled during the year, and at last the sums due to the Bank from the Overseers for this work have been paid.