MAJORITY REPORT. 
D55 
do not suggest that it should be prohibited, provided that the 
interests of the insured members of the Societies are properly 
safeguarded. The amounts of the payments made by some 
Societies under arrangements of the kind in question are very 
considerable. In the case of the Prudential Approved Societies, 
sums totalling nearly £700,000 a year are paid out of the State 
Insurance funds to the Prudential Assurance Company, and these 
payments appear as single items in the accounts of the Approved 
Societies as submitted to the Treasury Auditor and to the insured 
members, no details being available of the manner in which the 
money is applied by the Company. We feel, therefore, that a 
serious responsibility rests upon the Central Departments to 
scrutinise closely the terms and conditions of any proposed 
arrangement of this kind before giving their approval. The 
National Amalgamated Approved Society informed us (Q. 4812- 
4826) that the Companies with which the Society contracts make 
no profit out of the arrangement, while the National Sailors’ and 
Firemen’s Union (App. XLIII, 26; Q. 13,990. 14,006-14,008) 
stated that the Trade Union actually lost on the arrangement. 
We should have expected that very large Societies having at 
their disposal for the purposes of the administration of Nationa. 
Health Insurance all the machinery of a huge business 
undertaking, would have been able to carry out their 
National Insurance administration at an appreciably lower cost 
per head of membership than Approved Societies in general, and 
we are surprised to find that this is not in fact the case. We 
questioned witnesses representing the Prudential Approved 
Societies on the subject, and it appeared from their evidence 
(Q. 9750-9765) that, although a considerable reduction had 
recently been effected in the overhead charges of the parent 
Company as a result of certain measures of reorganisation, that 
reduction had not been reflected in the amount paid to the 
Company by the Approved Societies. We feel that it is only 
reasonable that the insured members of the Societies should 
receive some compensating advantage under arrangements of 
this character in return for their surrender of their ordinary 
right of scrutinising and criticising the detailed expenditure of 
the Society’s funds for purposes of administration, and we think 
that before giving their approval to such arrangements, the 
Central Departments should take all possible steps to satisfy 
themselves that this will be secured. 
622. Our attention was also drawn (Kinnear, Q. 23549) 
to another type of case, in which an Approved Society 
pass over to the secretary the bulk of the money 
available for purposes of administration, and the secretary 
in return undertakes to contract for the whole adminis- 
trative work of the Society, the persons by whom the work 
is undertaken being appointed and paid by himself and not 
being responsible to the Committee of Management or the