Co-operative and Community Benefit Societies and Credit Unions Bill
12th June 2009
Speaking on behalf of the Conservatives, Nick Hurd welcomes the Bill, which is aimed at reforming the law governing mutual societies.
Mr. Nick Hurd (Ruislip-Northwood) (Con): It is, as always, a pleasure to follow my hon. Friend the Member for Worthing, West (Peter Bottomley), who made a thought-provoking speech.
Until now, I have had no dealings with the Bill, so I should start by reassuring the right hon. Member for Croydon, North (Malcolm Wicks) that my presence at the Dispatch Box reflects the day of the week rather than any U-turn on behalf of the Conservative party, because we welcome what is a useful Bill. On a personal note, I would like to extend heartfelt congratulations to the right hon. Gentleman for taking the Bill so far. I have had the pain or privilege of taking a private Member’s Bill through Parliament: it eventually became the Sustainable Communities Act 2007. Notwithstanding his understandable frustrations at the process, I hope this is a part of his political life that he will look back on with great pride, and perhaps reflect on the irony that so far it has proved easier to change the law of the land as a Back Bencher than it proved to install renewable energy in his home in Croydon despite being Energy Minister at the time.
We welcome this useful Bill. My hon. Friend the Member for Fareham (Mr. Hoban) spoke in support of it on Second Reading. The hon. Member for Islington, South and Finsbury (Emily Thornberry) made an entertaining speech—although I noted how difficult it was for her to get her mouth around the words, “my right hon. Friend the Member for Normanton”. She reminded us that the Bill should be seen as the latest in a series of private Member’s Bills sponsored by Members from both sides of the House that seek to update the legislation on mutuals.
We value the work of mutuals. I do not know whether the right hon. Member for Croydon, North keeps a copy of the “Mutual Yearbook 2008” by his bedside, but it is a good read, and it reminds us of the economic importance of this sector. It employs close to 1 million people and has annual revenue of more than £84 billion. It is therefore a sector that has significant economic weight, as well as an important social impact in the country.
It is probably wrong to pick out any particular sector, but I happened to meet housing association representatives yesterday and they were keen to remind me that they are not just about bricks and mortar; they are also about providing community services through employment, health and education projects. They are important partners of regeneration. A recent audit of those services found that they annually invest at least £435 million in that work.
Whether the bodies in the sector are building societies, housing associations or football supporters’ clubs, they need the right legislative framework, and one that is suited to the 21st century, and this Bill provides that. As the right hon. Gentleman said, the Bill addresses four key issues. First, it requires new industrial and provident societies to register as co-operatives or community benefit societies. Secondly, it calls for the renaming of the Industrial and Provident Societies Acts; it has been agreed that the term “industrial and provident society” is arguably an outdated term, and hides the wide range of bodies that can be constituted as mutuals. Secondly, it applies the Company Directors Disqualification Act 1986 to industrial and provident societies. It is my understanding that there was no outstanding reason why officers of mutual societies should not be dismissed for negligence, as they can be under company law. Thirdly, it gives the Treasury powers to apply to community benefit or co-operative societies the company law on investigation of companies, company names and dissolution and restoration to the register. Finally, it gives the Treasury powers to make provisions for credit unions corresponding to any provisions applying to building societies. The clear theme is one of recognising the contribution mutuals have made to our economy by passing legislation that updates the framework within which they operate.
The Bill has been widely consulted on, and the mutual sector is broadly happy with the proposals. It is customary now to thrash out any issues left hanging after Committee stage, but this Committee stage lasted 14 minutes, at least two of which, I understand, were taken up by my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) praising the Bill’s sponsor for his integrity and experience. Given the career implications of that, it must have been the longest two minutes of the right hon. Gentleman’s life, but I am glad to see that he has recovered from the experience, and has been here today to guide us through proceedings at a steady pace.
At this point, however, we must sound a note of caution. Cross-party consensus must not become an excuse for lack of scrutiny. The Bill is important. It will modernise the legal framework of co-operatives and protect the interests of their members and industrial and provident societies through the provisions. It is not simply a tidying-up exercise. There are instances where co-operatives should be considered as companies and credit unions should become more like building societies, but mutuals are not companies and credit unions are not building societies and should not strive to be. We need to make sure that these legislative reforms are able to deliver the necessary modernisation while protecting the unique status of societies and credit unions. They are not the solution to all our problems either. There have been many casualties in the mutual sector throughout the financial crisis. It is not the case that all mutuals are well managed and it is in the interests of the members and customers of mutuals that their directors are brought within the remit of the Company Directors Disqualification Act 1986. As a result, although support for the ethos of mutuals is unanimous, so should be the recognition that they need effective regulation and the right legislative framework in which to operate. The Bill is principally an enabling one, and much will depend on the secondary legislation and the legislative reform orders that will follow. The standard of scrutiny that we have seen thus far must be maintained. The one thing that did emerge from the Committee was the news that the secondary legislation is yet to be drafted, and even what that has happened, it will be subject to extensive consultation. It is vital that those changes have the support of the sector, and that can be achieved only by proper consultation.
In conclusion, Conservative Members welcome the Bill, which should help mutuals to achieve their full potential through a more modern legal framework. We welcome both the protection that it gives members of mutuals from poor directors and the modernisation of credit union legislation. We wish this welcome Bill well.
10.40 am
