Financial Mutuals Arrangements Bill

I support the Bill and I am particularly grateful to the big hitters on the two Front Benches for being here to listen to my modest contribution. It is a pleasure to follow the symmetrically named hon. Member for West Bromwich, West (Mr. Bailey) and I would like to congratulate my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) on securing a place in the ballot. As those who have not been successful often point out, it is simply a lottery. The real skill is in introducing legislation. In that respect, my hon. Friend has been characteristically modest in not mentioning that he has brought three private Members’ Bills before the House and that, if this goes through, it will be his fourth—a record for this House of Commons. I am sure that the House would want to congratulate my hon. Friend on that. Members will want to speak to him later about his skill. Today’s debate is about the building society sector and I would like to commend the Minister, whose speech to the Building Societies Association I read this morning. He referred not just to 200 years of British history, but went back even to Roman history. I hesitate before complimenting him, however, given that politicians sometimes rise to make speeches written by others—as I am sure he in particular will know. The Bill’s removal of funding limits is certainly a very welcome step. I probed in an earlier intervention on my hon. Friend the Member for Bournemouth, West the level to which he thought it would rise through the Financial Services Authority and the Treasury. It was interesting that a broad consensus seemed to arise around 75 per cent. A second aspect of the Bill—dealing with the transfer between mutuals and other structures—is incredibly sensible. It made no sense whatever that the only exit route for a building society was to merge with its exact mirror, or indeed with a PLC. Most mergers nowadays are more mature and they take place not for size reasons but for specialism reasons. It makes more sense for a small building society to merge with a friendly mutual that might typically offer insurance products rather than just lend for mortgages. The Building Societies Act 1986 was a major step forward, but it became evident over subsequent years that some areas needed changing. The Bill certainly brings forward most of those changes. I spent a little time in retail banking in the UK and Africa, but I am not an accountant, so I am a little confused about the issue of pari passu—people who deposit money in building societies being placed on an equal footing with creditors. Will the Minister confirm that those people are on an equal footing with people who deposit at banks? My hon. Friend the Member for Bournemouth, West made a comparison in respect of investing in banking shares, but I am not sure that that is the exact comparison that we need. Perhaps the Minister will look further into it. I support the Bill, but I was a little concerned when my hon. Friend the Member for Bournemouth, West started talking about it becoming an enabling Bill, allowing the Treasury to introduce changes through negative rather than affirmative resolution. I am not making a party political point, but I have considerable distrust in the idea of handing over more power to the Treasury and the FSA. It will be interesting to explore further in Committee what checks and balances are in place to ensure that the power is discharged reasonably and sensibly.