Building Societies (Funding) and Mutual Societies (Transfers) Bill

As chair of the all-party group on building societies and financial mutuals, I am pleased to see the Third Reading of the Bill, even in its adapted and modified form. I, too, congratulate the hon. Member for Bournemouth, West (Sir John Butterfill) on taking up the issue and navigating it through some tricky waters where there were plenty of obstacles, some of which were below the waterline and had not been seen. On Second Reading, I said that we were lucky to have somebody who had already achieved the objective on other occasions with private Members’ Bills and who is well versed in the art of navigation. When I said that, I did not realise how important those skills would be, given the problems that have arisen. I endorse the hon. Gentleman’s remarks about the support and co-operation of both the Minister and the Treasury team in ensuring that the Bill, even in its modified form, has arrived where it has today. Its gestation started with the Miles report in 2004, which made what appeared to be a simple recommendation about changing the wholesale funding restraint. The subsequent Select Committee inquiry with the all-party group adopted that particular recommendation and added to it the need for building societies to be able to transfer engagements to another mutual. Again, that appeared to be a simple and logical step to take through legislation. However, when the complexities of financial regulation are merged with the complexities of corporate legislation, all sorts of problems arise, which is why the Bill has had such a difficult passage, albeit that everybody has tried to overcome the legal and financial complexities. I endorse the hon. Gentleman’s comments about insurance companies—again, that point was not foreseen. I hope that the good will and commitment behind the other provisions in the legislation will prevail once again, and that the problem will be overcome by the commitment and expertise of those involved. On Second Reading, I commented that in my locality, the black country, we are blessed by having a number of the smaller mutuals—the West Bromwich building society would call itself a medium-sized mutual—that represent the historical root of the building society movement. The Tipton and Coseley and the Dudley are small building societies, and they have provided a service to local people in one of the most deprived areas of the country for many years. The Bill will enable them to continue to offer the sort of service that they provided for the community in the past. When the all-party group investigated the relative competitiveness of the banking and building societies sectors, it became quite obvious that the advantage that mutual organisations have in not having to pay out dividends to shareholders enables them to provide better value and cheaper products to local people. In an area such as mine, where incomes are still low—historically house prices were low, but that is changing—the ability of local financial service providers to offer good-quality, low-cost products to people who may have lower incomes is absolutely essential and complements the Government’s desire to ensure that areas of this country are not financially excluded. Building societies have the advantage of having trusted brand names, and because of their historical root in local communities, they are well known and understand the communities that they serve. By passing this legislation and removing the wholesale funding restraint, or at least modifying it so that building societies can borrow more money, we will enable building societies to produce products that are even better tailored and suited to the needs of their local communities. Despite its complexity and its rather arcane nature, the Bill could have a significant part to play in helping people in lower income communities to develop their quality of life and get on the housing ladder. From the perspective of the all-party group on building societies and financial mutuals, I reiterate my thanks to the hon. Member for Bournemouth, West for taking up the Bill, which could have quite profound long-term consequences. I also thank the Treasury team again for being prepared to embrace it and the principles behind it.