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

Yes, I take my hon. Friend’s point, except that in practice that does not require building societies to increase their funding requirement. It gives the power to do so should they wish—that is the whole purpose of the legislation. Finally, under this broad heading, the other piece of reasoning behind the key provision—clause 1—is that following the Miles report, the Bill will enable building societies to become more active in the fixed interest lending market. The assumption behind the Miles report is that there will be a transition over time to more long-term fixed interest lending, which would be facilitated by the greater use of wholesale markets. That is entirely sensible and it is a good reason for the hon. Member for Bournemouth, West to introduce the Bill. Again, I would sound a slight cautionary note not just about whether that will happen but about whether, indeed, it is desirable. I have vivid memories of the mid-1970s, when I first bought a house in London, and of coming down from Glasgow and being offered a fixed interest long-term loan by Richmond council at what, at the time, was the almost ridiculously cheap rate of 14 per cent. That was a negative rate of interest, as we were in the middle of a financial crisis, and I was tempted, as it was much lower than what the building societies were offering, but I would have crippled my family if I had taken it. Past experience of long-term fixed interest lending suggests that we need to be careful before encouraging people to go down that road. However, despite those two caveats, the basic provisions of clause 1 are important. The way in which they have been modified by the Treasury is helpful, and I fully support them. Just a sentence each on the two other basic provisions in the Bill. Clause 2 creates a level playing field for different kinds of claims on a building society should it unfortunately be forced into insolvency. That is an important corrective, but it was emphasised several times on Report that on no occasion since the second world war has a building society failed, so we are dealing with a hypothetical circumstance that is unlikely to arise. It is a necessary provision none the less. My final point about the Bill was not discussed very much in any of our earlier proceedings, but it is important and in the long term it will probably be the most significant aspect, as it concerns the scope that it provides for the consolidation of different types of mutuals to merge with one another in a way that is not possible at present. Under current legislation, mutuals either have to demutualise to expand and diversify, or find an identical type of mutual institution. The Bill will permit much more diversity of operation. If a friendly society wishes to go in with a building society, or if a football supporters club wishes to link up with a friendly society, that is now possible. That is an important provision in the legislation which, in the long term, will probably have far more far-reaching repercussions than clause 1. Thank you, Madam Deputy Speaker, for indulging my attempt to make a rather more extended Third Reading speech than is allowed.