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

My Lords, I congratulate the noble Lord, Lord Naseby, on introducing the Bill and for setting out its provisions so clearly. We on these Benches support the Bill and share his view about the value of mutuals. As the noble Lord said, the Bill has three principal provisions, the first of which relates to the funding limit. It is a slightly odd provision in that no one seems to be applying great pressure to increase the funding limit in this way, although it is thought that it might be necessary. It is slightly unusual for legislation to anticipate change; it is normally some way behind the curve. Equally, it is slightly odd to have a formulation in these terms. Everyone knows that the plan is that the limit will go up to 75 per cent. Why you cannot put 75 per cent on the face of the Bill and have done with it I am not absolutely sure. But there it is. I am sure the parliamentary draftsmen have very good reasons for it and we will see that that figure is introduced in due course. Equally in due course, it will be interesting to see whether the building societies take up the expanded headroom, as it were, that they have for borrowing. The second power giving shareholders greater rights equivalent to other creditors is quite straightforward. Again, it is a provision that anticipates a situation which has not arisen in that no building society has collapsed, if not in living memory, certainly not in recent memory. The provision is welcome and unexceptional. I agree with the noble Lord that the third provision about making transfers easier is the most substantial and will be called into use more often. One of the problems I always have in debates in this area is that ““mutuals”” is a relatively new word in law. We find ourselves sometimes grappling with building societies, sometimes grappling with friendly societies—which is a marvellous phrase—and sometimes grappling with industrial and provident societies. In an ideal world, in this day and age, one would bundle them all together and establish a legislative framework that dealt with them all in a more common way, rather than having a set of separate legislative frameworks for what are essentially similar types of institutions. However, we are where we are. The Bill is a step towards making it easier for these bodies, which have the same ethos, to merge and transfer their operations, where that makes best sense, and to work more efficiently. I had one mischievous thought in my mind whenI read the week-end papers which stated that responsibility for the control of the financial sector within government may pass from the Treasury to an expanded Department of Trade and Industry. The Bill requires the Treasury to act in this policy area and by the time it has passed it might be that the bird has flown elsewhere. I am sure that will be dealt with by the usual sophistication of the Civil Service. I agree with the noble Lord, Lord Naseby, that in an ideal world the Bill would not give so much power in terms of substance to secondary legislation. Every clause states, ““The Treasury shall, by order””. As a general principle, I think all noble Lords will agree that is less than ideal. However, given the nature of these provisions, which are non-contentious and technical, we are prepared to accept it. As I said at the start, we are happy to support the Bill.