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

In the few moments that I intend to use, given the 32 Bills listed for debate during the next couple of hours, I shall briefly set out our understanding of the amendments and respond to specific points that have been made. The amendments fulfil the commitment given in the House to extend the Bill to mutual insurers, which answers one of the main points made by the hon. Member for Shipley (Philip Davies). The Government continue to be appreciative of the support from all those involved in developing the Bill and look forward to implementing its provisions for the benefit of the mutual sector. We shall of course support the amendments, given that we introduced them, with consultation and co-ordination, in the other place. I hope that both sides of the House will be able to support them, too. Clauses 3 and 4 will make it easier for one type of mutual society to transfer to the ownership of another type of mutual society as a subsidiary company while retaining the important elements of mutuality; for example, individual members transferring to the subsidiary company may be given voting rights in the holding mutual society. Mutual insurers and certain European mutuals will be included as a result of the amendments made in Committee in the other place on 10 July. I shall explain how they fit into the Bill as it left this place. Clause 3 concerns transfers to subsidiaries of other mutuals. Amendment No. 1 ensures that any order made under clause 3, which may have effects peculiar to a particular mutual, will not be dealt with under the hybrid instrument procedure, as has been much discussed this morning. As a result of the addition of the words ““EEA mutual society”” to clause 3—in amendment No. 2—it is possible that an order made under the clause could impose requirements on a mutual insurer or other EEA mutual society acquiring a UK mutual. That could include, for example, a requirement to give transferring members full membership rights in the holding mutual. If the holding mutual has a unique legal form, that may raise a procedural question of hybridity, as we have discussed. The hon. Member for Shipley asked which amendments would comply with EU law. Amendments Nos. 2 to 5 fulfil the dual purpose of extending the scope of the Bill to mutual insurers, as we decided we wanted to do following the comments of my predecessor that the hon. Gentleman quoted, and thereby complying fully with EU law. Amendments Nos. 1 and 6 are necessary as a result of amendments Nos. 2 to 5. I hope that is clear. The hybridity provision will ensure that the hybrid instrument procedure of the other place would not apply in the situation I described. It is a standard provision to exclude the hybrid instrument procedure, which will reduce complication and delay in making an order under clause 3. We have had considerable discussion as to whether that is a good thing and in that regard I shall refer to the letter that I think the hon. Member for Christchurch (Mr. Chope) was looking for—perhaps he would like to wave it at me—which makes it entirely clear that if one of the affected companies has a unique legal form, for example if it had been established by a private Act of Parliament, the provisions that we may or may not introduce as a result of the Bill could raise a technical question of hybridity. I believe that it really is a technical question. The important point is that the amendment is merely a precaution. I shall be completely honest with the House: at this stage we do not know how this part of the Bill should be implemented. My firm view—and, I believe, the view of the hon. Member for Bournemouth, West—is that it is better to have proper democratic consultation on the specifics of how we can fulfil our aims under the Bill, and to look at all possible options, rather than to exclude, by not having the hybridity amendment, one of the possible options that we may subsequently decide to pursue. No decisions have been taken on the implementation of the Bill. We shall consider and consult on the various ways of implementing clause 3, to achieve the aims of the Bill while protecting mutuals and their members, so including the hybridity provision is mainly a precaution. Our consultation will be extremely democratic.