New clause 9 - Application of company accounts
Co-operatives and CommunityBenefit Societies Bill
3:45 pm
Mr Andrew Love (Edmonton, Labour/Co-operative)
I beg to move, That the clause be read a Second time.
From the Back Benches, I, too, welcome you to the chair, Mr. Stevenson. This, too, is a probing new clause. It concerns the application of company accounts and audit provisions to industrial and provident societies. It is similar to one that was proposed during the passage of the Industrial and Provident Societies Act 2002, which received sympathetic consideration from the Treasury. Its terms reflect a consultation that was carried out in 1998, when the Treasury circulated all industrial and provident societies about the issues that were of concern to them.
Among the issues raised in that consultation were the outdated legislation on which industrial and provident societies had to base their activities, and the desire for a more level playing field between industrial and provident societies and companies. That was not only because it is right that there should be a level playing field, but because it was believed that industrial and provident societies were disadvantaged in their competition with companies by the fact that legislation imposed considerable additional burdens on them that were not faced by companies.
There are a number of ways in which such issues could be addressed, including the use of the Regulatory Reform Committee. However, amendments to legislation would be required to address the major issues that were raised in the 1998 consultation. I therefore believe that private Member's Bills and the Treasury's own Bills are the right vehicle for such issues to be debated and decided on in Parliament.
Parliament has not examined the question of industrial and provident societies extensively. As has already been mentioned, most of the relevant Acts of Parliament were consolidated in 1965. The Industrial and Provident Societies Act 2002 was the first legislation on the subject to be enacted since 1965: this Bill, when enacted, will be the second. There is a great deal more that needs to be done.
The 1998 consultation exercise set out the main areas in which industrial and provident societies wanted to see changes. In this probing new clause, I have chosen one of the areas in which there is an obvious lack of a level playing field: the way in which companies and industrial and provident societies have to provide accounts, and the auditing requirements to which they are subject.
Company law is changed on a regular basis—in recent years there has been a very comprehensive review of company law that updated it and brought it into the 21st century. However, there have been no more than piecemeal changes to the law on industrial and provident societies.
The current auditing requirements for companies mean that they can produce unaudited accounts and provide them to the members at half-yearly or annual meetings. However, if an industrial and provident society wishes to keep its members informed in the same way, it must provide properly audited accounts, which is an expensive and time-consuming process to undertake, so they are at a severe disadvantage in keeping their members informed and up to date, despite the fact that they are required to do so.
I shall not go into the matter in great detail, as I am aware that we are short of time and that hon. Members want to conclude the Committee stage. However, the Treasury needs to examine the issue, because of the additional burdens and costs imposed on industrial and provident societies. The Minister was sympathetic last year, and I hope that the Treasury has had an opportunity to look at the areas in which industrial and provident societies are disadvantaged. Can she give us some hope or expectation that the Treasury is taking seriously the issues that arose from the 1998 consultation? If it is not possible to insert an appropriate new clause at this stage, will she assure us that the Treasury is seriously considering introducing legislation to address those issues?