Co-operative and Community Benefit Societies and Credit Unions Bill [ Lords]

Part of Prayers – in the House of Commons at 1:17 pm on 12th March 2010.

Alert me about debates like this

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury) 1:17 pm, 12th March 2010

My concern is that, when the Bill was first tabled before the House in the previous Session, it turned out, on further scrutiny, to be deficient, but thankfully it has been corrected. That was the right approach. All of us would want to ensure that a Bill is not simply rushed-or railroaded-through on the nod, and that there is proper scrutiny, because sometimes that can identify issues that need to be teased out. I am afraid, however, that the hon. Gentleman's interventions are prolonging the rather brief speech that I wanted to make. As I said, we support the Bill, which is why it was given a fair passage when it returned from the other place, after Lord Tomlinson's very able stewardship of it through the Lords.

This is an enabling Bill, giving the Treasury the flexibility to apply the existing provisions of company law to industrial and provident societies or to make new, equivalent provisions. Although we want to ensure the right framework for industrial and provident societies so that their governance is on a par with that of companies, part of the challenge is that, in essence, industrial and provident societies are different from limited companies because of the role of their employees or members. We therefore need to ensure that we do not allow the crude application of company law to industrial and provident societies, but instead take a nuanced approach. I am sure that the Treasury will work with a number of organisations to ensure that such an approach is adopted.

The fourth issue that I want to address is supported credit unions. All of us across the House recognise the importance of credit unions in providing an alternative to the banking system. A number of moves have been made in recent years to modernise the legislative framework for credit unions, to ensure that they are capable of being sustainable and viable, and can provide a proper alternative to banks. I meet regularly the Association of British Credit Unions to talk about such issues, and I know how keen credit unions are to see this Bill put in place and for the legislative framework to be modernised.

This Bill is not the only such measure-I referred earlier to the legislative reform order that was tabled, but which subsequently had to be withdrawn because of the inadequacy of the supporting documents-but it enables primary legislation to be amended to facilitate the application to the credit union movement of various provisions in the legislation on building societies. The Bill does that by inserting a new section 23A in the Credit Unions Act 1979. It also gives the Treasury the power to amend by regulation the statutory provisions for credit unions to bring them more into line with those applicable to building societies. Again, the power is drawn broadly: any provision in the building societies legislation deemed to be appropriate can be adapted to credit unions.

Indeed, the Bill also includes provision to create equivalent criminal offences, which was one of the areas of concern for the Delegated Powers and Regulatory Reform Committee. There was a concern that the criminal offences created in the previous versions of the Bill perhaps went further than those in the comparable legislation. The amendments made to the Bill address that problem, and we are all grateful that the two sponsors of the Bill were happy to make those changes.

One of the clear themes to emerge from the Bill is that if we are to ensure that industrial and provident societies continue to play an important role in the provision of services, adapting to reflect the needs of a modern society, the legislative framework needs to be enhanced to ensure that the consumers, employees and suppliers of industrial and provident societies are protected. That is why we welcome the measures dealing with disqualification. The change in language is also important, in ensuring that people recognise that industrial and provident societies play a role in modern society and are not remnants of the industrial revolution. For those reasons we support the Bill. I pay tribute to the right hon. Member for Croydon, North for his persistence in taking it forward. The Bill makes an important contribution to the legislative framework and will be widely welcomed by those in the credit union and co-operative movement who have long looked forward to the day when it is passed.