I have no doubt that Europe is seeking to catch up with the United Kingdom in many instances, but in reality the Bill is trying to square the circle of how mutuals manage to cope with increasing solvency requirements, whether imposed by domestic legislation or by EU directives. One of the interesting factors of mutuals is that at present they cannot and do not cross national boundaries. If a mutual wants to trade in more than one EU member state, it can do so at present only by setting up a joint stock company to manage the variations in the regulations and laws between the different member countries.
I would be interested to learn from the Minister—I am pleased to see her in her place on the Treasury Bench—what approach the Government think they should take to legislation that would make it easier for mutuals to operate across Europe and, especially if the UK is in the lead in certain aspects of mutual activity, how we could take better advantage of that. The EU internal market rules apply generally to the operators insurance sector, but it is predominantly attuned to for-profit companies, and it is widely acknowledged that the rules do not always recognise the specific position of other company forms such as mutuals.
Within the framework of completing the internal market, with a view to allowing the free movement of people, goods, services and capital with equal terms of competition between different sectors and legal forms in the same markets, way back in 1992, the European Commission proposed regulations for a European mutuals statute, together with statutes for co-operatives and associations, in order to improve the legal embedding of the social economy in the European Community. Each draft regulation was supplemented by a directive on the involvement of employees. In the opinion of the Commission, mutuals, like other organisations within the social economy, should have been able to take advantage of the single market in exactly the same way as other companies, without having to discard their specific characteristics. It was considered that a European statute would help mutuals overcome the legal and administrative difficulties hampering their cross-border and transnational activities and co-operation in the internal market.
Returning to my amendments, the draft regulations were revised in 1993 and a statute proposed for European mutuals, including provisions for members of a mutual to have more than one vote and for decisions to be taken by a majority vote. I would be interested to hear from my hon. Friend the Member for Cardiff North and the Minister how they see this circle being squared—there is the perfectly understandable desire to get more money into mutual societies so that they can meet the solvency requirements, but how can that be done if those who invest substantial amounts get only a single vote? Given the history and record of mutual societies in this country, would it not be more sensible to use European-wide legislation that would enable UK mutuals to work and win business elsewhere in Europe, without companies having to go through the rigmarole of setting up joint stock companies to act as a bridge between other mutual societies in other member states?