Industrial and Provident Societies (Northern Ireland) Order 2005

– in the House of Lords at 4:02 pm on 1st December 2005.

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Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office

My Lords, the order will introduce provisions applying measures from the Co-operatives and Community Benefit Societies Act 2003 to Northern Ireland. That legislation updates the industrial and provident societies law in Northern Ireland and brings the legislation into line with Great Britain by applying measures from the Act to Northern Ireland. Specifically, the order inserts into the Industrial and Provident Societies (Northern Ireland) Act 1969 provisions dealing with community benefit societies—the registration and power to restrict the use of assets; the capacity of a society and power of a committee to bind it; matters relating to contracts, deeds and obligations, execution of deeds and other legal documents.

Briefly, by way of background, industrial and provident societies have played an important role for many years in Northern Ireland's local economy. The Department of Enterprise, Trade and Investment is committed to encouraging the growth and development of the region's social economy. The department is leading on a three-year cross-departmental strategy to support the sector. This Order in Council is a key action within the strategy's objective to create a supportive and enabling framework that will strengthen the role played by industrial and provident societies in the social economy, while protecting members' interests.

According to the most recent figures available from the Northern Ireland Registrar for industrial and provident societies, the annual turnover of the sector for the past financial year was just over £440 million. There are more than 180 industrial and provident societies operating in Northern Ireland. More than 60 of those are societies that act as mutual support organisations for stakeholders in the agricultural sector. That is by far the largest component of the industrial and provident sector, with some 27,000 and combined share capital in reserve of more than £112 million. A further 60 are registered as housing associations. They carry out philanthropic activities as providers of affordable housing for vulnerable people. The remaining 60 or so societies, which do not fall into either of those categories, have a diverse range of activities, such as self-help co-operatives and youth training workshops. Together, those societies have a membership of some 92,000 people.

The draft order has two main aims; namely, to improve the contribution of industrial and provident societies to Northern Ireland's economy by removing outdated legislation that may act as a barrier to the sector realising its full potential and to close the legislative gap that currently exists between industrial and provident law in Northern Ireland and Great Britain by updating the relevant provisions in Northern Ireland legislation to keep pace with new developments in Great Britain.

In particular, the order stipulates new rules for societies wishing to register as community benefit societies. Community benefit societies are industrial and provident societies whose purpose is to carry on business which will benefit the local community rather than for the benefit of the membership alone. Previously, legislation was ambiguous in that area. The order makes the rules explicit to avoid any potential for confusion. The order also stipulates a number of new rules governing the procedures which industrial and provident societies must follow when transacting general business, including the use of official seals, the capacity of societies, the functions and powers of societies' committees and how societies are to deal with legal documents such as deeds. In each case, the measures bring Northern Ireland legislation into line with Great Britain in accordance with the relevant provisions of the Co-operatives and Community Benefit Societies Act 2003.

Finally, the order also applies the provisions of the Company Directors Disqualification (Northern Ireland) Order 2002 (NI 4) to industrial and provident societies. This resolves an anomaly of persons disqualified as company directors still being able to serve as industrial and provident society directors. It effectively closes a loophole in legislation. I asked about that and there are no cases that we know about.

Consultation on the policy proposals and the draft order has been completed and the replies received were favourable to the proposals. There were only half a dozen consultees who responded to the document. They took the trouble to give us their views, so I shall take the trouble to put them in Hansard. They were the Fane Valley Co-operative Society Limited, the Ulster Community Investment Trust, the Northern Ireland Federation of Housing Associations and the Ulster Agricultural Organisation Society. We were particularly pleased with a personal contribution, which came out of the blue from a Mr James Gaston, who is an industrial provident member from County Antrim. He strongly supports our proposals on the modernisation criteria for registering a new community benefit society, the asset lock mechanism for community benefit societies, raising the voting threshold for industrial provident societies in line with Great Britain and applying directors' disqualification rules to industrial provident directors. Such feedback from grassroots active participants is incredibly helpful to officials who draft such legislation. It is even more reassuring to Ministers to know that what they say makes sense to those on the receiving end.

It is essential that the momentum achieved over the past few years in the growth of Northern Ireland's economy should be maintained and, where possible, enhanced. Its economy and, in particular, the social economy, will grow only if we continue to bring forward legislation that enables and facilitates that growth. This Order in Council will contribute to that process by removing the obstacles that impede growth.

In summary, industrial and provident societies play an essential role in the Northern Ireland economy. The Department of Enterprise, Trade and Investment is committed to ensuring that law relating to industrial and provident societies in Northern Ireland keeps pace with developments in Great Britain, thus making sure that they can make a full contribution to Northern Ireland's economy. I beg to move.

Moved, That the draft order laid before the House on 14 November be approved.—(Lord Rooker.)

Photo of Viscount Bridgeman Viscount Bridgeman Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, Northern Ireland, Deputy Chief Whip, Whips 4:09 pm, 1st December 2005

My Lords, the House will be grateful to the Minister for that comprehensive explanation of the background to this order and, in particular, for pointing out the large effect that it has on the key areas of housing and agriculture in Northern Ireland. The Act clearly works well in Great Britain. It has been subject to proper consultation in Northern Ireland. I intend to continue my unblemished reputation of supporting this order.

Photo of Lord Smith of Clifton Lord Smith of Clifton Spokesperson in the Lords, Northern Ireland Affairs

My Lords, I too thank the Minister for his comprehensive explanation of the order. We also support it because, as he said, it forms part of the underpinning of the agricultural economy, along with other sectors. We welcome this modernisation.

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office

My Lords, I am extremely grateful to both noble Lords for their support.

On Question, Motion agreed to.