New Clause 1 - Application of Company Accounts and Audit Provisions to Societies

Part of Industrial and Provident Societies Bill – in a Public Bill Committee at 12:15 pm on 13th February 2002.

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Photo of Ruth Kelly Ruth Kelly Economic Secretary, HM Treasury 12:15 pm, 13th February 2002

I congratulate my hon. Friend the Member for Edmonton on the way that he has set out his case for the inclusion of his new clauses. The provisions concern accounting and audit requirements, the capacity of societies, formal matters such as the execution and authentication of documents, and matters concerning contracts entered into by societies. The Government understand, and agree with the general objective of creating, so far as is appropriate, a ''level playing field'' between companies and industrial and provident societies. In that sense, we are sympathetic to the aims of these new clauses, which attempt to further that objective in the specific areas mentioned.

However, as my hon. Friend the Member for Harrow, West pointed out, there are drafting difficulties and technical issues with the new clauses. To take one example, the new clauses are silent on their relationship with existing provisions in the Industrial and Provident Societies Act 1965, with which they would appear to overlap. The result would be most unsatisfactory in terms of the coherence of the legislation, and could cause confusion. For example, section 36 of the Companies Act, which would be applied to industrial and provident societies by new clause 2, operates in the same areas as section 29 of the 1965 Act on the making of contracts by societies. The Companies Act provision refers to a wider range of contracts which appear to conflict with those of industrial and provident societies.

The Government are also concerned that we have not had time to think through the substantive implications of the effect of some of the new clauses and that those affected by the proposals contained in them have not had the opportunity to express their views. I therefore hope that my hon. Friend will withdraw the motion.