Clause 63 - Demutualisation of insurance company

Finance Bill – in a Public Bill Committee at 10:15 am on 10th June 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

This is a lengthy clause, but my point is narrow. I understand that the clause carries forward the provisions of section 96 of the Finance Act 1997. However, professionals and experts have raised a number of concerns, and I simply ask the Chief Secretary to confirm that the provisions in the Bill exactly match those in the 1997 Act in both form and substance.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. The hon. Gentleman has not done what I am about to say, but I want to make it clear to other hon. Members that it is not within the scope of the clause to discuss whether demutualisation is a good idea.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I shall be guided by you, Mr. McWilliam. I would like the Chief Secretary to explain why the relief in the clause, as well as that in clause 64, continues to exist.

I should tell the Committee that I am a joint policyholder of Standard Life, which is a mutual insurance company, and a joint mortgage holder of Nationwide Building Society, which is mutual building society.

I would not seek to question the strictures you placed on the debate, Mr. McWilliam, but I hope that the Chief Secretary will explain why the Government have seen fit to continue the relief that was introduced in section 96 of the Finance Act 1997. Clause 64 continues the relief for building societies that was introduced in 1986. That could, if anything, encourage demutualisation and members could and should be aware of the stamp duty land tax cost if they chose to demutualise.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I, too, recognise your guidance, Mr. McWilliam, but I want to put on the record my belief that the clause removes an impediment to carpetbaggers who want to initiate another vote on Standard Life. With the appalling record of demutualisation and the effect on policyholders* why is the clause in the Bill?

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

I am tempted, but must resist going down the route suggested by my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) and the hon. Members for East Carmarthen and Dinefwr and for Hertford and Stortford. I shall bear your strictures in mind, Mr. McWilliam.

I can reply in the affirmative to the hon. Member for Hertford and Stortford. The clause provides relief from stamp duty land tax when land is transferred from a mutual insurance company to a public company owned by the members of the mutual company after demutualisation. That is based on the relief from stamp duty in section 96 of the Finance Act 1997. Similar relief is provided for mutual building societies in clause 64. The clauses speak for themselves. It is right to ensure that such vehicles are treated in the same way as any other company reconstruction. Recognising—for reasons that you will understand, Mr. Chairman—that I was not able to respond as he would have liked to my hon. Friend the Member for Wolverhampton, South-West, I hope that the Committee will give the clause a fair wind.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

May I reassure the Committee that my qualifications are in telephony, not telepathy.

Question put and agreed to.

Clause 63 ordered to stand part of the Bill.