Clause 64 - Demutualisation of building society

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 Mr John McWilliam Mr John McWilliam Labour, Blaydon

The shout of Aye on the previous clause was awfully quiet. Can I encourage the Committee to shout rather than to nod their heads? I know that one of our colleagues had a birthday party last night, but he is not in the room at the moment, so it would not be unkind to speak up.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

I was not aware that some heads were sore. I shall attempt to be soothing in my remarks, but

not too soothing where the Chief Secretary is concerned.

The clause provides relief from stamp duty land tax for land transactions that are part of the demutualisation of a building society. I understand that the clause is based on section 102 of the Building Societies Act 1986, and extends the exemption to cover the new land tax. Looking with care at the explanatory notes, I see that they state that section 102 would continue to provide relief from stamp duty for the transfers of shares and securities to a company. They also state that section 97 of the Building Societies Act 1997 provides for the demutualisation of a building society by the transfer of its business to a commercial company. While that is helpful, can the Chief Secretary confirm that, so far as he is aware, nothing here would unduly assist a carpetbagger to attack the mutual character of a building society? Conservatives value the role and the work of building societies and we would welcome a clear statement on the matter from the Chief Secretary.

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

The clause provides relief from stamp duty land tax on transfers of land from a mutual building society to a public company on demutualisation of the building society. It is based on the existing stamp duty relief in section 102 of the Building Societies Act 1986. A similar relief for mutual insurance companies is provided by clause 63, as we have discussed. The rationale behind the continuation of the reliefs is that, before and after any change, the members will be largely the same so it is, in effect, a reconstruction. It is right that it should be treated broadly as a vehicle in the same way as a company reconstruction; that will be accepted by members of all parties. It does nothing to assist carpetbagging; there is no change to the impact of existing legislation, so the mutuals are no more vulnerable than they were before. It simply replicates a relief on the basis that vehicles of this nature and companies in the course of a reconstruction should receive broadly the same treatment. On that basis, and with that assurance, I am sure that the Committee will support the clause.

Question put and agreed to.

Clause 64 ordered to stand part of the Bill.