‘After section 50(3)(f) of the Financial Services Act 2012, insert—

“(g) making provision for the increased diversity of the financial services sector and promotion of mutual societies, including arrangements to measure the number of members of mutual societies, and the market share for mutual societies as a proportion of the UK financial services sector.”.’.—(Chris Leslie.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

The coalition agreement, that wonderful document—[Interruption.] I say that in a sarcastic way, just for the record—that certain members of the Committee will remember with great fondness, although most of us will not, made a promise that the Government would

“bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”

It is the fact that, three years on from the coalition agreement, we are still waiting for action to promote mutuality that has caused us to table this new clause. It would simply insert into the 2012 Act a requirement that regulators and the Government should make

“provision for the increased diversity of the financial services sector and promotion of mutual societies, including arrangements to measure the number of members of mutual societies”— in other words, whether more people are working with co-operatives or building societies, or less—

“and the market share for mutual societies as a proportion of the UK financial services sector.”

Building societies form a vital part of the British financial services sector, with mutual lenders and depositors currently having total assets of around £375 billion. Together, with their subsidiaries, they hold residential mortgages of £245 billion. They hold more than £250 billion of retail deposits, which accounts for more than a fifth of such deposits in the UK, and employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

In the past, both sides of the Committee have expressed, at one level or another, agreement that there should be a greater role for mutuals in the financial services sector; indeed the Deputy Prime Minister himself—for it was he—has repeatedly extolled the virtues of models of shared ownership and the “John Lewis economy” at various times. Mutuals have consistently achieved higher levels of customer satisfaction than other financial services  providers, as demonstrated in last year’s Which? consumer survey, in which five of the top ten financial brands in the UK are mutuals.

It would be helpful if the Government would take this opportunity to live up to the pledge that they made when forming the coalition and state specifically what steps they are taking to promote mutuals. We have had a lot of words and general support, but we want to see specific hard measurements agreed to now so that we can track the progress of the coalition agreement three years on from its inception and see how they intend to fulfil that pledge by the time of their demise in 2015.

Of course, the problem we have to address is the shrinkage in the number of mutuals that happened because of the financial crisis which has left us with rather fewer than we would have liked. The hon. Gentleman is right to refer to the coalition agreement as committing us to making it easier for mutuals to establish themselves and flourish. We certainly retain that commitment and actively pursue it.

In this Bill alone—we have mentioned this in earlier sittings—we exempt the building societies movement from the definition of ring-fenced bodies and we use the existing building societies legislation to bring them in line with the ring-fencing provisions. That measure was supported enthusiastically by the Building Societies Association as being most likely to respect their particular arrangements, rather than to seek to co-opt them into unfamiliar arrangements.

The Financial Services Act 2012, on which the hon. Gentleman participated, introduced a new requirement into FSMA for regulators to analyse the impact of any of their proposed rules on mutuals, which was an important new insertion. It also ensured that the Financial Services Compensation Scheme protection was extended to credit unions in Northern Ireland. As we have discussed, that has helped to address a particular problem that was there, and hopefully that will encourage confidence in that particular mutual sector.

The Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011 was an important measure to reduce the burdens on establishing mutuals, which came into effect in January 2012. It allows, for example, credit unions to admit corporate bodies, such as charities and small businesses, into their midst, and it allows them to offer interest on deposits for the first time. That is important to allow them to be competitive with banks; something that we all want to see.

The Law Commission is drafting a co-operatives consolidation Bill, which the Treasury will introduce by the end of 2013. It will rationalise a dozen pieces of legislation that add up to the burden of establishing and running mutual organisations. Ed Mayo, the secretary-general of Co-operatives UK, has said that the Bill would make it easier and cheaper to establish co-operatives in this country. In this year’s Budget, the Chancellor said that we will consult on proposals to make it easier for industrial and provident societies to raise capital.

Regarding the alacrity with which we are discharging our commitments in the coalition agreement, I do not think we can be faulted at all for pursuing our commitments with vigour. The only source of regret is that it has been necessary to recover from the situation that we inherited, in which we lost some valuable mutual organisations.

It is interesting that the Minister feels that he is doing well on the issue. Will he at least report to the Committee what has happened regarding the market share of mutual societies as a proportion of UK financial services? It is a genuine question; I do not know the answer. Is there a way of keeping track?

There is indeed. That is the import of the new clause, which would require information to be published to

“measure the number of members of mutual societies, and the market share for mutual societies as a proportion of the UK financial services sector.”

That is a perfectly reasonable question to ask.

The information requested by the new clause is already available in the public domain. For example, the first request is the number of members of mutual societies. There are 20 million such members. Regarding the market share as a proportion of the UK’s financial services sector, the mutual sector has a 17% share of residential mortgages, a 19% share of retail deposits, and a 31% share of individual savings accounts in the UK. That information is available online. The hon. Gentleman asked me about the change in recent years, and I am happy to write to him on that.

The information is available, and it is quite right that it should be. The sector is important, we want to see it grow and we are already able to monitor the extent to which it does. The debate has been an opportunity for us to discuss the importance of the sector. There is no need for a statutory provision for the information, because it is already provided and available to the public.

It is important to hold the coalition to account on their pledges. Promoting mutuality is certainly an important pledge. It is not good enough simply to fall back on the Law Commission’s Bill, which is an amalgamation of existing legislation into a single statute. It might make for simpler reading, but it would not necessarily alter the general direction of travel and lead to a renaissance of the mutual and co-operative sector in financial services.

I think the hon. Gentleman is being a bit churlish. The secretary-general of Co-operatives UK has said that the Bill would make it easier and cheaper to establish co-operatives. That surely is a reliable indication that it would help.

It is certainly a worthwhile exercise, but I am not sure that it would necessarily change the general realities of the legislative framework in which mutuals operate. If there are nascent mutuals that have been burdened by the weight of the different statutes, and they would in future be able to read through them in a simpler way, that is certainly a good thing. However, I do not think that it is necessarily a big enough fig leaf to cover the Government’s blushes.

The Bill would be interesting, and the Government’s work on capital raising and capital adequacy is certainly more substantive. It is also important that we analyse the impact of regulatory changes on mutuals. Those are small steps. I am left wanting to see further action and more forceful steps. We will continue to call for that.  However, given the Minister’s helpful commitment to write to me and the Committee on the direction of travel trends in market share, and the number of members of mutual societies, thereby giving some feedback in response to the new clause, for the time being, though we might want to come back to the matter, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.