Banking Bill

I support the measure proposed by my hon. Friend the Member for North-West Leicestershire (David Taylor), and I wish to make it clear that as chairman of the all-party group on building societies and financial mutuals, I completely endorse his arguments. When the vote on Halifax demutualisation was held, I was one of the 3 per cent.—[Interruption.] Indeed, my hon. Friends were, too. To anticipate an intervention from the hon. Member for Castle Point (Bob Spink), may I make it clear that my deposit is honourably held by the West Bromwich building society, which has retained its mutual status? The all-party group has conducted a number of exercises that clearly demonstrate the important role that the mutual sector plays in the financial services industry, and the added advantage that it brings not just to the financial services sector as a whole but to individual investors and borrowers. The all-party group held a Select Committee-style inquiry that sought to examine the relative advantages of the mutual sector in providing value for money compared with the proprietary banking sector. That inquiry clearly demonstrated that, by and large, building societies provided higher rates of interest for investors and lower mortgage rates for borrowers. Even today, if one looks at the tables of best buys in most of the Sunday newspapers, that practice is substantiated by building societies' high ranking in comparison with banks. We held another inquiry on the impact of demutualisation on people who had invested in the relevant organisations both before and after demutualisation, which clearly demonstrated that, on the basis of the figures, anyone who received a windfall from a demutualised bank subsequently lost the benefit of that windfall in the organisation's relatively poor performance and deals. In practice, that process was not financially advantageous to people who had formerly been members of the building society. We invited a range of people from all sectors—banks that had been mutuals, building societies, and even carpetbaggers—to that Select Committee-style inquiry to give evidence. I treasure one particular letter. The chief executive of Northern Rock declined to appear before the committee—surprise, surprise—but he submitted a letter stating that Northern Rock was very competitive, that it provided value for money and that its 100 and 120 per cent. mortgages were incredibly popular among consumers. I understand that there are potential financial obstacles to the adoption of new clause 2. It is designed to set a legal framework, which, notwithstanding such financial obstacles, would at least ensure no legal impediment in the event of its being a financially viable option in future. For the sake of brevity, I will not develop my argument for too long. I note that clause 72 allows the Treasury to take a building society into temporary public ownership by order. New clause 2 provides an equivalent reverse process for the Treasury to provide a legal mechanism by which former banks could be rescued and put into mutual ownership. I would be very interested to hear the Minister's response on that point, because it is important that we have a legal framework which, notwithstanding any financial considerations, provides a level playing field and recognises the unique role played by building societies in financial services in this country.