Co-operative and Community Benefit Societies and Credit Unions Bill [HL]

My Lords, the Government recognise the need to develop the legislation affecting co-operatives generally. This Bill makes a valuable contribution in improving governance and administrative arrangements, which are lacking in the current legislation. A number of noble Lords, particularly the noble Lord, Lord Kirkwood of Kirkhope, and the noble Baroness, Lady Noakes, referred to the legislative reform order. I can answer their questions straightaway. The LRO process and the Bill process are quite separate, and one is not dependent on the other. With the LRO, there is a 60-day super-affirmative resolution procedure. My understanding is that the next committee scrutiny is on 13 January, followed by another on 19 January. The noble Baroness asked whether the Bill has a chance of becoming law before an election either in late March or in May. It is hoped that it will receive Royal Assent in March, which will mean that there is a possibility that commencement on Clauses 1 to 3 will be undertaken before the election, but, as she pointed out, Clauses 4 and 5 will provide specifically for consultation with the sector, so their implementation will be after the election. The noble Lord, Lord Kirkwood, made the fair point that this should perhaps be a government Bill rather than a Private Member's Bill. I agree with him about that, but given the pressure on the Government’s timetable, it seemed to make much better sense to proceed with a Private Member's Bill today and as rapidly as possible so that we could progress this legislative reform of industrial and provident societies immediately. There is obviously nothing to stop a future Parliament coming back to the subject. As many noble Lords have said, a Bill similar to this one was introduced in the previous Session—it was passed unamended in the other place. I am delighted that so many speakers in today’s debate have drawn attention to this House’s role in exercising scrutiny on it. The Delegated Powers and Regulatory Reform Committee, the Constitution Committee and particularly the noble Baroness, Lady Noakes, all made proposals which have strengthened and improved the Bill considerably. That the two committees and the noble Baroness have exercised the opportunity to scrutinise in this way and propose changes and improvements is very much to the credit of this House. I endorse the comments of other speakers to that effect. The Bill was criticised in a number of ways, particularly in terms of consultation on measures that would have been introduced via secondary legislation. It was criticised also because it created the risk that new criminal offences and higher penalties might be introduced when assimilating either company law into the industrial and provident society legislation, or building society law in relation to credit unions. The Bill in front of us today takes account of those concerns. The Delegated Powers and Regulatory Reform Committee commented on the new Bill in its report published on 3 December. The committee expressed the view that issues to which it had drawn attention previously concerning offences and penalties are addressed satisfactorily in the new Bill. Likewise, in a report issued only yesterday, the Constitution Committee confirmed that it was satisfied with the safeguards added to the Bill in its present form. It welcomed the new provisions at Clauses 4(7)(b) and 5(1), which address the specific concerns raised in respect of those clauses. It also accepted the explanation provided by the Financial Services Secretary to the Treasury concerning the operation of a power conferred on the Treasury to make consequential amendments to legislation under Clause 6. Having originally expressed concern that provisions requiring amendment should be identified before the introduction of the Bill, the committee accepted that the number of consequential amendments required, particularly as a consequence of the renaming of industrial and provident societies as co-operative societies or community benefit societies, are such that this would be impractical and that the power in Clause 6 is in line with current practice. The committee is content for that clause to remain as originally drafted. The noble Lord, Lord Newby, raised a question about the letter of my noble friend Lord Myners to the BBA. I am afraid that I am unable to give him an answer on that; I certainly have not seen a reply. If one has not been received, we shall chase it up, and if one has been received, we shall make sure that it is available to the House. Across the United Kingdom, mutuals have a membership comprising more than 30 million individuals and provide a viable alternative to the proprietary company model. I certainly endorse all the good things that have been said about mutuals and credit unions in the debate today. The co-operative-and-community-benefit-society form of mutual, being self-help and community-focused—so well described by the right reverend Prelate the Bishop of Salisbury—are owned and run by their members for their members. Mutuals, in the form of credit unions, instil and encourage a savings culture among their members. They play an important role in supporting and promoting many government initiatives such as ISAs and child trust funds. I very much endorse the views of the noble Lord, Lord Kirkwood, about their value. I should at this stage declare a personal interest as an account holder at the Co-operative Bank who can remember his account number, but, I am afraid, not his dividend number. The noble Lord, Lord Newby, referred to how the Post Office could play a bigger role. We would very much like to look at that. The Co-operative Bank already has a close working relationship with the Post Office, and post office branches accept credit payments made in Co-operative Bank envelopes. I am sure that that co-operation can be built on. Mutuality is appealing to many people, but the market share that mutuals have earned has been restricted because the law governing their operation has not kept up with company and charity reforms of recent years. The Government recognise this and wish to modernise and update the legislative and regulatory framework to meet the current and future requirements of the mutuals sector. The LCO is a further example of how we are taking this forward. The Bill seeks to update the legislation for co-operatives, community benefit societies and credit unions. The proposed changes are welcomed by the sector and come as a result of the Treasury consulting on these issues and listening to what the sector says that it would like. The sector is highly regarded by the Government, and we want to see mutuality thrive and grow. We want to see mutuals continue to offer greater choice and diversity in the financial sector and continue to make a valued and significant contribution to the nation’s economy. I hope the House will agree that the changes that have been made to this Bill, compared to the one that we considered in the previous Session, are both necessary and proportionate and that they will help to further enhance confidence in the sector and engender good corporate governance. I feel that they make what was already a good Bill a great deal better. I am conscious that I have not answered the very last of the noble Baroness’s questions and have a feeling that it may not be possible for me to do so this morning. However, I hope that she will allow me to write to her in the course of the next few days and give her the answer that she deserves. More than anybody else, she has helped to improve this Bill and the very least that she can expect is a sensible answer from me and the Government. There has been cross party support for the proposed measures. I hope that this will continue for the passage of this Bill. I and delighted to know that the noble Baroness will not be tabling any amendments in Committee. I repeat the Government’s gratitude to my noble friend Lord Tomlinson and commend this Bill to the House.