Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011

My Lords, I am grateful to the small but focused and committed group of noble Lords who have spoken with clear knowledge and some degree of passion about this, as it is important. It is clear from all sides that there is strong support for the work that co-operatives and credit unions undertake across Great Britain. In answer to the noble Lord, Lord Davies of Oldham, I was waiting to see—my noble friend Lady Kramer having nobly stepped in in the absence of my noble friend Lord Newby—who might be on the Front Bench in the absence of the noble Lord, Lord Eatwell. I noticed that the noble Lord crossed three Benches in one bound and here he is. It is always good to be opposed by the noble Lord, Lord Davies. I had not realised that we were debating this order on International Credit Union Day, but I am delighted that we are making a small contribution to that. I should like to have said that we had scheduled the business deliberately, but I must confess that I was unaware. As has been said, although the co-operative and credit union sector is not as large in Great Britain as it is in other countries, its membership is growing. That is clear testimony to the trust and esteem in which they are held across the country. The Government want to make sure that we underpin the valuable role that they play, particularly in promoting higher rates of saving across the economy, helping to develop a culture of financial responsibility, providing credit at a local level for individuals and empowering communities across the UK. However, I recognise the points made by the noble Lord, Lord Kennedy of Southwark, and my noble friend Lady Kramer about the need for us to do more. Even though I was not asked about what else the Government are doing, we see this order in the context of a series of reforms that we are making, as I am sure the noble Lord, Lord Kennedy, is aware. We are exploring the commencement aspects of the co-operative Act and this order is a necessary precondition of that Act coming into effect. We are making the electronic communications order for mutuals, which will enable them to cut the costs of communicating and to hold votes electronically. Only earlier this week we debated in Committee the transferring of Northern Ireland credit unions under the FISMA legislation, which will not only act as a deregulatory measure but give better protection to an important category of depositor. Therefore, this order is part of an ongoing programme of work. Let me address the important questions of the noble Lord, Lord Davies of Oldham. On the question of non-withdrawable share capital, the consultation and trade body studies indicate that approximately 0.5 per cent of industrial and provident society members will seek to invest more in their co-op. This is viewed as positive. The results do not raise a question of withdrawal but show a small positive interest among members in investing more. Then there was the question of whether businesses will effectively take over credit unions. Will credit unions lose their independence? The sector itself wanted businesses to be able to be members and, in that way, help to expand the membership base. No concerns were expressed about this during the consultation period. Therefore, this is seen entirely as an opportunity by the sector itself, rather than as any threat to independence. In relation, finally, to the common bond and its removal, there is a limit on the extension of the common bond which is currently very restrictive. Some restrictions will remain to ensure that the fundamental purpose of credit unions is not undermined, and that is built into the new construct. I agree with the noble Lord that we must not do anything to undermine the fundamental purpose here. We are not doing so, nor does the sector believe us to be. When the coalition came into government, we made clear that we would be supportive of the mutuals sector. By means of this legislation, we are taking another step to bring what is essentially a 19th century construct into the 21st century in order to free the sector of unnecessary burdens and obstacles. It is clear from what I said in my opening remarks, and I think it has been confirmed by contributions this afternoon, that there is huge appetite for growth in this sector. At a time when we must redouble our efforts to support the economy, we have to do all that we can, and this plays a modest but important part in enabling growth. I believe that this order is a win-win situation not only for co-ops and credit unions, but also for the communities that they serve. Motion agreed.