I beg to move, That the Bill be now read the Third time.
It is a pleasure to bring this Bill back for further debate, as it now exists in an amended form. It is a key moment for a Bill that is important to the building society sector, and I must thank all colleagues from both sides of the House who have taken part as the Bill has gone through its various stages—they have been so supportive of the Bill. I am going to keep my remarks short so that if other Members wish to speak, they can do so, and to try to make sure that the Bill’s progress is as smooth as possible.
The Building Societies Act 1986 (Amendment) Bill will help level the playing field between building societies and banks, and will support building societies to be able to lend more money in a safe and secure way. To trade as a building society, the Building Societies Act 1986 requires the company to obtain a minimum of 50% of funding from its members—what is known as the wholesale funding limit. This Bill does not change that, and it does not dilute the unique ownership model of building societies. The fundamental nature of a building society—being run in the interests of its members—is not changed by the Bill; in fact, that is what makes the sector so special.
What the Bill does is disregard the following from the 50% wholesale funding limit: Bank of England liquidity insurance facilities, debt instruments raised to meet the minimum regulatory requirement for own funds and eligible liabilities requirements, and sums received under sale and repurchase agreements with a view to complying with Prudential Regulation Authority rules. This means that in times of national economic crisis, building societies will have more options within their gift for remaining comfortably solvent, and will therefore continue to serve in their members’ interests. The Bill is designed to allow future Governments to respond to the financial landscape of the day. That is why it does not specifically define funds, but instead defers the specification of funds to a later date through secondary legislation passed in this House. All the responses from the sector to the Government’s 2021 consultation on this issue, in advance of the Edinburgh reforms, were positive. Those reforms make the sector more robust.
The Bill also seeks to modernise the sector. It amends the 1986 Act to explicitly allow the option of real-time virtual member participation, bringing the sector in line
with the requirements that the Companies Act 2006 places on businesses. It also enables the Treasury to introduce more flexibility for societies in relation to common sales and the execution of documents, in line with companies law.
The Bill is important because it would achieve a great deal in a very succinct manner, allowing the sector to operate on a more level playing field with banks. This is positive for a number of reasons, but especially in view of the sector’s support for first-time buyers. More than half building society lending goes to first-time buyers, and since 2020 building societies just in my region, the north-east and Cumbria, have lent them some £3.4 billion.
This Bill follows a number of previous private Members’ Bills—including that of my hon. Friend the Member for Preston (Sir Mark Hendrick), which received Royal Assent last year—that continue to modernise the sector. I will not restate all the facts that I presented on Second Reading, powerful as they are, but it is important to acknowledge that, while the housing sector has recovered significantly since the record low mortgage approvals during the covid pandemic and has recovered from the acute economic shock caused by the last Conservative Administration, mortgage approvals are currently still below the level that that we saw before the pandemic. That is why I think that a Bill such as this, which gives more choice to the building society sector to operate in the interests of its members, is a good thing.
As I have said, the sector has a strong record in supporting first-time buyers, and given that every £10 million of lending could support an additional 20,000 mortgages, I am proud to be introducing a Bill with the potential not just to support the housing sector and the wider economy, but to allow building societies to help more people on their journey to home ownership. I have spoken to many constituents in Sunderland who are struggling to get on to the housing ladder—young couples and families who just want the chance to have a place that is theirs and in which they can feel comfortable, away from a volatile and often unfair rental market. The Government’s failure to reform the sector is a debate to be had elsewhere on another day, but I expect this Bill to do more to support a sector that often goes above and beyond to support its members, and to help people get on to the housing ladder and secure a future for themselves. Its passing would be a landmark moment for the sector, and I look forward to seeing the positive effects that it would bring.
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