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9.39 pm
Mr. Nick Raynsford (Greenwich): We have had an extremely good and interesting debate on issues of importance to the future of building societies and, indeed, mortgage lending. I add my voice to all those who have paid tribute to the important contribution that building societies have made over the past 150 years or so to enhancing opportunities for people to obtain houses and finance for those houses, thus supporting the extension of home ownership to a level approaching 70 per cent. of the population.
That important contribution has made it possible for people of modest means in all parts of the country to obtain the advantages of owner-occupation which would otherwise not have been available to them. That particular contribution grew out of the commitment of building societies to meet the needs of people in their area when those societies were small, local organisations representative of their small communities. Gradually, over the years, the building societies have grown in size and inevitably their role has changed. Nevertheless, there has been that consistent commitment to meet the needs of the population, which has found its expression in the principle of mutuality. Tonight, we have heard hon. Members express their strong support for that principle and its maintenance. I think we can all echo that belief in the importance of mutuality.
We are especially concerned that societies that are seeking to change from mutual status to, essentially, the status of a bank should be free to do so, but not on terms
that give them an unfair advantage over societies that remain mutual. One of the important changes proposed in the Bill is in clause 41. It is an amendment to the five-year rule which creates a proper and fair balance between the interests of societies that have chosen to convert and those that have chosen to remain mutual. It is clearly insupportable for societies that have chosen to remain mutual to find that they can be picked off by societies that convert and seek to defend their interests by acquiring mutual societies during the five-year period in which they themselves cannot be challenged.
Mr. Butterfill:
I do not think that that has been suggested by any of the converting societies. They are happy to concede that they would lose that status if they were to bid for a mutual society, on either a contested or an uncontested basis. Will the hon. Gentleman explain why the five-year rule, which was thought to be very important in 1986, is no longer relevant and, indeed, no longer desired by his party?
Mr. Raynsford:
The hon. Gentleman knows full well that the situation has changed considerably in the intervening 10 years. During that time, the number of societies considering conversion has increased, while the number that might choose to remain mutual has decreased significantly. The hon. Gentleman is familiar with the subject, so he will know that many societies are clear about the fact that, if the five-year rule were not to be amended as proposed, there would be a serious erosion in the number of societies, which would be picked off for precisely the reasons that I outlined. I hope that the hon. Gentleman will give his full support to clause 41 which, in its current form, will ensure fairness so that societies that choose to remain mutual may do so and those that choose to convert may also do so, but without obtaining an unfair advantage during the transitional period. The provisions of clause 41 create that framework. I hope that the hon. Gentleman will support them.
During the debate, we have heard some interesting conjecture about the Deputy Prime Minister. Why he chose the opportunity of a column in The Mail on Sunday the day before the Bill was due to have its Second Reading to set out a straightforward paean of praise for the act of conversion is a curious mystery that only he can answer. It has not gone unremarked, and cannot have been unnoticed by the Economic Secretary who, just when she is presenting a Bill to ensure proper protection and support for mutual societies, suddenly finds the ground cut from under her feet by her deputy leader.
I remind the Economic Secretary of the Deputy Prime Minister's language in the article, talking about the windfall gains from conversion. He says:
The hon. Member for Gloucester (Mr. French) said that, if the Deputy Prime Minister had really opposed the Bill, it would not be before the House. The Deputy Prime Minister has proposed a number of measures in the past that he no longer proposes so enthusiastically. He used to
propose the use of capital receipts to get more housing investment: he urged that councils should plough back their capital receipts into building more houses; he has changed his tune on that. We have heard of his support for Europe and his enthusiasm for a move towards a single currency; he has changed his tune on that, as well.
I do not know the explanation for his curious antics, but what is set out in The Mail on Sunday is very poor fare for the Bill's advocates. The defence of mutuality is in far safer hands with the Economic Secretary than with the Deputy Prime Minister, who, in an article published the day before the Second Reading debate, could not bring himself even to mention the word "mutuality", let alone to praise it.
We have had a useful and valuable debate, with excellent contributions from a number of hon. Members. I single out in particular the contributions of my hon. Friends the Members for Feltham and Heston (Mr. Keen), for Great Grimsby (Mr. Mitchell), for Hemsworth (Mr. Trickett) and for Burnley (Mr. Pike), as well as those of the hon. Members for Christchurch (Mrs. Maddock), for Bournemouth, West (Mr. Butterfill) and for Gloucester.
Mrs. Angela Knight:
With the leave of the House, I should like to speak a second time in this important debate.
I congratulate all hon. Members who have taken part in the debate. I am pleased that they all support the Bill. I should like to pick up on some of the points raised, starting with the speech of the hon. Member for North Warwickshire (Mr. O'Brien), who made a number of extraordinary comments. After giving us a history lesson, he waxed lyrical on a subject on which other Opposition Members have concentrated--the article in The Mail on Sunday by my right hon. Friend the Deputy Prime Minister.
I can only presume that Opposition Members concentrated on the article because they had nothing decent to say about such an important Bill. They should read the article because, quite frankly, their interpretation of it, or their spin, in the modern parlance, is misleading. I can only conclude from the points that they have made that they are against the decision to convert by the members of converting societies. Therefore, they are against 16 million people receiving shares in converted societies.
I can only say that the message that has come loud and clear on a number of occasions from the hon. Members for North Warwickshire and for Greenwich (Mr. Raynsford) is that the Labour party is clearly against 16 million people receiving a windfall.
Mrs. Knight:
On a number of occasions, I have heard from the hon. Gentleman and from Opposition Back
Mr. O'Brien:
I am grateful to the Minister for giving way, as I would not want her to misrepresent our position. In no way have we criticised those who have decided that their building societies should convert. That is a matter for them. We have always adopted that position and we wish them well in that conversion. The hon. Lady should stop throwing around little bits of abuse, as she did earlier, and deal with the points in the article, which was an attack on mutuals. It was a call for conversion and the Minister must deal with it.
Mrs. Knight:
The article was not an attack on mutuals. If the hon. Gentleman maintains that position, he is misleading the House and the country.
I found it surprising that that was all the hon. Gentleman had to say on the subject, except that apparently the Government have taken too long in bringing the Bill to the House. We have carried out a first-stage consultation and made changes accordingly under the powers in the 1986 Act. We have continued listening to the societies in order to make the changes that they want in the Bill. The Bill was introduced the day after it became clear that the Opposition parties would co-operate. We have moved very speedily and I look forward to continuing co-operation in Committee.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made his usual useful speech on a subject of which he is a well-known master. We have one or two disagreements which we have discussed before. Let me expand briefly on the two-year rule and the five-year protection that were mentioned by most hon. Members who spoke in the debate.
Let me turn first to the two-year rule. At present, converting societies can distribute shares to members of less than two years, but they do not have to do so: the choice is theirs. The Act operates in that way not because Parliament passed it that way but because it was changed as a consequence of cases taken by societies themselves. That is why the two-year rule exists in its current form.
The key issue is how best to help societies with the problem of speculation and carpetbaggers. I am sure that no hon. Members are in favour of carpetbagging, which results in the societies feeling destabilised in some respects and overcome by the number of people queuing up outside their doors. However, one chief executive recently told me that the influx of customers was the best free advertising that the society had ever had.
"16 million people will benefit from these windfall gains. This outcome flows directly from the Government's policies, its determination to deregulate business and promote competition".
The Deputy Prime Minister is unquestionably setting out a prospectus for conversion. Nowhere in the article is there the slightest reference to the virtues and merits of mutuality.
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