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Linda Gilroy: I was astounded at my hon. Friend's report that the Liberal Democrats are resisting mutualisation in the water industry. In its first trading year, Glas Cymru in Wales has been able to return a £41 million surplus to that mutual organisation.

Mr. Lazarowicz: I am grateful to my hon. Friend for her intervention. I cannot be too unkind about Liberal Democrats in the Scottish Executive, for reasons of which she will be well aware but it is disappointing that the excellent record of Glas Cymru has not found favour in Scotland so far.

There is a way to go before the full potential of the new revived and modern co-operative ideal is grasped. I hope that the Minister will support the Bill, but more than that I hope the Government will regard today as a starting point for further work to promote the co-operative, community-controlled and mutual sector. I hope that the Minister will also tell us how she can build on the opportunity presented by the Bill further to promote this now vibrant and vital sector for our society and economy.

12.53 pm

Mr. Christopher Chope (Christchurch): I declare my interest as a member of the Christchurch Conservative club. I can tell the hon. Member for Harrow, West (Mr. Thomas) not just that it is a good club for lunches but that it serves full pints and real ale. I hope to hear a speech by the hon. Member for Wolverhampton, South-East (Mr. Turner), whom I congratulate on the accolade that he was given the other night by the Campaign for Real Ale. A special ale has been brewed in his honour, which is quite an accolade for an hon. Member. I hope that when he is next in Christchurch he will call in and try some of our ales.

I am a member of the Christchurch branch of the Royal British Legion, which I think is the finest Royal British Legion club in the country. I am also a member of an allotments society. I have a share in a co-op: the International Exhibition Co-operative Wine Society, which was founded in 1875 and which I think is the finest wine society in the country, if not in the world. Indeed, last night I spent a little time looking at its spring list of wine offers, which I recommend.

I congratulate the hon. Member for Harrow, West on his success in the ballot, his choice of subject and the lucid way in which he introduced the Second Reading debate. He and other speakers have shown the Government up. In 1998, the Government introduced a wide-ranging consultation paper on industrial and provident societies and invited people to send in their comments before 1 May 1998—indicating, thereby, some sense of urgency. Now, almost four years later, we have still not had a formal Government response to the consultation, or even the publication of the responses to the consultation.

That point was emphasised by my hon. Friend the Member for Epsom and Ewell (Chris Grayling). He raised a number of important issues concerning the virtues of the Bill, including housing stock transfer, the community benefit of his local co-ops and the warm welcome that he

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gives and receives at his local Conservative club. He also expressed a few reservations about some aspects of the Bill, particularly about the way in which it restricts the future use of assets. I hope that my hon. Friend will be willing to serve in Committee because his knowledge of and interest in the matter will be useful in debate.

There have been many other interesting speeches. It is interesting to see so many Members from Scotland here on a Friday—they are down in England for the weekend, I hope. It shows that the Bill appeals to a wide range of interests.

We do not oppose giving the Bill a Second Reading, but we have some concerns and questions that can be explored further in Committee. When the Government brought out their consultation paper, they bought some time. However, they raised expectations in the consultation paper, and they have failed to deliver. I hope that the Minister will take the opportunity to explain exactly what Government policy on industrial and provident societies is.

The 1998 consultation paper was sponsored by the Treasury and the Registry of Friendly Societies. Since then, the Financial Services Authority has taken over the role of registrar of industrial and provident societies, and is threatening a sharp increase in fees. The hon. Member for Corby (Phil Hope) referred to that in passing. It is a serious issue, to which the Minister should respond, and I am disappointed that the hon. Member for Harrow, West, the Bill's promoter, did not raise it in his speech. I know that he has heard from the Village Retail Services Association—ViRSA—which is based in Dorset, about the problem that will be caused by the burden of the new charges to be imposed by the Government, through the FSA, on industrial and provident societies.

Mr. Gareth R. Thomas: As the hon. Gentleman says, I am aware of the concerns about the charges, and I endorse the concerns of my hon. Friend the Member for Corby. As to why I did not raise this matter during my speech, I could have raised numerous issues and given numerous examples across the industrial and provident societies area, and I am grateful to the hon. Gentleman for giving me the opportunity to set the record straight.

Mr. Chope: I am grateful to the hon. Gentleman. The theme of his speech, and of the Bill, is creating better opportunities for existing industrial and provident societies and enabling more to be created. The increase in charges is a relevant issue because it is a burden on existing societies and a threat to the establishment of new ones.

It is worth reading from the letter from ViRSA. It says:

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Mr. Peter Jones, the director of ViRSA, then gives some examples of industrial and provident societies that ViRSA has sponsored for registration as shop associations. He says:

We are talking about costs that will have a serious impact. As an illustration, if someone wishes to set up and register a shop association using the ViRSA organisation, it might cost them about £450 to register. That is a one-off cost with no recurring annual costs. Obviously, if they wish to change the rules, fees are incurred as a result of that. I understand that the FSA proposes an annual charge of between £300 and £400 per association just for the privilege of being registered.

There are 9,000 industrial and provident societies, and if one takes a mid point between £300 and £400—£350—that would give the FSA an income of £3,150,000 every year. To put it another way, a burden of £3,150,000 is being imposed on industrial and provident societies. That is unhealthy and unacceptable, and it is another example of a Government stealth tax. I hope that the interest in the issue will now be such that the Minister will instruct the FSA to ensure that its proposal, which is so seductive for a self-financing regulatory authority, will be dropped.

Societies that have set out on the basis that they would pay a one-off fee for registration should not have to pay recurring annual charges. [Interruption.] I am delighted to see that the hon. Member for Wolverhampton, South-East (Mr. Turner) is showing his enthusiastic support for that.

Mr. Dennis Turner: That is because we are talking about 6 million people who are associated with clubs, and 5,000 non-profit-making clubs will be faced with increased charges. That is of great concern to the all-party group. It is on our agenda, and we shall be making representations, as the hon. Gentleman has made them from the Dispatch Box today.

Mr. Chope: I am grateful to the hon. Gentleman for that—and I am delighted to see that the Minister is to get some more briefing, so that she will have the opportunity to respond to the point.

There is no need to make much comment on clause 1; it is a sensible proposal to bring the rules in line with the rules that apply to building societies. I am an enthusiast for mutual organisations. I have a mortgage with the Nationwide and an insurance policy with Standard Life. I practice what I preach, and I can see the benefits of mutual organisations.

I was interested to hear the hon. Member for Stroud (Mr. Drew) refer to the fact that the Government had had some problems with clause 2. I look forward to hearing what the Minister has to say. I noted that in paragraph 44 of the consultation paper issued in March 1998 an issue was raised in response to the suggestion that a special type of co-operative should be created, the undertakings of which could be transferred only to another co-operative and not to a company.

The response was that the suggestion raised concerns:

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I should be interested to hear from the Minister whether that reservation still applies, and if so, what amendments or proposals she would suggest as a consequence.

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