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In addition, there is no consistent relationship between the size of a society's operations and the amount of work

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that it generates for the FSA. That is linked to the points made by hon. Members about complexity, accountability and the desirability of structures in industrial and provident societies. If the FSA charged on the basis of transactions, that would lead to exceptionally high costs for individual transactions such as rule changes. That would discourage good governance and we should not inadvertently, for motivations that I quite understand, include something in the Bill that would do that.

A link between size and fee levels for societies could also create unintended effects. For example, it could lead to charitable housing associations and registered social landlords, which are among the largest societies, effectively subsidising the cost of smaller societies such as private members-only clubs or societies set up to benefit members. That would clearly cause problems in the different structures. It would be perverse and go against the idea of a more equitable distribution of costs.

Mr. Chope: Does the hon. Lady accept that under the proposed fee structure, small organisations that do not change their rules each year will be subsidising and cross-subsidising those that choose to change them because they did not get them right in the first place? How can that be equitable?

Dawn Primarolo: I am trying to explain to the House the complexities of the issues involved, the diversity of the sector, and the importance of striking the right balance and considering the necessary scope of work. The number of industrial and provident societies has been broadly stable between 1996 and 2000, but the amount of their assets has increased, from approximately £41 billion in 1996, to £61 billion in 2000.

I have been doing my best to show the House that the sector is very broad and that there is not just one simple answer. As hon. Members have said, there is a difficult balance to strike. Therefore, the FSA needs to assess all the issues; all hon. Members who have spoken this morning believe that fees need to be part of that assessment and the eventual balance reached.

I understand that the FSA, along with many in the movement, prefers an approach based on a flat-rate fee, as the hon. Member for Christchurch said. That will inevitably affect some societies unfavourably, but equally it must be appreciated that some societies will gain from such a move. We need to find out which is the most equitable solution and ensure that it is delivered.

We also have to consider those societies that are active in updating and developing their governance structure. That is precisely what the Bill is about. For example, I understand that the proposed periodic fee would cover all registration transactions undertaken by a society in a year. A society could, for example, adopt a completely new set of rules and have them registered for free by the FSA. The former registry would have charged £800.

As I have continually tried to stress, it is necessary to strike a balance here. The FSA has worked hard and will have to continue to work hard to build a consensus around its proposals. I believe that at this stage it is not appropriate to legislate in the rigid fashion suggested by the new clause.

As I have said, I am sympathetic and I understand clearly the points made by my hon. Friends. I have tried to show the complexity of the area. I am sure that there

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will be ongoing discussions between the clubs and the FSA. Those discussions, I sincerely hope, will reach a solution.

Mr. Dennis Turner (Wolverhampton, South-East): I welcome the Minister's remarks. She understands the dilemma that clubs are facing. The immense frustration felt has been echoed around the Chamber. My hon. Friend has met the FSA, and is meeting it again on Monday. Would she be prepared, if it is felt necessary, to meet the Working Mens Club and Institute Union to discuss some of the anomalies that we talked about this morning, in the hope of getting justice for the clubs of this country?

Dawn Primarolo: Normally this subject area would fall within the remit of the Economic Secretary. However, both the Economic Secretary and I are always pleased to receive representations and see delegations. I am sure that, if my hon. Friend thought it appropriate, either one of us would do our best, as we try to do for all Members, to accommodate those representations.

I hope that I have given the House an explanation of why the Government do not support the new clauses. I hope that they will not be added to the Bill, but also that the House is sufficiently reassured that the Government have taken note not only of the representations, but of this debate.

Mr. Greg Knight: We have had a very interesting debate, and I am grateful for the support expressed for my new clause by hon. Members on both sides of the House. I am particularly grateful for the comments of my hon. Friends the Members for Christchurch (Mr. Chope) and for Bournemouth, West (Mr. Butterfill), who made a very powerful case for the new clause.

This really comes down to the fact that, once a year and for a fee of £15, Companies House, in respect of each limited company registered with it, examines the company accounts and the annual return form that a director or secretary of the company has to submit. The FSA says that, in future, it will charge £200 to examine similar forms and accounts submitted by clubs and other organisations that, under the Industrial and Provident Societies Acts, come within its remit. Clearly, there is something wrong with the FSA's system, because in each case accounts are prepared. The FSA does not have to put together those accounts; organisations submit them in a recognised form. I do not, therefore, feel that the size of the proposed fees can be justified.

The hon. Member for West Bromwich, West (Mr. Bailey) made, if I may say so, a rather strange speech, appearing to speak against his new clause. Either the Whips did a little arm-twisting earlier today, or his heart was not in the arguments in the first place.

The hon. Member for Harrow, West (Mr. Thomas) reminded us that this issue was raised on Second Reading. He said that swift action is needed, but pinned his hopes on a meeting he has pending with the FSA. If what the FSA is telling the Working Men's Club and Institute Union—the CIU—is anything to go by, I would advise the hon. Gentleman not to raise his hopes too high. A member of the FSA has advised the union that if clubs do not like the fee, they can deregister—an outrageous piece of advice, given that deregistering means that clubs would lose their limited liability. If a club that had deregistered

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got into trouble, the working people running it would find that their homes, cars and other assets could be seized. Deregistering is not an option for clubs.

When the hon. Member for Wolverhampton, North–East (Mr. Purchase) rose, my optimism increased. He is an important Member of Parliament and Parliamentary Private Secretary to the President of the Council and Leader of the House of Commons, so when he said that he supported the measure I thought that meant that the Government were on side—there spoke the PPS to the Leader of the House. Then along came the Paymaster General to pour cold water on everything that her hon. Friend had said.

Mr. Purchase: I do have some independence of mind, which does not always accord with Government policy.

Mr. Knight: I applaud the hon. Gentleman's independence on this matter: may we see much more of it.

I strongly advise the Paymaster General not to enter any working men's club in Bristol in the near future, because if its members have read her speech I doubt that she will receive a warm welcome. The hon. Member for Wolverhampton, North-East says that something has to be done, and he is right. I am extremely disappointed that, although she expresses sympathy, the Paymaster General has declined to give a commitment to consider the issue. To be fair, she said that she would be happy to meet a delegation from the CIU or some other source, but she gave no commitment to the House that she would examine the matter with a view to righting the clear wrong.

Something has to be done, and my new clause is a vehicle to do it. I hope that the House will approve it.

Question put, That the clause be read a Second time:—

The House divided: Ayes 10, Noes 74.

Division No. 212
[11.13 am


Allan, Richard
Bottomley, Peter (Worthing W)
Brazier, Julian
Cable, Dr Vincent
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clarke, Rt Hon Kenneth
Forth, Rt Hon Eric
Hayes, John
McIntosh, Miss Anne

Tellers for the Ayes:

Mr. Greg Knight and
Mr. John Butterfill.


Anderson, Rt Hon Donald
(Swansea E)
Bailey, Adrian
Barnes, Harry
Beard, Nigel
Berry, Roger
Borrow, David
Challen, Colin
Clark, Mrs Helen (Peterborough)
Corbyn, Jeremy
Cousins, Jim
Cranston, Ross
Davey, Valerie (Bristol W)
Dismore, Andrew
Dobbin, Jim
Dobson, Rt Hon Frank
Donohoe, Brian H
Drown, Ms Julia
Eagle, Maria (L'pool Garston)
Ellman, Mrs Louise
Ennis, Jeff
Field, Rt Hon Frank (Birkenhead)
Fitzpatrick, Jim
Follett, Barbara
Gerrard, Neil
Gilroy, Linda
Griffiths, Jane (Reading E)
Hendrick, Mark
Hill, Keith
Hopkins, Kelvin
Howells, Dr Kim
Hughes, Kevin (Doncaster N)
Hutton, Rt Hon John
Jones, Lynne (Selly Oak)
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Knight, Jim (S Dorset)
Lammy, David
Lawrence, Mrs Jackie
Lazarowicz, Mark
Lepper, David
Linton, Martin
Love, Andrew
McAvoy, Thomas
McFall, John
Mactaggart, Fiona
McWalter, Tony
Michael, Rt Hon Alun
Mole, Chris
Munn, Ms Meg
Naysmith, Dr Doug
Norris, Dan
Olner, Bill
Palmer, Dr Nick
Picking, Anne
Pond, Chris
Pound, Stephen
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Rapson, Syd
Salter, Martin
Sedgemore, Brian
Sheridan, Jim
Skinner, Dennis
Smith, Angela (Basildon)
Stewart, Ian (Eccles)
Taylor, David (NW Leics)
Thomas, Gareth R (Harrow W)
Touhig, Don
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Twigg, Stephen (Enfield)
Vis, Dr Rudi
Wilson, Brian

Tellers for the Noes:

Phil Hope and
Rob Marris.

Question accordingly negatived.

19 Apr 2002 : Column 836

Clause 1

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