Industrial and Provident Societies Bill

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Joan Ryan (Enfield, North): I take it that the hon. Gentleman does not object to statutory instruments per se. I note that, when he was Parliamentary Under-Secretary of State at the then Department of the Environment for five years, approximately 100 per year were passed. During the three years that he was at the then Department of Transport, 335 were passed.

Mr. Chope: I keep those figures always at the forefront of my mind and I am delighted that the hon. Lady is so well briefed. If she is kind and generous enough to acknowledge that I have some experience of the issue as a Government Minister and as a Member of the House, it is that experience that guides me to the

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belief that we should be concerned about giving too much power to produce statutory instruments that cannot be amended. Both the Government of which I was privileged to be a member and the present Government have got into difficulties with statutory instruments.

We must ensure that legislation does not have a disproportionate effect on small organisations—the little platoons, as the former Prime Minister, John Major, described them. We referred to the example of parish councils and I will not dwell on that again. However, the prospect of people who take on office as committee members and officers of a small industrial and provident society suddenly finding themselves unwittingly brought before the courts and subjected to criminal charges, fines and public humiliation might act as a deterrent to taking on a role in the best interests of the society.

There may be a case for assimilating the laws for companies and those for industrial and provident societies. If we want to do that, the Government are free to introduce primary legislation. It does not have to be discussed at tremendous length and, if the Modernisation Committee has its way, there will be scope for us to consider amendments and properly discuss primary legislation much more quickly than we have in the past. Primary legislation allows flexibility that statutory instruments do not.

I was concerned when the hon. Member for Harrow, West said that it would be appropriate to assimilate the criminal law relating to offences under company law and under industrial and provident law in the case of the rugby club—perhaps it was a slip of the tongue. I thought that the purpose of the new clause was to say that it might be appropriate, but he is already saying that it would be. If it would be appropriate, he can table a new clause on Report, so that we can debate the proposal on its merits.

Mr. Thomas: On a couple of occasions, the Chairman has chastised me, and I am happy to be chastised by the hon. Gentleman. He is absolutely right. Such a proposal might be appropriate.

I am a member of a united services club in my constituency that is set up as a company. I aspire to be a member of the Tithe Farm social club, which is of a similar size but is an industrial and provident society. Their services and operations are virtually the same. If I seek office in the club that is a company, however, duties will be placed on me that would not apply in the case of the other club. If I seek office in the club that is an industrial and provident society, I can do things that, rightly, I could not do as an officer of the social club that is a company. New clause 5 would make it possible to read across for industrial and provident societies the protection that exists under company law for social clubs, which are companies.

Mr. Chope: I understand the purpose of the new clause, but my concern is that it is too wide-ranging, even in its restricted form. We should not introduce new criminal offences in secondary legislation, which

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we cannot amend. As many officers are almost volunteers, industrial and provident societies might face new burdens of regulation.

I look forward to hearing the Minister's comments. She, too, expressed concerns on Second Reading about the scope of clause 3, which has effectively been withdrawn by the hon. Member for Harrow, West. I am still concerned that whatever changes may be desirable, which could be introduced in this or subsequent legislation, should be discussed fully rather than introduced on the quiet.

Ruth Kelly: First, I congratulate my hon. Friend the Member for Harrow, West on comprehensively outlining how the new clause would work and where updating industrial and provident society legislation would be most useful. The Government fully sympathise with his aims in the clause, and although we have some concerns about its drafting, we recognise the need for the legislation on industrial and provident societies to be updated. My hon. Friend provided some useful examples of how that could be achieved. We shall carefully consider those issues, and I look forward to consulting with the movement about where changes are necessary. The useful exchange with the hon. Member for Christchurch brought out some of the details of the issue and the debate has been constructive.

I return to the argument that was put a little too strongly by the hon. Member for Christchurch about the appropriate checks and balances that Parliament would usually expect to be put in place in relation to such delegated powers. We have some concerns about the clause, but I can see the advantages of my hon. Friend's new clause. The Government would retain the flexibility to move quickly to update important areas of industrial and provident society legislation even where there had been no corresponding change in company law. The movement is likely to benefit most speedily from any modifications in primary legislation that occur as a result. However, it would remain out of line with provisions available under building society and friendly society legislation and it is clear that the Treasury can update legislation only once there has been a change in company law, and even then, only certain specified relevant provisions.

My hon. Friend and other Committee members may be worried about what changes might be possible after the review of company law has taken place. We expect the review to be far reaching—the most important reform of company law in a generation and, perhaps, the most important in 150 years or so. It is unlikely that the review would disqualify the Treasury from looking into particular areas of industrial and provident society legislation that might need to be updated, although we must wait for the results of the review to be absolutely sure.

I must express the Government's reservations. We would prefer a clause that tied industrial and provident society legislation more closely to that concerning other relevant mutuals.

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Mr. Thomas: I am grateful to my hon. Friend for giving way and for the opportunity of an exchange with the hon. Member for Christchurch. I hear the concerns of those on both Front Benches. If the Committee were minded to allow new clause 5 to make progress on this occasion, I should consult further on changes to it to try to deal with those concerns.

Ruth Kelly: I thank my hon. Friend for his useful intervention, in the light of which I am happy to consider the clause further with him.

The hon. Member for Christchurch has tabled an amendment to new clause 5 that would move the Bill—as amended by the new clause—more closely into line with other mutual society legislation. However, it would not deal with all of our concerns about the scope of Treasury powers. I would like to consider the amendments further to see whether it is possible to offer additional flexibility to the movement to update legislation, while ensuring that power delegated to the Treasury is appropriate; it should be consistent with our relationship with Parliament and the role that Parliament needs to play in the consideration of what is proposed.

We have already had an interesting exchange about amendment (d), tabled by the hon. Member for Christchurch, which would deny the Government the power to create criminal offences when updating industrial and provident society legislation under clause 3 provisions. We are not prepared to accept the amendment. My hon. Friend has already fully responded to it. If a criminal offence exists for a certain action under company law, I do not see why it should not be considered for the equivalent area of industrial and provident society legislation. That does not mean that we would always be obliged to create a criminal offence. The clause as drafted would allow some discretion as to how company law was assimilated.

I hope that that provides some reassurance to the hon. Gentleman. However, enacting such a prohibition now would reduce the chances of maintaining a fair and level playing field in relation to companies, where we think it is appropriate. We might, for example, feel that the creation of a criminal offence in some contexts would be the most appropriate way to protect the interests of society members. At the moment, I would not like to prejudge the circumstances in which that might happen.

The provision to create criminal offences is present under the equivalent provisions in building society legislation and I see no reason why we should not have the option to treat industrial and provident societies similarly. I therefore ask that the amendment be withdrawn.

The Chairman: Order. The amendments have not yet been moved, so they cannot be withdrawn.

Mr. Chope: The Minister has dealt with two of my amendments, the first of which she said did not go far enough, so I look forward to hearing further comments about that in due course.

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In response to what she said about amendment (d) on the power to create criminal offences, I remind her that she just said that the Government are on the threshold of introducing the most radical reform of company law for perhaps 100 years. That will be an enormous piece of legislation. There seems to be no reason why it should not cover industrial and provident societies and offences relating to those who hold office in them—or, indeed, in friendly and building societies and perhaps the new vehicles and not-for-profit companies. Who knows what may be in the legislation?

Surely it would be better for all that we are considering to be dealt with in primary legislation, rather than piecemeal through statutory instruments without sufficient consultation or discussion in public. The Minister spoke on Second Reading of the response that had been received to the consultation paper that was launched in 1998. Those responses have not yet been published, but when they are, perhaps they could lead to discussion of detailed measures to amend further the industrial and provident societies legislation. Surely that would be better dealt with through primary legislation. However, I do not want to press my amendments. If the Committee accepts new clause 5, the issue will be subject to review. I am grateful to the hon. Member for Harrow, West for his flexibility. New clause 5 is much preferable to the clause that it replaces.

Question put and negatived.

Clause 3 disagreed to.

Clause 4 ordered to stand part of the Bill.

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Prepared 13 February 2002