Industrial and Provident Societies Bill

[back to previous text]

Mr. Thomas: I commend the way in which my hon. Friend the Member for Edmonton (Mr. Love) has introduced his new clauses. I agree with his view that there is a sensible case for aligning the law governing companies with that governing industrial and provident societies in the three matters. He is right to say that, in each case, societies operating as businesses suffer a significant disadvantage compared with companies, because of a failure to keep I and P law abreast of the changes and developments that have taken place in company law.

In each case, my hon. Friend's new clause points to the basic solution to the problems that exist by applying the appropriate company law provisions to societies. However, as my hon. Friend said, some further drafting work would be required to ensure that the new clauses could be appropriately applied to societies. It was that consideration that led me to propose the Bill in its original form and new clause 5 so as to omit the use of delegated legislation by Government, if they were so minded, to refine the application of company law to societies as we have already discussed.

The application of part VII of the Companies Act 1985 on accounts to societies, which my hon. Friend suggested in new clause 1, is a complex and technical point. Further work would be necessary before an appropriate and effective amendment to achieve that aim could be developed. If the Committee is convinced by the thrust of my hon. Friend's case, it may be that further down the line a new clause with more modest aims, such as the provision for societies of the exemptions and deregulatory advantages enjoyed by small and medium-sized companies, and an exemption from the need for a full audit on the same terms as companies, could be achieved without the need for delegated legislation and appropriately added to the Bill.

Column Number: 30

On the other two new clauses—and the one that was not accepted for debate—I believe that the application of company law rules to societies could be achieved more easily, but a clause to achieve that would clearly need some more refinement than is outlined in my hon. Friend's new clauses. If the Committee is so minded, I will consider whether incorporation of suitable provisions would be a useful and sensible addition to the Bill and consult on that. I may bring forward amendments on Report.

12.15 pm

Ruth Kelly: I congratulate my hon. Friend the Member for Edmonton on the way that he has set out his case for the inclusion of his new clauses. The provisions concern accounting and audit requirements, the capacity of societies, formal matters such as the execution and authentication of documents, and matters concerning contracts entered into by societies. The Government understand, and agree with the general objective of creating, so far as is appropriate, a ''level playing field'' between companies and industrial and provident societies. In that sense, we are sympathetic to the aims of these new clauses, which attempt to further that objective in the specific areas mentioned.

However, as my hon. Friend the Member for Harrow, West pointed out, there are drafting difficulties and technical issues with the new clauses. To take one example, the new clauses are silent on their relationship with existing provisions in the Industrial and Provident Societies Act 1965, with which they would appear to overlap. The result would be most unsatisfactory in terms of the coherence of the legislation, and could cause confusion. For example, section 36 of the Companies Act, which would be applied to industrial and provident societies by new clause 2, operates in the same areas as section 29 of the 1965 Act on the making of contracts by societies. The Companies Act provision refers to a wider range of contracts which appear to conflict with those of industrial and provident societies.

The Government are also concerned that we have not had time to think through the substantive implications of the effect of some of the new clauses and that those affected by the proposals contained in them have not had the opportunity to express their views. I therefore hope that my hon. Friend will withdraw the motion.

Mr. Chope: I waited to hear what the Minister would say about the new clauses because this debate deals with having an approximation of the law relating to industrial and provident societies and that relating to companies. If the Government are sympathetic to the hon. Gentleman's new clauses, it is disappointing that that they cannot use their resources to ensure that a new clause setting out the objectives can be brought forward on Report and that there cannot be a chance of some public consultation before then. The Government already had the opportunity to consult about general principles in 1998.

Column Number: 31

Ruth Kelly: Perhaps I should point out to the hon. Gentleman and to the Committee that the performance and innovation unit is undertaking a report and is looking at the social enterprise sector. One of its objectives is to see how the industrial and provident societies might be helped to thrive and grow. I look forward to that report being published. In future, there will be ways of taking some of these projects forward, perhaps in a more considered context. I certainly look forward to discussing them with him in due course.

Mr. Chope: The Minister has now added to the technical objections to the drafting the old chestnut of prematurity. As the Government went out to consultation in 1998 on the subject and raised expectations among industrial and provident societies that something would be done, let us hope that the performance and innovation unit report is not long delayed and that, when it is published, it will lead to a speedy resolution of these issues. The hon. Member for Edmonton concentrates our minds on substantive changes that need to be made, rather than just the theoretical stuff that we were discussing on the previous new clause. I do not know what he is going to do with his new clauses. If the Minister is unwilling to amend them and make them suitable for incorporation

Column Number: 32

in the Bill, all the hon. Gentleman can do is hope that the performance and innovation unit will come up with the goods sooner rather than later.

Mr. Love: I thank my hon. Friend the hon. Member for Harrow, West, the hon. Member for Christchurch and the Minister for their contributions. Those who contributed have recognised the drafting difficulties and the technical complexity of some of the issues, but I am pleased there was sympathy from hon. Members on both sides of the Committee for the thrust of what is to be achieved through the new clauses.

I accept that we have not tabled, and it would take considerable time to debate properly, adequate new clauses that would reflect what we are trying to achieve. I also accept that the PIU is undertaking a review of the social enterprise sector, and that will deal with some of the issues touched on in each of the three new clauses. It may be possible to introduce changes in the future, and I believe that there must be some urgency in ensuring that they are made. I accept what the Minister says, and I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill, as amended, to be reported.

        Committee rose at twenty-one minutes past Twelve o'clock.

Column Number: 33

The following Members attended the Committee:
McWilliam, Mr. John (Chairman)
Bacon, Mr.
Burnham, Andy
Cable, Dr.
Chope, Mr.
Francois, Mr.
Gilroy, Linda
Goggins, Paul

Column Number: 34

Grayling, Chris
Hope, Phil
Kelly, Ruth
Love, Mr.
Ryan, Joan
Thomas, Mr. Gareth R.
Turner, Mr. Dennis

Previous Contents

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 13 February 2002