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4 Apr 2003 : Column 1183—continued
Ruth Kelly: I congratulate Members on the quality of the debate. My hon. Friend the Member for South Derbyshire (Mr. Todd) set out a persuasive case for his amendment and the hon. Member for Eddisbury (Mr. O'Brien) brought a touch of his experience and history to these matters. I have learned some things in the Chamber today. My hon. Friend the Member for Harrow, West (Mr. Thomas) also brought his experience to the issues, which I intend to touch on in a few moments. My other hon. Friends also made valuable interventions.
My general principle in working on the amendment with my hon. Friend the Member for South Derbyshire, and on the provisions in clauses 2 and 3, has been to allow industrial and provident societies to benefit from the same freedoms that apply to companies. We have therefore taken companies legislation as our base and mirrored those provisions as closely as possible, where appropriate, for industrial and provident societies. I should perhaps emphasise the words "where appropriate", because I agree with my hon. Friends that, in any particular area, it is important to consider carefully whether exactly the same provisions that apply to companies should equally apply to industrial and provident societies. Of course, it is relevant to consider each and every case, including the 21-day notice period.
Clause 3 sets out the implications for acts done by a society that are beyond the powers given to the society and its rules. It would allow members of societies to ratify such acts retrospectively and grant relief from any resulting liability to committee members, in each case
through a special resolution. The clause goes on to define the procedures for a special resolution. For example, it specifies that the resolution must be
- "passed by not less than 75 per cent. of"
Company law also requires at least 21 days' notice of a general meeting to pass such a special resolution, and the amendment would make the same provision in society law. I say to the House that 21 days is a minimum protection. The decision is perhaps equally important for companies as for societies in considering a special resolution, so 21 days seems appropriate, but, beyond that, we do not want to be too prescriptive for many of the reasons set out today, particularly by my hon. Friend the Member for South Derbyshire. Those include the diverse nature of societies, how they inform members, their constitutional rules and so forth. As a minimum period, 21 days seems reasonable.
To return to the point raised by my hon. Friend the Member for Harrow, West in relation to other resolutions that are debated and required minimum notice periods, the debating of such resolutions by societies is extremely important in the example of demutualisation. Indeed, one might argue that it is equally important, although I understand the point made by the hon. Member for Eddisbury that third parties are affected by the issue under discussion today.
10.45 am
Other important checks are in place in respect of demutualisation resolutions. For example, two meetings are required, with notice being given before each. For the first meeting, the notice period is left to the society's rules. For the second, there is a minimum of 14 days. One might consider the combination of the two to be more onerous than a 21-day minimum period required for a special resolution under the amendment, so 21 days strikes me as a reasonable minimum for debating such a resolution. I therefore support the amendment on those grounds and agree that we should align the procedures in this area more closely with the provisions in company law. I commend it to the House.
Amendment made: No. 8, in page 6, line 25 [Clause 3], at end insert—
'(c) in relation to a society whose registered office is situated in one of the Channel Islands, means a society established for charitable purposes only ("charitable purposes" having the meaning given by the law of the Island in question).'.—[Mr. Todd.]
Mr. Andrew Love (Edmonton): I beg to move amendment No. 9, in page 12, line 4, leave out 'Industrial and Provident' and insert 'Cooperatives and Community Benefit'.
The amendment would give the Bill a new short title, but the important thing is that the change would apply to all Acts of Parliament from the 1965 consolidating measure that brought together all previous industrial
and provident societies Acts, right through to the excellent Bill promoted by my hon. Friend the Member for Harrow, West (Mr. Thomas) and carried by the House last year. The amendment's net effect would be to change "industrial and provident" to "co-operatives and community benefit" in all parts of the law. While that change is deceptively simple—people might say that in many ways it is modest—it is fundamental to the modernisation of industrial and provident society law.The amendment is probing, because, like my hon. Friend, I am not going to the barricades yet. However, an important principle is involved, which I raised on Second Reading, as did my hon. Friend the Member for South Derbyshire (Mr. Todd) and the hon. Member for Eddisbury (Mr. O'Brien), and it has been touched on again today. I am rather disappointed that it was not taken up in Committee, because we could have had a useful discussion.
Interestingly, the Bill is called the Co-operatives and Community Benefit Societies Bill. The reason for that could be that, last year, my hon. Friend the Member for Harrow, West introduced his Industrial and Provident Societies Bill, so that title was not available, although I think that a more important principle is involved. That is, of course, the modernisation agenda as it relates to industrial and provident societies, which is reflected in the strategy unit report "Private Action, Public Benefit".
In that report, the modernisation agenda was endorsed by the Prime Minister himself, who said in his foreword:
- "This report sets out a package of measures which will modernise the law and enable a wide range of organisations to be more effective and innovative, whilst maintaining the high levels of public trust and confidence which are vital to the continued success of the sector."
The strategy unit report was published in September 2002 and the consultation concluded at the end of December. Other Members will comment, I suspect extensively, on that report. It is important to review what that report said about the name change. It is easy to understand why we need a name change.
Yesterday, when I was thinking about this debate, I realised that I had better look up what "industrial" and "provident" mean. I cannot relive the debates in the House in 1852, but I looked up the word "industrial" and the dictionary definition is "of the nature of industry or productive labour". I tried to associate that with the consumer co-operative movement, with agricultural and worker co-operatives, and even with community benefit societies such as football trusts and housing associations. It is difficult to associate any of those activities with the dictionary definition of "industrial".
Similarly, the dictionary definition of the word "provident" is "careful in providing for the future". We could argue about that in respect of the provision of pensions, and I suspect that the Government strongly want to get across to people the message that they
should look after themselves when they reach senior citizen status, but the term does not have any contemporary relevance to the organisations that are concerned with the law as it stands. It is redolent of a 19th century, Dickensian, Victorian vision. There were visionaries at that time, but these terms are not relevant to the 21st century.
Claire Ward: For many young people, their main connection with a community benefit society is probably through the new football supporters trusts. For them, that is clearly a community benefit, yet it would have no connection with the concepts of "provident" or "industrial". Would not it be helpful in our approach to the next generation to use terms that they understand and appreciate?
Mr. Love: I agree entirely with my hon. Friend. It is an immediate turn-off for organisations that are thinking about establishing new bodies and are considering the different structures available to suggest that they form an industrial and provident society. There is no way that young people, or I suspect people of any age, will be attracted by that terminology. We need to move on and find a modern language to reflect what can be achieved by these societies.
Mr. Levitt: Is my hon. Friend arguing that the sector needs to increase public trust and confidence, because it lacks that? Does he believe that merely changing the name will produce the extra public trust and confidence that I am sure we all seek?
Mr. Love: The organisations that are formed under industrial and provident society law critically depend on public trust and confidence, so the need to ensure that they have that trust and confidence is a strong priority for them. The reason that I suggested a change in title was more fundamental. I think that it will improve trust and confidence, because it will improve people's understanding of such organisations.
If we are to modernise the structures, as this Bill does, as the Bill introduced by my hon. Friend the Member for Harrow, West did and as I hope will be the outcome of the strategy unit report, we must also modernise the language that is associated with these organisations. Although there was a 1965 consolidating Act, these structures date back to laws that were passed in 1852 and 1862. We still use those structures as a basis, and we still use the language of that time.
That language may have meant something at the time, and may have given Victorians and people who lived in the 19th century a vision of what industrial and provident societies were trying to achieve. I do not think that that applies at the present time. I shall take the example of a football trust, which was mentioned earlier. I was involved in the formation of a football trust in Enfield. The old Enfield Town football club has gone through considerable difficulties in the past few years. In an effort to mobilise its support, it decided to set up a football trust. It is an admirable organisation, and is working successfully. I attended meetings, and I put them in touch with the national organisation set up by the Government. When we got down to the nitty gritty of discussing how the trust would be formed, someone said, "Lads, it has to be an industrial and
provident society". Hon. Members can imagine that the response was, "What the **** is an industrial and provident society?". It had no relevance or meaning to them. That is the problem that we face.The strategy unit report referred to modernisation of industrial and provident society law. A number of issues were emphasised in the report that are relevant to the debate on this amendment. I was involved in the retail co-operative movement, and I remember with dismay that everyone who tried to explain what it was would always start with its glorious 19th century heritage and would not talk about its 21st century relevance. That is an important consideration in this debate about the language.
That terminology is off-putting. It is not possible to attract people using the language that is current in the laws that cover industrial and provident societies. They have a poor brand image. How do we get people who are trying to form an organisation to consider industrial and provident societies when there is such low public esteem for those bodies? The term is out of date and needs a fundamental overhaul.
This is a critical issue for important sectors of the economy. It is not just new organisations that are being formed. In significant parts of the economy industrial and provident societies are already of relevance and constitute a majority in that activity. I could talk about the housing or agricultural co-operative movements and credit co-operatives, but I shall use the example of the retail co-operative movement, because it is the one best known to me and, I suspect, to other hon. Members. It has 115,000 staff members, most of whom do not have a clue what an industrial and provident society is. Frankly, if one tried to raise the issue with them, they would be put off by the idea. It has 9 million members, and although they are aware of the caring, sharing difference of co-operatives, as the old brand image used to call it, they do not understand what it is. We must do something about the problem of language.
The strategy unit report recommended that we set down a definition for co-operatives. As well as using the terms "co-operatives" and "community benefit societies", we should define them.
When it comes to community benefit societies, we could have the same argument about football trusts. The organisations that I know best are the registered social landlords: the housing associations. They are a big sector of the housing market. In recent years, half a million properties and tenancies have passed from the council sector to the housing association sector. It is rapidly becoming the largest social housing landlord in the country, yet it still uses this completely outdated terminology of industrial and provident society. Let us suppose that someone is trying to persuade a tenant that a transfer from council to housing association accommodation would benefit him or her. That cannot be done in the language of the 19th century.
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