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4 Apr 2003 : Column 1191—continued
Ruth Kelly: I congratulate my hon. Friend the Member for Edmonton (Mr. Love) on the way in which he introduced his amendment. As he has said, he has shown a consistent interest in this matter. I am aware of his concern about the use of the term "industrial and provident society", particularly the points that he made about whether the term is outdated and well understood, whether it should be replaced by what some regard as more modern, more descriptive terminology such as co-operative and community benefit society. The strategy unit report looked at the issue and concluded that the name "co-operatives and community benefit societies" should be retained and that the umbrella term, industrial and provident society, should no longer be used.
As I said in Committee, we examined the responses to the public consultation on that report. I hope to make our response to those recommendations soon. Nothing
in the legislation requires societies to call themselves industrial and provident societies, but it does require that the title of every society must end in the word "limited". The term "industrial and provident society" is used in the title of the relevant Acts and in some of the substantive provisions of the Friendly and Industrial and Provident Societies Act 1968 and the Industrial and Provident Societies Act 2002. The proposed amendment would not change the names of the previous Acts or the substantive provisions in which the term "industrial and provident society" occurs. Societies would continue to be registered under the Industrial and Provident Societies Act 1965.I recognise that part of the issue is presentation and branding, and how the movement and individual societies wish to present themselves. My hon. Friend the Member for Edmonton made a powerful case about the members of football clubs and whether they see themselves as members of industrial and provident societies. Given the case that he and others have made, we considered whether we could introduce an enabling provision to facilitate a change in the names of industrial and provident society Acts and to amend all other legislation that contains references to those Acts. Unfortunately, we decided that such provision was outside the scope of this Bill. Moreover, changing the names of those Acts would probably be unhelpful at this stage. It would apply a collective title to Acts that individually bear different titles and that would make the legislation less transparent and more difficult for societies to navigate. For those reasons, I urge my hon. Friend to consider withdrawing his amendment.
Mr. Todd: Unfortunately, it has fallen to the Minister to give the boring and disappointing answer to this interesting debate, but her response was not unexpected. She has done her duty. It is worth reflecting for a moment—I still fancy myself as a historian—on the reasons for choosing the term "industrial and provident society" to describe that sector of activity.
I have mixed feelings about the amendment. It is logical, in the modern day, to describe the movement in a way that is much more recognisable to ordinary individuals, especially—as my hon. Friend the Member for Watford (Claire Ward) said—to young people, who would not necessarily be aware of the background of those organisations. However, I am always struck by the extraordinary endeavours of those who founded, in Victorian times, the movement that we are discussing today and—as my hon. Friend the Member for Edmonton (Mr. Love) mentioned—the respect that we owe to people who struggled to set up organisations that provided a wide range of benefits for working people at a time when the state did not so provide and they relied entirely on their own endeavours through voluntary groups.
The original legislation in 1852, which started the process, was moved by the then hon. Member for Shrewsbury. I cited that Bill's preamble on Second Reading, but not everybody was here then. It states:
- "Associations of Working Men have been formed for the mutual Relief, Maintenance, Education and Endowment of the Members, their Husbands, Wives, Children, or Kindred, and for procuring to them Food, Lodging, Clothing, and other Necessaries, by exercising or carrying on in common their respective Trades or Handicrafts."
The word "provident" is not commonly used today, but the word "prudent", which is commonplace in the Treasury, has had a welcome revival, and the same might happen to "provident". It has the clear meaning of making sensible provision for future needs, which is clear in the original purpose of the legislation.
The movement moved on and did not remain confined to working people. Any person from any background, as confirmed by the examples given by my hon. Friend the Member for Harrow, West (Mr. Thomas) and others, can now become involved in such societies and seek to further a variety of goals that the Victorians never conceived of. I defend the use of the language at the time, because it was appropriate and clearly defined the organisations that existed in those days. I also salute those people who wisely provided the legislative framework to permit such institutions to carry on their business safely in law at that time, but I accept the arguments advanced by my hon. Friend the Member for Edmonton. He pointed out that whatever the benefits and merits of the description then, it does not apply in present circumstances.
I note the Minister's words with regret, albeit tinctured with some relief that we shall preserve in the legislative framework references to farsighted behaviour by hardworking individuals. The profound implications of the judgments that they made show that we owe them great credit. I hope that my hon. Friend will withdraw his amendment, but I respect his reasons for moving it.
Mr. Love: I have always thought of the Chancellor as a modern-day Rochdale pioneer, although I raise that point with some trepidation in case the hon. Member for Eddisbury (Mr. O'Brien) jumps up to tell us that we have someone new in that post. I wish to correct an earlier mistake and pay tribute to the founders of the co-operative movement and the community benefit movement, including the Rochdale pioneers of 1844 and J. T. W. Mitchell—a person of very humble origins—who was the chief executive of the Co-operative Wholesale Society in 1895 and took part in an investigation by a Committee of the House of Commons into retailing. His comments and his vision for the future are due great respect, even today.
Mr. Lepper: In my hon. Friend's catalogue of pioneers of the co-operative movement whom he congratulates, I am sure that he would want to include Dr. William King and those others who in the early 1820s, some 20 years before the Rochdale pioneers, set
up a co-operative retailing shop and a working men's institute based on co-operative principles in West street in my constituency.11.30 pm
Mr. Love: I do of course pay tribute to Dr. William King. I also pay tribute to George Mudie—not the Member of this House—who set up the London Co-operative Society. Some in Scotland—looking round the Chamber, I can see that there are no Members from Ayrshire here—lay great claim to the Fenwick weavers having been the originators of the co-operative principle. Whoever it was, I pay great tribute to the endeavours of all the people who created the movement that we have today.
I freely admit that my amendment has some shortcomings, as the Minister said, but it allows me to refresh the House on the importance of changing the language in this respect. I take note, as we did in Committee and on Second Reading, of the fact that the Treasury is looking carefully at the strategy unit report and will bring forward recommendations resulting from that in the near future. I also take note of the positive way in which the Minister responded to my amendment. I can feel some sympathy for its terms, although I recognise that it does indeed lie outside the scope of the Bill. I hope that the Minister and Treasury officials will give serious consideration to the strategy unit report and to its recommendations in general, but in particular to the recommendation that we should change co-operatives and community benefit societies. I hope that they will take note of the sentiment of this House, which has been strongly expressed on several occasions, not only by me, but by Back-Bench Members of all parties. Given those considerations, I hope that the Minister will make proposals that reflect them.
On the basis of the assurances that she has given, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.33 pm
Mr. Todd: I beg to move, That the Bill be now read the Third time.
It is pleasure to introduce the Third Reading of the Bill, which has occupied a significant amount of the time of the House and of hon. Members who served on the Committee.
Let me briefly refresh hon. Members' memories as to the key purposes of the Bill and its implications. The first purpose is to remove arcane obligations on societies on the execution of agreements of various kinds. For example, clause 5 relates to the use of society seals, the way in which they are kept and operated, their function and indeed the necessity of having them at all. That has already been commended by many as a means by which a number of societies will be able to make significant savings in terms of money and administrative time in the course of their activities. It is a modest change, but one that has beneficial implications.
The second purpose is the protection of business partners of societies should they inadvertently or—as we discussed earlier—deliberately breach the objects of their constitutions. We all accept that it is important
that those who have business dealings with societies should have equivalent protection to those who deal with a company and should not be caught out by someone being able to point out that the society has traded outside its objects. In that case, the contract struck is ultra vires, which places that entirely innocent partner in the position of potentially losing significant sums of money. Those provisions are covered in clauses 3 and 4. Particularly as a result of additions to those clauses, the Bill has been dramatically extended from the Bill that received Second Reading. I had imagined that if the House continued to have faith in it and it passed through another place I would have a relatively modest little package of paper to present to people and say, "This private Member's Bill has been passed partly through my endeavours." It will now be a slightly larger package of paper because the amendments, particularly on this matter, have lengthened it considerably. To be fair, they set out the protections in much more detail and therefore perhaps with greater legal protection for those who are covered.The third protection, which is a new element that was introduced in Committee, but is certainly valuable, is to ensure that societies that are also charities make clear that status to those with whom they form contracts. That is because those contracts will not be protected in same way as those that are made by societies that are not charities. The key element here is the balance of protection involved. It is right that the membership of a society who intend further to extend their own benefits should be treated in the same way as a company in terms of the protection of third-party contracts. However, that is not so in the case of a charity that seeks to serve the interests of third parties. It is clear in law that the assets and objects of that charity should be protected with greater rigour than is obliged in the case of companies or—after the passing of the Bill, if that is willed—co-operatives and community benefit societies. It is vital that the fact that a society is a charity is made crystal clear to anyone who seeks to make a contract with it. That effectively challenges the individual or body making that contract to look carefully at the objects of the charity to ensure for themselves that they are engaging in a contract that lies within the scope of the charity's objects, because they will not enjoy the equivalent protection that they would if they had been dealing with a community benefit society or a co-operative that was not a charity. Clause 2 covers that at some length. It is an important point for a small sector of activity.
The final element of protection is the framework to give community benefit societies new rights to bind their assets and the proceeds of any assets that are disposed of to the purposes of the society, albeit that such purposes may be carried out through another vehicle. It is recognised that it may be appropriate to change the framework through which the object is delivered, provided that the same obligation applies to that new vehicle: in essence, that the assets may not be disposed of to those who happen to be members of the society at that time, but must be used for the purpose involved. On Second Reading, in Committee and on Report, reference was made to the importance of that provision; for example, to community benefit societies that are football trusts. Although the precise purpose may have become redundant, it is important that the society's
original aim should continue to live in its assets and should be transferred to another society with similar aims. That is the purpose of the Bill.The implications of the Bill are that it would bring the relevant legislation broadly into line with equivalent company law. It would make it easier for societies to carry out the normal business of making agreements, contracts and conveyances with other bodies, without an additional bureaucratic burden or unintended risk. It could make societies slightly more competitive than they are currently; it would save them some time and money and would make it possible for them to pursue their interests more effectively and speedily.
The asset lock clause lays the foundation to allow the implementation of one of the recommendations of the strategy unit's report, "Private Action, Public Benefit", which has been mentioned several times this morning. Incidentally, that report has received as wide a range of accolades for the quality of its thinking and the comprehensiveness of its recommendations as any report from a public institution for some years. It is pleasing that part of the Bill would implement an aspect of its recommendations.
Lack of an asset lock provision could prevent the safe use of a community benefit society model in some circumstances; for example, in public service provision. I have long argued that some services are better delivered through a voluntary sector model, or at least one that engages with the customers or residents who use that particular service. For example, a particular village may have a direct personal interest in the way that its services are run, but there should be public support for such services, perhaps through the transfer of an asset and certainly through the provision of public money. If one were to follow that path, it is critical that there is a way of locking those assets into that particular purpose. It would be wrong if those who happened to be residents or qualifying members of a particular society were able to say, "Thank you very much, we'll take the proceeds and use them for whatever we have in mind or for our own purposes", through using the escape clauses—turning into a limited company by guarantee—that were discussed on Second Reading. The Bill thus affords a valuable opportunity to use community benefit societies as a means of delivering public services with the benefit of public assets and public money.
I shall refer briefly to my personal history. I served on Cambridge city council for 12 years, three of them as leader, and always held the view that one should try to find ways of engaging with our citizens. Often, in Cambridge, they were willing to be engaged; they did not need much prompting. My hon. Friend the Member for Cambridge (Mrs. Campbell) is not in the Chamber today, but I am sure that she would agree.
As a member of the council, I wanted to provide ways for citizens to exercise more direct control. Cambridge is a city with a profusion of voluntary sector, charity and industrial and provident society activity. It would have been marvellous to have found ways safely to transfer some services to some local residents through the means proposed in the Bill. However, one could not do that then; the Bill would provide the basis for such judgments.
I willingly thank the Treasury team for its help with the Bill and in preparing substantial additions to strengthen it. Through their help in preparing the definitions in clause 1, the Government have set out the means by which the asset lock protection would work after appropriate detailed consultation. They rightly provided that there should be an obligation to consult and set out the type of issues on which consultation would be required. The Bill would allow the implementation of the asset lock through regulation after consultation. It is not the perfect model; I should have preferred to include rather more such definition. However, clause 1 is sufficiently constrained to reassure those who feel that the measure would be an open door for a variety of procedures. It is quite restrictive and obliges the Government to draft the regulations so that they clearly define how an asset lock would work and its implications for the community benefit society that would use it. The simple model would be where new community societies chose to adopt an asset lock at the start of their activities, while the more complex model would be where an existing community benefit society chose to adopt the asset lock and persuaded its existing membership of the need to follow that approach.
Those who have followed the Bill with interest will want to monitor the Government's progress in drawing up the necessary regulations. Obviously, the timing will be dependent on the officials and Ministers who guide the process; nevertheless, I am encouraged by the enthusiasm and commitment shown by the Treasury so far. It indicates a firm intent to proceed at a reasonable pace.
In conclusion, this is a modest Bill. As the person who was first in the ballot for private Member's Bills, I had a large number of Bills suggested to me—some of which could certainly not be described as modest. However, one of the several provisos that I made in deciding which Bill to promote was that I wanted a Bill that would not restrict freedoms. In some circumstances, restricting freedoms is understandable—and a number of Bills on the list this year do so—but I wanted not to restrict but to extend freedoms, and this Bill does that. It provides greater protection for existing organisations to carry out their business more effectively and it provides a framework for a flowering and extension of the community benefit societies movement. It will have wider implications beyond our conceptions.
One of the main reasons that I am fond of this Bill—and the reason that I quoted the preamble to the 1852 Bill—is that, sometimes, from tiny little acorns greater oaks may grow. It may well be that making it easier for community benefit societies to operate may have implications for their future kind, range and scale that are wider than we can conceive of now. With those thoughts, I commend the Bill to the House. I very much hope that it will be supported.
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