| Previous Section | Index | Home Page |
4 Apr 2003 : Column 1204—continued
Mr. O'Brien: I am grateful to the hon. Gentleman for confirming that the Bill has all-party support. We shall see how much time I shall take on Third Reading to decide whether his assertion is correct.
The initiative of the hon. Member for South Derbyshire has allowed the Government to focus their energy on addressing the matter seriously with the professional resources at their disposal. That is why the Bill's measures and detail are correct and why we should speed its passage to join other Acts on the statute book. It is a permissive Bill and will consequently be enabling legislation. Producing such legislation rather than measures that curtail and restrict freedom is the proper role of the House and an essential element of our democracy. I could not say the same of other Bills before the House.
Clauses 1 to 3 of the original Bill were replaced by new clause 1, and new clauses 2 to 5 were added. The original clause 4 is now clause 6 and the original clause 5 is now clause 7. The Bill also now has new clause 8 and clause 9, and so it was important to keep track of it. I can honestly claim to be half-Lancashire and therefore part of the genuine heritage of the co-operative movement, a pride in which I share with many others, and I am glad that this important sector has been recognised, not least because, at the end of 2000, the 8,382 industrial and provident societies on the register held assets of £61 billion in this country. It is an incredibly important sector.
For the purposes of that analysis, the register is divided between retail societies, including the small co-operative stores—one of which is in Bunbury in my constituency, in which I shop every week and get my ample supply of newspapers; one might call it a media store—and the wholesale and productive societies. The register also includes the agricultural societies that are so important to our rural economy, given the challenge that it faces, the fishing societies that provide the ability to supply fishing equipment to members and marketing facilities to each other, clubs—of one of which I am proud to be an honorary member—general service societies and housing societies. Given the great importance of those organisations to what is taking place in so many of our communities, the strategy unit report correctly put its finger on this important area for review, as has been mentioned earlier.
We did not have the opportunity on Report to refer to some of the questions raised in Committee. The Minister very helpfully agreed to write to me about
them, and I would like to place on record that she did so on 25 March. Her letter sought to deal with two particular points, and I urge all Members with an interest in the Bill to read it, as it has been placed in the Library. It had attached to it the draft regulatory impact assessment, and I am most grateful to all those who have spent time giving that assessment proper and due consideration.I am pleased to place on record that it is a very satisfactory and helpful document which summarises why this measure is justified and—if I may rather immodestly suggest this—vindicates the request for such an assessment. It merits reading, and the point that flows from it—to which the Minister might allude later—is that it seeks to clarify why it is fair to say that this provision does not anticipate all the measures that might come out of the strategy unit report on charity law reform. At the same time, however, it heralds some of the thinking that is probably going on as a result of the extensive consultation that is taking place because of that very worthy and welcome report.
In regard to the regulatory impact assessment's finding on the power to restrict the use of assets—the so-called asset lock—in clause 1, the Minister's letter suggests that, without an asset locking regime in place, there would be "a serious deterrent to funders". It is important to recognise that that was not clear from the outset, and that it has become clear during our deliberations. That is part of the merit that has been derived from our having had this extensive debate on the Bill. That was important not only because we have looked at a number of the processes by which these entities are able to commit themselves and to be bound to the outside world as well as ensuring that they have modern procedures, but because, in the modern competitive world, they must have the opportunity to gain the confidence of those who would seek to fund them so that they can be competitive while maintaining the mutuality of interest of their members. Those requirements have been served by the measures that we are introducing. As with normal companies, the provisions allow for the possibility of a reduction in transaction costs and the facilitating of business transactions, which I welcome as potentially deregulatory.
I would like to raise a practical point, which is that, in relation to the sealing of documents, there is an added benefit that is not highlighted in the Minister's letter of 25 March. These days, commercial deals are often done quickly to capture the opportunity, and co-operative or community benefit societies equally need to try to ensure that they do not lose out by being unable to act swiftly when it is in their interests and the interests of their members to do so.
The seal is no longer needed, although it has to be considered in jurisdictions other than England and Wales. It is appropriate that we have that benefit, which is also necessary given that, these days, company executives, as well as those of co-operatives and community benefit societies, have to travel extensively, despite the fact that they are focused within their community. They are often not in the right place to be able to sign against the seal. The point is very practical, but all those who have been involved in commerce
realise that such factors can often be a serious deterrent to getting deals done quickly and giving confidence to the counter-party.We discussed on Report the ramifications of ostensible authority and vires, but it would be best if we received clarification from the Minister, either today or as soon as possible, that the Financial Services Authority is to be considered. The review is coming up at the end of the year and the FSA's remit is set by Parliament, so the Government will have to come back with a recommendation, but it would be helpful to know what they have in mind or whether there is any barrier to working positively on those issues. As a registry function is provided for the sector, it would be useful to have that clarification. The Minister's letter was helpful as far as it went, and I pay tribute to that.
Moving on from the letter, which I recommend that all those with an interest in the Bill read, my only other reservation about the process is that, as a result of the Government amendments, much will be left to secondary legislation. That will obviously depend heavily on a consultation process. That indeed helps, and as part of the asset lock-in and dedicated assets discussion we had not only consultation, but the liberal use of the word "sensitivity". I am glad to think that the question of dedicated assets and asset lock-ins can be dealt with in a sensitive way. I think that that is intended as an attempt to take cognisance of the particular conditions at any given time and the particular transactions that people may have in mind as to each society. That is sensible, so long as the overriding principles, at all times, are purpose and the community of benefit. If we always keep those uppermost in our minds, we will be fine.
The Bill is highly worthy, likely to be effective and desirable. The point on the question of the name has been considered, but it would be helpful if the Government reiterated their assurance that the legislation is intended not as a blank cheque, but as a process by which secondary legislation is clearly itemised and dealt with under the affirmative resolution procedure, although that has already been confirmed.
It is interesting to note that the hon. Member for Harrow, West (Mr. Thomas), who has kindly sent me a note of apology to say that he cannot be here for the winding-up speeches as he has to go to his constituency surgery, none the less thinks that we are setting a good precedent for foundation hospitals. It will be most interesting to see how that develops, if he believes that the proposals on foundation hospitals relate to co-operatives, which is not how I read them.
My only other point is technical: it would be helpful if the Minister made some reference to when the Government intend to consider the separate legislation that will apply to Northern Ireland and bring it into line. Quite rightly, Northern Ireland has been excluded from the Bill. It has different arrangements, so it would be sensible to consider whether they can be dealt with as effectively as those we have debated today.
It is appropriate to pay tribute not only to the hon. Member for South Derbyshire, as the Bill's promoter, but to the Minister, who has handled proceedings with dedication and a seriousness of intent, and to my constituents who have helped me as they are somewhat involved in the Co-op group, not least the chief
executive. The Opposition also pay tribute to all that the co-operatives and community benefit societies do. This is a well-deserved measure that will assist them in going forward in the 21st century. We hope that it builds on the legacy of past generations, which made available assets as well as their time, skills, endeavour and good will. We hope to acknowledge them by doing the same and adding to their good work.12.29 pm
Ruth Kelly: I thank my hon. Friend the Member for South Derbyshire (Mr. Todd) for introducing this important Bill on co-operatives and community benefit societies. He has worked hard to secure the Bill's passage through the House. I applaud his constructive approach to bringing that about. The Bill has been improved through scrutiny, which is due in no small part to the illuminating and constructive debate involving hon. Members on both sides of the House. I am sure that that will produce a legislative outcome that will greatly benefit the industrial and provident society sector. I thank the House and my hon. Friend for that. I am also grateful for the support that the Opposition parties have lent to the Bill, and for the favourable remarks made by the hon. Member for Eddisbury (Mr. O'Brien).
Industrial and provident societies, with their ethos of member engagement, independence and help for the community, have for many years made an important contribution to the United Kingdom's economy and society. They form a significant section of the economy. The hon. Member for Eddisbury described the diversity of the sector and the contribution that it makes. Societies also perform an important social function. The Government welcome the benefits that they produce for their members and for the wider community. A range of enterprises across all sectors of the economy can use that flexible corporate form, which, strengthened by the proposals in the Bill, should continue to prosper. We are keen to help the sector to maximise the benefits that it provides to its members, which is why we have made it clear from the outset that we support the principles behind the Bill.
Clause 1 on asset lock-in was rightly given a great deal of attention in Committee. It will enable the Treasury to introduce in secondary legislation provisions under which community benefit societies could prevent any use of, or dealing with, their assets except for the benefit of the community. That will provide societies with the option of ensuring that their assets can be used only for purposes that are beneficial to the community.
As the hon. Member for Eddisbury said, the proposal emerged as one of the key recommendations of the strategy unit's report into the voluntary and not-for-profit sector. The report highlighted the benefits of the proposal, stating that the current situation with no asset lock-in provision was a "serious deterrent to funders". That is an important point. The new provision could be of great benefit to industrial and provident societies.
The report also noted that care would need to be taken for
- "robust mechanisms . . . to be put in place to ensure that takeovers, mergers and dissolutions are conducted in a fair and transparent way".
An asset lock-in regime is a complicated area of policy, and it is important that we get it right. My hon. Friend the Member for South Derbyshire and I took the view that it would not be possible, within the time scale envisaged in Parliament, to establish in detail exactly what the regime should look like. We need to produce a regime that will maximise the benefits to societies and the wider economy, which is why the Bill provides for a clause that enables regulations to be made at a later date giving community benefit societies the ability to lock in their assets. As the hon. Member for Eddisbury said, we will consult thoroughly with the movement and with other interested parties to ensure that we get the regulations right. They will be passed by affirmative resolution in due course.
The question of who the regulator will be is one of the details that we have not had time to consider properly during our scrutiny of the Bill. That is why we are introducing enabling legislation, which will allow us to consult more fully with the movement, and with the Financial Services Authority on whether it would be prepared to take on that role. At present, we have no set view on the outcome of that consultation, but I can assure the House that if the Bill is enacted, officials will start work straight away to establish an asset lock-in regime, and will consult on the details of the regime as soon as it is sensible to do so. I can, however, confirm our full support for the principle and the clause.
The hon. Gentleman asked about the current legislation being considered by Northern Ireland Ministers and officials. We are liaising closely with Northern Ireland officials to ensure consistency of approach, but, while consistency is highly desirable and will certainly be taken into account, this is ultimately a matter for Northern Ireland.
I shall not repeat all the arguments advanced in Committee, but I will say a little about the Bill. Clauses 2 and 3 update industrial and provident society legislation in line with company law to make it easier for societies to enter into business transactions. They protect those dealing with societies and society committees from adverse consequences if societies or committees are found to have acted outside societies' rules. That will remove the current risk that apparently legitimate business transactions may prove invalid if a society is found to have acted outside its own rules. It will also remove the onus on those doing business with societies to investigate their rules before entering into contracts.
The clauses were amended in Committee to make their effects more transparent. By setting out all the new provisions as amendments to the 1965 Act, they reduce the amount of reference to other Acts that would otherwise be necessary, and make clear the intended effects on societies. The proposals accord with the Government's agenda for modernisation of the industrial and provident society form, and with our aim to create, where appropriate, a level playing field between societies and the company corporate form.
The aim of clauses 4 and 5 is to make it easier for societies to enter into contracts and execute documents. It seeks to do that by, again, bringing industrial and provident society legislation up to date with existing provisions of company law. The hon. Member for Eddisbury raised some important points about that. Societies will be more able to execute documents
without having to overcome the potentially cumbersome burdens associated with having to use a common seal on all occasions, and will thus enjoy much more flexibility.The Bill takes an important step towards the modernisation of industrial and provident society legislation. In doing so, it will benefit societies and their members, and I am pleased to say that it has the Government's full support. Mutual societies have an important part to play in providing consumers with choice and innovative services in retail and financial markets, and in facilitating social enterprise. I believe that the Bill has the potential to add significantly to the contribution already made by industrial and provident societies.
I congratulate my hon. Friend the Member for South Derbyshire on his work, and on the constructive way in which he has engaged with the Department and with me throughout the Bill's passage. I also thank all who have spoken today, and who spoke during the Bill's earlier stages. The Bill makes an important contribution to the industrial and provident society movement, and will benefit that movement considerably. It will modernise the sector, and I wish it every success in the other place.
| Next Section
| Index | Home Page |