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The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): It might get through!
Lord Dubs: My Lords, the Minister suggests it might get through before an election. However, it is a pretty hefty Bill to get through before an election; it has 109 pages. I am sure it is a worthwhile measure, although I have not had time to examine it. Perhaps I should not say I am sure it is a worthwhile measure; I hope it is a worthwhile measure. However, since I picked it up from the Printed Paper Office I have not had time to look at it. As I said, I am somewhat irritated that the Government have not done what they should have done.
Having said that, I welcome this Bill. It will deal with the sense of unfairness that a small number of second and lower-named account holders quite properly feel. It will put that matter right and I wish it a quick passage through this House.
12.22 p.m.
Baroness Gardner of Parkes: My Lords, I appear to be speaking in the gap. I presume that the noble Lord, Lord Addington, will sum up the debate when he speaks and therefore this is the only moment when I can speak in the debate. I apologise for not giving notice, but I only arrived from Australia at six o'clock this morning and therefore I did not have an opportunity to do so.
The noble Lord, Lord Dubs, said that the Building Societies Bill in another place was expected earlier. I have spent some time on a building society board although I am no longer involved. I have also been a member of the all-party building societies group. The toing and froing between building societies and the Government has been extensive. I believe that is why the Bill has not arrived earlier in another place. It was a case of trying to produce a measure that would be acceptable to all the parties involved.
I add my voice to those who welcome this measure today. I note that other noble Lords who are currently members of building society boards are present in the
Chamber. The administration of building societies is far more complicated than one realises. It is complicated to sort out who is entitled to what. I believe that this measure is a step in the right direction. I support the Bill.12.24 p.m.
Lord Addington: My Lords, all we can really say about this Bill is that we are thankful it is here and we wish it had been here earlier. It addresses a matter of natural justice. The people we are discussing had money in an account which was being held for them for their use and was accruing interest for their use. However, they were denied the bonus that was paid out when some building societies changed their status. That should not have happened. I believe that building societies and the Government have become totally reactive on this matter. They have waited for problems to arise and then waited for pressure from this House, another place and the press to build up before they did something about it.
When building societies were first created they were not expected to become banks. When they decided to change their status someone should have examined their future structure and any problems that might arise. This is a warning to all of us that, if we are considering great changes, we should spend a great deal of time planning for that. We should also be prepared to listen to people's opinions and to consult widely.
Those who have spoken before me have covered the technical details. I am only sad that we cannot do more for those who have been adversely affected prior to this point. We can wish the Bill well. The lesson we can learn from this matter is that when one undertakes change which affects the general public one must consider such change from their point of view. It is quite clear that that was not done in this case. I hope that any future government, of whatever colour or persuasion, will bear that in mind and will show far more consideration for those people who are directly affected by a change which is often thought of as an administrative one.
12.26 p.m.
Lord Mackay of Ardbrecknish: My Lords, I start by paying tribute to my noble friend who has so persuasively introduced this Bill and who will take it through its remaining stages in this House. I also pay tribute to my honourable friend the Member for Gloucester, Mr. Douglas French, for his considerable efforts in drafting the Bill and his enviable achievement in ensuring its swift passage through all its stages in another place.
As all noble Lords have said, the concern behind the Bill is over cases where a carer or family member is the first-named on a building society account held for a person for whom it is not reasonably practicable to operate his account, and at the same time has another membership account with the same building society. Of course in the normal run of things, this makes little difference to either person. But recently it has made a difference where the accounts are held with a society which is proposing to convert or to be taken over.
In these cases, the general practice is for only one bonus to be paid to the carer in respect of both accounts. Depending on the circumstances, there may well be a duty under trust law to pass on part of the bonus received to the disabled people, but as a consequence, the benefits accruing to the disabled person, and indeed to the first-named account holder, may well be substantially less than a first-named account holder would expect to receive.
Societies have generally paid only one bonus because their schemes are based on voting membership. Provided a scheme is within the law, it is for the society board and members to decide on a distribution scheme. Under the Building Societies Act 1986, only the first-named member on an account has a vote on the transfer proposals, or any other resolution of the society. This provision reflects the mutual constitution of societies. It also ensures against distortion of the voting base, for example by someone adding several names to an account to get extra votes. Likewise, a person with more than one account in his or her name will have only one vote. Both of these rules underpin the nature of mutual building societies, where the principle is one member, one vote.
I say "general practice" because there is no compulsion on converting societies to tie their distribution schemes to voting membership. A society embarking on conversion could propose a different scheme, including one with special provision for disabled and other second-named savers if it wished, not in precisely the way envisaged by this Bill, but with similar effect. This Bill is designed to make sure that in future, distribution schemes will specifically cater for savers who are limited, by disability, ill-health or age, in their ability to operate their accounts from day to day.
It is generally open to savers and carers to decide whose name should be first on the account, and so who has voting membership. Indeed, the 1986 Act gives joint savers and borrowers the statutory right to choose the order of names on an account if they wish. I hope that my noble friends and others will join me in welcoming the initiative of the Building Societies Association, which has issued guidance notes for its members in opening accounts where the saver--the person whose money it is--may not be the best person to manage the account on a day-to-day basis. In such cases, the saver may be the first-named member on the account, with a second-named member carrying out the practical operation of their account. Clearly that will go a long way towards resolving the problems that the Bill addresses.
The Bill we are discussing would address those cases where the first-named or sole named member on an account is acting on behalf of someone for whom it is not reasonably practicable to operate the account. At the time the account was opened it seemed sensible to put the account operator's name first, and no one could have foreseen that the order of names would have had the unwelcome consequence that it has turned out to have.
I started by praising the significant achievement of my honourable friend the Member for Gloucester, Mr. Douglas French. I hope that he will have a double
whammy. The noble Lord, Lord Dubs, reminded us that my honourable friend has already to his credit a Private Member's Bill on building societies on a closely related topic. With a bit of luck, and with your Lordships' support, he should have two such Bills to his credit. That is pretty good going with Private Members' Bills in another place, and especially Private Members' Bills on such a complex and technical subject as this Bill and indeed, the other measure. I congratulate him, and my noble friend Lord Hayhoe on taking up this issue in this House. I thank the three noble Lords who spoke, including my noble friend Lady Gardner of Parkes, whom I welcome back. I am impressed with her stamina in speaking in the debate having got in on an overnight flight from the other side of the world. I thank all noble Lords who have taken part. Given the level of support, I am sure that the Bill will reach the statute book before the end of this Parliament.12.30 p.m.
Lord Hayhoe: My Lords, I am grateful for the support that this limited measure has received. In view of the comments of my noble friend Lady Gardner, perhaps I should declare an interest. I was--I underline "was"--a non-executive director of a building society, as the noble Baroness was of a different society. I hope that the building societies which are converting will take note of what was said in the debate, in particular what has just been said by the Minister. If the Bill becomes law, the Bill will require societies in the future to act to redress the grievance of the elderly, the handicapped, the sick and the aged. But there is nothing to stop building societies which are converting now from taking that action of their own volition. I hope that they will take note of what has been said and of the fact that the Bill had all-party support in another place. I hope that those building societies will find some way of helping those people who have a real sense of grievance with the present situation.
I am grateful for the support that the Bill has received. I hope that it will now receive a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
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