CO-OPERATIVES AND COMMUNITY BENEFIT SOCIETIES
24. This is a private member's bill brought up
from the House of Commons. The Treasury has provided a memorandum
for the Committee setting out the delegated powers in the bill.
The memorandum is printed in Annex 3 to this Report.
25. The bill is intended to update some aspects
of the legislation about co-operatives and community benefit societies
and also to make new provision for asset "lock in",
described in paragraphs 6 to 10 of the Treasury's memorandum.
26. There are delegated powers at clauses 1,
3 (new section 7F(3) of the Industrial and Provident Societies
Act 1965), 7 and 8. The delegations in clauses 7 and 8 (relating
to commencement and application to the Channel Islands) and those
in clause 3 (applying, subject to negative procedure, seven specific
subsections of the Companies Act 1985 for the purposes of new
section 7E(1) of the 1965 Act) are, in our view, appropriate.
27. Clause 1 contains a power for the Treasury
to make regulations (subject to affirmative procedure) enabling
community benefit societies to ensure that assets cannot be used
or dealt with except in certain cases. Paragraphs 8 and 9 of the
Treasury's memorandum explain why a power has been taken and why
the provisions do not appear on the face of the bill. It is a
wide power which includes the power to prescribe:
- the type of society to which the provisions apply
- the assets covered (subsection (1)(a) to (c));
- the cases in which the assets may be used or
dealt with ( subsection (2));
- how assets must be dealt with in some of those
cases (subsection (4)(c));
- enforcement mechanisms and investigations procedures
(subsection (4)(f) and (g));
- criminal offences (subsection (5)(a));
- rule-making bodies which can make legally binding
rules (subsection (5)(d)).
The regulations may modify, exclude or apply any
enactment or rule of law (subsection (5)(f)).
28. The Committee has three concerns about the
powers under clause 1. First, clause 1(5)(a) will allow regulations
to impose criminal liability but there is no limit on the face
of the bill on the maximum penalty for criminal offences under
the regulations. In view of the range of provision which may
be made under clause 1, the Committee considers that the delegation
in clause 1(5)(a) would be appropriate only if such a limit were
included in the bill.
29. Secondly, clause 1(5)(d) enables the regulations
to authorise a prescribed person to make binding rules (not required
to have a parliamentary procedure). It is suggested in paragraph
13 of the Treasury's memorandum that these rules are intended
to relate only to supervision of the regime established by the
regulations, rather than to impose some of the requirements for
which it would be expected that the regulations would provide.
The Committee considers that the delegation in clause 1(5)(d)
would be appropriate only if expressly limited in the bill to
a specific purpose such as that described in the Treasury's memorandum.
30. Finally, clause 1(5)(f) enables any enactment
or rule of law to be modified or excluded altogether and the case
for this is set out in paragraph 13 of the Treasury's memorandum.
In our report on Henry VIII powers to make incidental, consequential
and similar provision,
published earlier this Session, we concluded
that there are occasions when Henry VIII powers to make such provision
are justified. We also concluded that there should be a presumption
that the affirmative procedure should apply. In this case,
although the affirmative procedure applies, the Henry VIII power
is not restricted to incidental, consequential or similar provision
and, for this reason, we believe that the power is too wide and
is, therefore, inappropriate.
31. We draw to the attention of the House
the recommendations in paragraphs 28, 29 and 30 above. There is
nothing else in the delegated powers in the bill to which the
Committee wishes to draw the attention of the House.
3 3rd Report, Special Report on Henry VIII powers to
make incidental, consequential and similar provision, HL Paper
21, Session 2002-03. Back