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In the diocese of Salisbury some seven credit unions have been set up in the past 10 years, all of which are working well, while one of my priests in Poole has been chairman of the national organisation of credit unions and is himself working to set up a credit union for the sake of the clergy, to assist them in facing those peaks of expenditure when their income is rather inclined to remain on a plateau. I welcome these initiatives and the detail of the legislative framework that lies behind them.

I want to speak about the importance of these credit unions and their social benefits. The positive benefits that credit union membership brings to communities are huge-especially to those on low incomes, of course, but also to everyone else who participates in them. I participate in a credit union, partly because I think it is important for people not just to use these institutions when it might be convenient to them. We all know that their origins are in the social management and help of one for another in the working years of the industrial revolution in the 19th century, but we all need to support these kinds of ventures because otherwise people will imagine that we are interested only in those banking organisations that exist primarily to make money for those who have shares in them. The reason why in many cases people do not get much out of a high street bank, as the noble Lord just now referred to, is just that: a high street bank will calculate what profit is in it for itself, rather than who needs cash now not to fall into serious debt or become the victims of a loan shark or worse.

The noble Lord referred, too, to the heavy mobs going in. I have seen the results of that in estates on the edge of Poole. Noble Lords may think that I have a leafy diocese but one-quarter of its population lives in Poole, a substantial area with its own estate cultures and one or two rather dangerous no-go areas. It has been just as he says in recent months and years, primarily as a result of the unavailability of credit of any kind when something happens that to you or me

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might be of very little significance, like a washing machine exploding. But, in that kind of context, the replacement for people on very low incomes and living in very small housing units, something in which they can wash their children's clothes is of considerable importance and they have very little option. In normal ways, the banks would not lend them those kinds of sums because they would be considered to be a risk. I watch families fall into debt and for the first time, certainly since I have been in Salisbury, we have churches running substantial breakfast groups for children who are sent to school without anything to eat in the morning.

The reality is that there is a big gulf between those who have access to credit and those who do not. We need to support this timely Bill. With the mainstream banking sector in some disrepute, customers need a reliable and honest home for their money. Co-ops, mutuals and credit unions are already a significant part of the economy, with total assets of more than £400 billion and a combined membership, according to my information, of more than 30 million people. But that is not enough. We need to make this the mainstream of the way in which people bank and support each other. Because it works so well at the very local level this is really important. Often, those who have shares in the major high street banks seem to be at such a remove from those who need money immediately.

Seeing how the people next door are affected binds communities together. We talk a lot about the social glue that we need and here is a prime example of a way in which we can move to make it happen. I echo the call of my noble friend the most reverend Primate the Archbishop of Canterbury who last year called for the encouragement of locally based, entirely trustworthy, user-friendly, educationally sensitive and confidence-building methods of managing debt, such as those represented by the credit unions. I very much hope that this Bill will bring increased flexibility to the way in which these organisations can operate and will enable credit unions to work with corporate members, small family businesses, religious groups active in community work, local co-operative networks and so on, and will give the option to members of paying interest on continuing savings retained in the credit union, rather than receiving a dividend. That would be a very important sign to those who think that banking is primarily about what you can get out of it for yourself.

With this Bill being supported in all parts of the House-we will do our best to make sure that it gets through its stages on to the statute book, easily, completely and swiftly-we have a way in which to show people that our primary interest is to build local support and to get it right. I not only congratulate the noble Lord on bringing this Bill before the House again, but am pleased to note that the Government wish to support it. I look forward to what the Minister will say about how soon we can hope to see it on the statute book.

10.43 am

Lord Graham of Edmonton: My Lords, it is a pleasure to have the opportunity to take part in this debate. I begin, as have all other speakers, in congratulating my

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noble friend Lord Tomlinson on bringing his baby here today after the fully understandable hiccup which took place. As the noble Lord, Lord Kirkwood, said, it proved that the procedures and safeguards in existence are for a proper purpose and that, provided there is good will, a way around a problem will be found. The noble Baroness, Lady Noakes, played a major part in causing the matter to be stopped and reconsidered, which I appreciate.

I cannot better the explanation of the Bill than that given by my noble friend Lord Tomlinson. It may be technical, but underlying its purposes are social objectives which we all enjoy. I enjoyed the reference made by the noble Lord, Lord Kirkwood, to his mother's Co-op number. My mother's Co-op number was 65539. In 1987, I was in the boardroom of Tesco when I was given the great honour of being the president of the Co-operative Congress, which is the biggest single honour that can be given. At that time, the headquarters of Tesco was in Cheshunt, near my patch of Enfield and Edmonton. The noble Lord, Lord MacLaurin, is a great friend of mine. He invited me to his boardroom, in a sense, to pay tribute to my contributions. He said, "Well, I think it's not widely known but I owe a great deal to the Co-op and I can quote my Mum's Co-op share number", which he proceeded to do. He said, "Not many here can say that", whereupon half the assembly of directors and chief officers recited their numbers.

I have another story about numbers. In 1948, I was paying out the dividend in the Newcastle Co-op when a book was pushed through the grille to receive the dividend. I looked up and there was Jackie Milburn. He was a hero. He said, "What can I get on this book?". I looked at it and said, "I cannot pay you a penny". He asked why not. I said, "Because it is in your wife's name. Here is a form. Get her to sign it. Come back and I will pay you". He came back the next day and asked, "How much can I get?". I said, "There is seven pounds and 17 shillings in the book. I can pay you seven pounds and 14 shillings because you must leave three shillings". He said, "Seven pounds and 14 shillings-that is a week's wages", which it was. A week's wages for a footballer was eight pounds in the season and six pounds out of season. He said, "Thank you very much, bonny lad. If I can help you, I will". As he walked away, I said, "Jackie, you and I know that one of these days Newcastle will get to the cup final". He said, "Yes". I said, "I would like to be able to write to you". He said, "You do that bonny lad, I will get you a ticket".

In 1951, Newcastle United got to the final. I wrote a letter: "Dear Mr Milburn, you will remember that I paid out your wife's dividend and I would like a ticket". I enclosed a postal order for three shillings, which was the price of a ticket to stand at Wembley. Three days later, I received an envelope with the Newcastle United logo on it. Inside was my ticket, my postal order and a compliments slip, which was simply signed, "From your Jackie". I give that illustration to demonstrate the roots of the co-operative idea in credit unions, consumer co-ops and many others. The Co-op is going through something of a renaissance and is doing very well. That is borne out of not only the efficiency of the movement but also the conditions in which we are. It is a great credit.

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This Bill will be known as the Tomlinson Bill. Malcolm Wicks is entitled to feel slightly aggrieved at the turn of events, but his Bill, which was produced by my noble friend Lord Tomlinson, was the product of consultation with the co-operative movement in all its forms. I pay tribute to the officers of the co-operative moment who were consulted and the officers of the Treasury who worked on this for a long time.

In 1997, I became the chairman of the United Kingdom Co-operative Council. I took over from Lord Carter who had produced an all-embracing co-operative Bill, to become an Act. Over the years, because of time, it turned out not to be quite the appropriate vehicle. In the past few years, every now and again, a co-operative initiative is taken. My noble friend Lord Tomlinson referred to the Industrial and Provident Societies Act. I studied 1852, 1893 and 1960s co-operative law and administration. Periodically, there is a need for the legislation to be reviewed, so I warmly endorse what my noble friend has done.

I will sit down soon in deference to the debate in the name of my noble friend Lord Morris, a matter on which a lot needs to be said and done. My noble friend, as we know, is not only a hero and champion of the disabled, he is indefatigable in pursuing his issues. His Bill is a matter of life of death.

For many in this country, the Bill before us is not a matter of life and death, but when I started out people would say, "Well, in the Co-op, we never made a millionaire and never made a pauper". I do not think it has ever made a pauper, but in latter days it has made a few millionaires. I warmly congratulate the noble Lord, Lord Tomlinson, on the Bill and I wish it well.

10.50 am

Lord Newby: My Lords, it is always a pleasure to follow the noble Lord, Lord Graham of Edmonton, when he speaks with such passion on this subject. If this sector is to flourish, it needs additional support beyond that provided by the Bill. I was therefore particularly pleased to see the noble Lord, Lord Triesman, enter the Chamber while his noble friend was speaking. He has since been taking assiduous notes from which I take it that it is only a matter of time before the FA will indeed be offering tickets at three shillings each to co-operative, credit union and benefit societies that perform well, to his great emporium in Wembley.

It is a great achievement for the noble Lord, Lord Tomlinson, to get his Bill back into the House so quickly after it was derailed at the last turn in the previous Session, so we are all pleased that he has done that. The problems that arose with this Bill previously demonstrated a more general issue that Parliament often has with legislation: the problem of what you put on the face of the Bill and what you leave to regulation. Now, as the Constitution Committee has made clear, the balance is right. Clearly it would be ludicrous to put into the Bill the 811 references to friendly societies in the existing legislation, but equally it is sensible to set out the other provisions that are now in place.

I do not intend to repeat the points I made in our earlier discussions on the Bill about the values of mutuality. Indeed, the speeches we have heard, particularly

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those of the right reverend Prelate the Bishop of Salisbury and my noble friend Lord Kirkwood about both the need for and the positive activities that are already taking in this sector have made the arguments very well. But as my noble friend Lord Kirkwood said, the Bill is not sufficient if we want to see this sector to grow as we would like. For it to do that, it may be necessary for a raft of other things to take place. We have to accept that in the current climate, much as we would like it, the sector will not grow as the result of additional government expenditure. Frankly, that is pie in the sky. I think it is fair to remember that the great expansion of the co-operative movement and the initial growth of the credit unions did not take place because the Government wanted it, but because people did. Unless people want these institutions and can see their relevance, they will not grow in any event.

However, that does not mean that the state in its various guises cannot help in various ways. The comments made by the noble Lord, Lord Elystan-Morgan, about the Post Office are relevant here. To many of us, the Post Office seems almost to have been scratching around looking for additional roles and not being very successful at finding them, not least because of the permanent crisis at the top of Royal Mail as a result of the industrial relations problems over many years. However, the Post Office is an infrastructure looking for a role and credit unions are a role looking for an infrastructure, so there is a potential marriage here. Bringing it about would require a considerable act of will by the Post Office rather than the credit unions because they are small and can do little unless the Post Office moves towards them. I hope very much that we will see such moves. I cannot say that I am completely optimistic given everything else that is happening in the Post Office, but I hope that we will see some movement.

Another area that has been touched on is that of the procurement rules and the need for local authorities and other public sector bodies procuring services to ensure that, as far as possible, those rules are compatible with the capacity of ordinary mortals to fill in the forms and bid successfully for business. At the moment, it is exceptionally difficult to secure public sector contracts unless you are a real expert in filling in the forms. Obviously a rigorous process is necessary, but I do not think that the state in all its guises has been good at providing a user-friendly process. Ministers talk a lot about small businesses bidding successfully for government contracts, but frankly, most small businesses would run a mile when they see the forms. Having grappled with them myself in the course of running my business, and as someone who is not bad at tackling forms, I know that I have fallen foul of them on a number of occasions. Sometimes I have just stopped because I felt that I did not have the will to complete them. I hope that further work is done by local government and others to see how to make the procedure more user-friendly.

The final challenge is one of ambition. Many co-operatives, community benefit societies, social enterprises and credit unions necessarily start small and then continue to think small. When you talk to them it is clear that they are very proud of what they do, and often they are delivering public services more

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cheaply and effectively than the bigger state bodies. However, they suffer from the same problem as many NGOs in the past: they are good at doing something small, but do not know how to do it big. The challenge is how to encourage greater ambition and management capacity in the sector. When we discussed credit unions a couple of months ago, again at the behest of the noble Lord, Lord Tomlinson, I suggested that there should be an industry-wide programme from the banking world and the financial sector more generally under which bankers would spend pro bono time working with credit unions in the same way as lawyers do a lot of pro bono work, particularly in education but in other sectors as well. The noble Lord, Lord Myners, kindly took up my suggestion and wrote to Angela Knight at the British Bankers' Association suggesting that it might look at this. This happened only recently and I know that the BBA has had one or two other things to consider, but I wonder whether the Minister could let me know whether his noble friend had a reply to that letter.

More generally, just as my noble friend Lord Kirkwood is on the board of the Wise Group, many Members of your Lordships' House already serve on the boards of community benefit societies or enterprises and play a valuable part in them, not least in explaining how the system works to people who, while extremely well-meaning, highly motivated and hard-working, feel outfaced when they encounter what they see as huge entities with which they need to contract if they are to be successful. Perhaps we should have a Peers' mentoring or trustee initiative to get Members of your Lordships' House, who between them have a great deal of relevant experience including on boards in the commercial sector, to do more in this area. We need a range of additional measures to supplement the very good provisions contained in the Bill.

10.58 am

Baroness Noakes: My Lords, here we are again with the Co-operative and Community Benefit Societies and Credit Unions Bill. Let me remind the House that while this Bill has the appearance of a Private Member's Bill, it is to all intents and purposes a government Bill. I understand that the Treasury drafted the first version which did not complete its passage during the previous Session, and to my knowledge it has certainly drafted the revised version before us today. That said, I join others in paying tribute to the noble Lord, Lord Tomlinson, for persevering with the Bill. Last summer, as we have heard, he introduced the first version after it managed to navigate the obstacles put in the way of Private Members' Bills in another place. As the noble Lord, Lord Tomlinson, has said, that Bill was found wanting by both the Delegated Powers and Regulatory Reform Committee and the Constitution Committee of your Lordships' House.

One of the most important tasks of your Lordships' House is to prevent badly drafted legislation becoming law. However good the intentions behind a Bill-and, in its first version, the Bill was manifestly well intentioned and remains so-it is our duty not to pass into law substandard drafting. I am pleased that noble Lords around the House have supported the crucial role of your Lordships' House in that today.

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I tabled amendments to the previous Bill in order that the House could consider the points raised by the committees. Having done that, the Bill could only have completed its passage before prorogation in November if the Government had been prepared to co-operate in making the changes; in particular, that required them to modify their approach to the handling of Private Members' Bills in another place. The Government chose not to pursue that course, even though it was a Private Member's Bill in name only. We were disappointed with that.

However, the noble Lord, Lord Tomlinson, did not take this lack of support lying down. He has pursued the approach, which we on these Benches suggested to him, of tabling a perfected version of the Bill early in this Session as his own Private Member's Bill. He has, of course, as I have noted, been assisted by the Treasury in doing so, but we should be clear that it is the noble Lord, Lord Tomlinson, who has pushed it forward.

I thank both the Delegated Powers and Regulatory Reform Committee and the Constitution Committee for considering this latest version of the Bill so promptly in this Session. Both committees raised points in relation to the order-making powers in Clauses 4 and 5 of the first Bill, and both committees, as the noble Lord, Lord Tomlinson, has said, are satisfied that their points have been addressed in the revised Bill.

The Constitution Committee also raised important points in connection with Clause 6, which was, and is, drafted in a wide and unspecific way. It felt that the Treasury should have identified the consequential provisions that it needed to alter in advance of drafting legislation. The Treasury said that this was the way that it usually did things. Reading between the lines of the Constitution Committee's report, it has accepted, quite sensibly, that having 811 existing statutory references to cope with was an acceptable reason for not pursuing a more detailed drafting approach in this Bill. However, as a matter of principle, it does not accept the Treasury's usual way of doing things, which is to draft a skeleton Bill and then flesh it out in largely unscrutinised secondary legislation. The Treasury is not the only department which likes to draft its Bills in a skeleton way and I hope that the whole of Whitehall has noted our Constitution Committee's warning that it will remain vigilant over this kind of drafting.

The Bill is relatively modest in its scope as it brings co-operative and community benefit societies and credit unions within the architecture which exists to regulate ordinary companies. For example, the powers in relation to the disqualification of directors may not amount to much in practice because relatively few are likely to be disqualified, as we have found with the use of the powers in relation to companies. However, we hope that they will be a strong reminder to those who take governance positions that they must follow the highest standards in relation to the organisations that they lead. These are extremely good things.

Like other noble Lords, I am not going to repeat the speech that I made on Second Reading of the first version of the Bill other than to reiterate that my party supports diversity of provision of financial services and, hence, supports credit unions and other financial mutuals for their contribution to that. As the right

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reverend Prelate the Bishop of Salisbury and the noble Lord, Lord Elystan-Morgan, reminded us, they play a crucial role in reaching parts of society which conventional financial services organisations either cannot reach or do not want to reach.

I shall not pursue that further but I should like to pick up on one or two points that arose in our debates on Second Reading of the first version of the Bill and which are worth pursuing again today. At the first Second Reading I asked the Minister when the Government planned to introduce the secondary legislation that the Bill provides for. I did not get an answer in the debate in July but the noble Lord, Lord Myners, wrote to me subsequently to say that Clauses 1 to 3 would be dealt with as soon as practical-that time-worn phrase-but that Clauses 4 and 5 would be subject to further consultation with the sector in order to see what the sector would like the powers used for.

I have a couple of questions for the Minister about this. First, can he give the House an idea of the timing for the Bill overall, on the assumption that it can proceed through your Lordships' House without substantial Committee or Report stages? When could it receive Royal Assent? Put simply, does it have a chance of becoming law if we have an election in, say, late March or early May? Would either of those timings allow the Government to introduce the relevant orders before likely dissolution? That is, does "as soon as practicable" mean that it will be in this Parliament? In relation to the more substantive powers of Clauses 4 and 5, can the Minister say a little more about the consultation? Will it take place in advance of the Bill receiving Royal Assent or must it be a sequential process?

I was intrigued by the reference of the noble Lord, Lord Myners, to consulting on what the sector wanted to do with these powers. The use of Clauses 4 and 5 should be a matter of public policy and the Treasury should have a clear idea of what it wants to achieve with those powers. Indeed, the Treasury should be consulting on what it believes should be achieved with the powers and not on what the sector wants to achieve. For example, implementing the powers for investigations, as allowed for by Clause 4(2)(a), should be a matter of policy whether or not the sector wants those powers. Can the Minister enlighten the House on that?

In another area, we know that the most important changes to credit unions will come not from this Bill but from the legislative reform order which has been consulted on. The noble Lord, Lord Myners, told the House in July that this reform order would be published in draft by the end of last July and would be laid before Parliament when the House returned from Recess in October. As I understand it, none of this happened in the previous Session of Parliament but a draft order was laid before the House in late November. I also understand that this will be dealt with by the super-affirmative procedure. What timetable are the Government working to in respect of this order? Furthermore, can he say whether the Government think it is appropriate to complete the processes in relation to the legislative reform order in advance of the Bill of the noble Lord, Lord Tomlinson, receiving Royal Assent; that is to say, are they connected together or are they entirely separate processes?

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