Transfers to subsidiaries: distribution of funds

‘(1) An order under section (Transfers to subsidiaries of other mutuals) may provide for this section to have effect.

(2) Subsection (3) applies if the terms of a transfer to which the order applies include provision for part of the funds of the transferor or the mutual society of which the transferee is a subsidiary (the holding mutual) to be distributed in consideration of the transfer among the members of—

(a) the transferor,

(b) the holding mutual, or

(c) both the transferor and the holding mutual.

(3) The provision for the distribution must be authorised as follows—

(a) it must not exceed the limits prescribed by order under subsection (4), and the distribution must be approved (in the case of the transferor) by the transfer resolution or (in the case of the holding mutual) by a resolution of such description as the Treasury specifies by order;

(b) if the provision for a distribution exceeds the prescribed limits, it must be approved by each of the resolutions mentioned in paragraph (a).

(4) The Treasury must by order authorise distributions of funds to members by mutual societies participating (directly or through a subsidiary) in transfers to which an order mentioned in subsection (1) applies, subject to limits specified by or determined in accordance with the order.

(5) A transfer resolution is—

(a) in relation to a building society, each of the resolutions required pursuant to paragraph 30 of Schedule 2 to the Building Societies Act 1986 (c. 53);

(b) in relation to a friendly society, the resolution required by section 86(2)(b) of the Friendly Societies Act 1992 (c. 40);

(c) in relation to an industrial and provident society, the resolution required by section 52 of the Industrial and Provident Societies Act 1965 (c. 12).

(6) Expressions used in this section and in section (Transfers to subsidiaries of other mutuals) have the same meaning as in that section.

(7) Subsections (4) to (7) of that section apply to an order under this section as they apply to an order under that section.’.—[Ed Balls.]

Brought up, read the First and Second time, and added to the Bill.

We come now to Government new clause 5.

It was our intention to consult the Channel Islands and the Isle of Man about new clause 5 before exercising the power, but given the time available, it has not been possible to complete those consultations satisfactorily. The new clause would not have a material impact on the Bill or the sector, so it is not my intention to move it.

Title

Amendments made: No. 7, in title, line 1, leave out ‘Remove existing’ and insert ‘Make provision in relation to’.

No. 8, in title, line 1, leave out ‘subject to regulation by the Financial Services Authority’.

No. 9, in title, line 3, leave out from second ‘to’ to end of line 4 and insert

‘make provision in connection with the transfer of the business of certain mutual societies’.—[Ed Balls.]

Question proposed, That the Chairman do report the Bill, as amended, to the House.

May I congratulate my hon. Friend the Member for Bournemouth, West on introducing the Bill and on the huge amount of work that he and his advisers have put in? At the same time, may I pay tribute to the Treasury and the Government for accepting the merits of the Bill? My hon. Friend might have been the fuse that activated the Government to produce this legislation, which is long overdue and very beneficial to the mutual movement. I have discussed the matter with him and I am truly amazed at the amount of work that he has put in. I also thank the Treasury for the way in which it has co-operated with him in putting the basis of good legislation on the statute book.

I intend to treat that as a point of order.

Further to that point of order, Mr. Taylor. From the Government Benches, may I echo the comments of the hon. Member for Macclesfield? In essence, the legislation, which we will report to the House following today’s debate, takes forward the original proposals of the hon. Member for Bournemouth, West, and it follows a great deal of detailed consultation and discussion. We are very grateful to the hon. Gentleman and his advisers, Mutuo and the Co-operative party, and to the Treasury and Financial Services Authority advisers who have worked with us to translate the principles, concepts and intention into legislation that we will take forward if the House supports it on Report and Third Reading, and through the work of subsequent Committees and secondary legislation. We are very grateful for the hon. Gentleman’s work and leadership.

In reply to the hon. Member for Macclesfield, let me say that we are currently undertaking a broad-based review of the legislation in this field. There are necessarily limits to the amount of parliamentary time that the Government can make available in these areas. Where we have had time, we have used it, but we rely on the ability of private Members to make proposals, when they have the opportunity to do so, that we can support. There have been a number of private Members’ Bills in recent years that have substantially improved the legislative environment for mutuals and co-operatives in our country. This Bill is in that tradition, and the Government have not been brought reluctantly to the table. On the contrary, this is an established way of legislating and one that we fully support and encourage. However, success depends on the leadership and hard work of Members of this House. We are very grateful indeed to the hon. Member for Bournemouth, West for the leadership he has shown, which has enabled us to take forward a substantial improvement in the legislative framework for mutuals across our country.

Further to that point of order, Mr. Taylor. I wish to reiterate my gratitude for all the co-operation received from members of the industry, the Building Societies Association and friendly societies.  I am especially grateful to the Treasury, which has, as the Minister said, done a great deal of work and research on the matter before us, and really put itself out to deal with it expeditiously. It did not have a great deal of time in which to produce such complex legislation, and I am very grateful to it, as I am to the Committee members who have turned out to support me. Indeed, I am grateful to all the parties in the House for supporting the Bill. It is rare that one gets every party in the House supporting a Bill, and I am very grateful to them for it. It pleases not only me, but the Portman building society in my constituency, which is one of our largest employers, and the Liverpool Victoria friendly society, which is the largest friendly society in my constituency. Both are exemplars of involvement in the community and support for community organisations, including at least two charities with which I am personally involved. I am very grateful to them.

Further to that point of order, Mr. Taylor, may I say on behalf of the Committee how much we appreciate the courteous and quiet way in which you have administered the Committee and managed our affairs? It has gone very smoothly, much due to your diligence and courtesy.

I am most grateful for those remarks.

Question put and agreed to.

Bill, as amended, to be reported.

Committee rose at sixteen minutes past Ten o’clock.