"Rights of second-named joint shareholders.
102A.—(1) This section applies where the terms of a transfer of business by a building society to the company which is to be its successor include such provision as is mentioned in section 100(1).
§ (2) If—
- (a) a person ('A') held shares in the society throughout the requisite period;
- (b) any shares in the society held by A were jointly held for any period ('the joint ownership period') constituting the whole or part of the requisite period;
- (c) A was the second-named holder of the jointly held shares for the whole or part of the joint ownership period; and
- (d) no person who has priority over A for the purposes of this section held shares in the society throughout the requisite period,
§ (3) The following persons shall have priority over A for the purposes of this section, namely—
- (a) where A was not the first-named holder of the jointly held shares for any part of the joint ownership period—
- (i) any person who was the first-named holder of those shares for the whole or part of that period; and
- (ii) where A was the second-named holder of those shares for part only of that period, any person who was the second-named holder of those shares for a later part of that period; and
- (b) where A was the first-named holder of the jointly held shares for part of the joint ownership period, any person who was the first-named holder of those shares for a later part of that period.
§ (4) If a person dies during the requisite period at a time when he is named in the records of the society as a joint holder of any shares jointly held, this section shall have effect in relation to any later time as if he had never been so named.
(5) In this section—
'the first-named holder', in relation to any shares jointly held, means that one of the joint holders who is named first in the records of the society, that is to say, the person by whom alone, apart from this section, those shares would, by virtue of paragraph 7(5) of Schedule 2, be treated as held for the purposes of section 100;
'qualifying day' has the same meaning as in subsections (8) and (9) of section 100;
'the requisite period' means the period beginning two years before the end of the qualifying day and ending immediately before the vesting date;
'the second-named holder', in relation to any shares jointly held, means that one of the joint holders who is named second in the records of the society;
'the vesting date' has the same meaning as in section 100.
(2) In paragraph 7 (joint shareholders) of Schedule 2 to that Act (establishment, incorporation and constitution of building societies), after sub-paragraph (5) there shall be inserted the following sub-paragraph—
(5A) In its application to section 100, sub-paragraph (5) above shall have effect subject to the provisions of section 102A." ")
§ Mr. Douglas French (Gloucester)
I beg to move, That this House doth agree with the Lords in the said amendment.
The first amendment gives the impression of being draconian. It introduces a new clause that replaces the whole of the original clause 1 of my Bill, which I introduced into the House on 17 January 1995. I emphasise that that is not a classic takeover operation. It reflects, rather, different schools of thought on drafting.
The Building Societies Act 1986 is an extremely complex piece of legislation. Tampering with one part causes repercussions elsewhere. Although the aim of my Bill was simple, the task of giving effect to it on paper was the reverse.
Therefore, although the principal clause, the new version of which we are debating first this morning, is drafted differently from the one that I placed before the House on 17 January, I emphasise that its legal effect is almost the same as that which I originally tried to achieve. There are a few tiny modifications, which I shall mention later.
That is important, because the House did me the honour of permitting my Bill to pass through all its stages on 10 February without debate. I therefore believe that the House might have had legitimate difficulty in accepting from the other place a Bill with amendments that substantially altered its effect. I am pleased to confirm that no such dilemma exists.
The central aim of my Bill and amendment No. 1 is to facilitate the payment of bonuses to second-named account holders when building societies are taken over or merge. Naturally, there is a current interest in the case of the Cheltenham and Gloucester building society. The Bill is also relevant to the proposed merger of the Halifax and Leeds building societies, and any other building society mergers or takeovers by banks that may happen in due course.
Under the Building Societies Act 1986, bonuses to savers with investment accounts can be made only to a sole account holder or to the first-named person of a joint account, and then only to those who have invested continuously for two years. I support, and do not seek to change, thé two-year requirement, which rewards loyalty for long-term saving. Their Lordships took the same view.
What I seek to change, and amendment No. 1 changes, is the restriction of bonus entitlement to first-named account holders only, which discriminates unfairly against several sorts of saver.
First, it is grossly unfair to widows who have had a joint account with their husbands. If the husband dies during the two-year qualifying period, the bonus dies with him, even though the same account may continue in the widow's name alone, with the husband's name deleted. It makes no difference how many years the wife has previously contributed to the account: she gets no credit for it. The two-year qualifying period has to begin all over again.
1088 An example could be given in the case of the Cheltenham and Gloucester building society, where the qualifying two-year period is from December 1992 to December 1994. If a husband on the account—the first-named account holder—died during that period, the widow would be denied the bonus entitlement that she would otherwise have received had her husband lived.
Secondly, the 1986 Act is unfair to newly marrieds. A single woman with an investment account savings history that qualifies her for a bonus in her own right, will fail to qualify if, on marriage, she redesignates her account jointly in the name of her new husband and herself. Her new husband, as the new first-named account holder, must begin a two-year qualifying period in his name. His wife's savings history no longer counts.
Thirdly, the 1986 Act can be unfair to those who get divorced or separated.
Fourthly, there are cases in which it has proved unfair to couples where the husband's name was deliberately taken off a joint account for sensible tax-planning reasons, consequent upon the introduction of separate taxation. I could give the House instances of where that has been done on the specific advice and recommendation of a building society branch. That well-intentioned step, made during the two-year qualifying period for quite different reasons, can result in the account holder losing his or her bonus entitlement.
The new clause in amendment No. 1 can put right those injustices. I am bound to admit that it does so with greater certainty and precision than did my original clause.
In the original drafting, I had the benefit of advice from three extremely distinguished firms of solicitors. I should like to record my thanks and pay tribute to them. I shall, however, refrain from mentioning them by name. I do not believe that they would thank me for doing so as, in the event, their efforts turned out to be capable of improvement. I suspect that taking advice from three firms of solicitors simultaneously—heavyweight firms, at that—may be a temptation best resisted.
§ Mr. Bernard Jenkin (Colchester, North)
Does not my hon. Friend's experience suggest that, where two lawyers disagree, one might assume that one of them might be correct, but where three lawyers are in agreement, they are all bound to be wrong?
§ Mr. French
I think my hon. Friend makes an extremely good point, reminiscent of what is frequently said about economists—
§ Mr. French
I do not agree with the hon. Gentleman's sedentary comment.
When the Bill was originally drafted, we turned first to the second schedule of the 1986 Act, which is where the provisions relating to joint account holders are to be found. We set about amending the schedule. In doing so, we produced, I freely confess, some unintended and unexpected results, including some risk that certain account holders might qualify for double entitlement. That was never our intention.
I shall illustrate how that happened by reference to the original sub-paragraph (5C). In the case of divorce, where the wife was the second-named account holder, if the two 1089 of them opened separate accounts with the same building society, the wife would not qualify for a bonus, whereas, if the husband moved his account to a different building society, she would. Similarly, if the husband's name was taken off the joint account for some other reason, the wife would be entitled to a bonus if the husband had no other account with the society, but she would not if he did.
Clearly, that was not what was intended. That example is one of a number of reasons why we are now discussing a redrafted clause, and it shows why that redrafting was essential.
Parliamentary counsel wisely advised that, instead of amending the schedule, it was better to tackle the qualifications for cash and share distributions, as set out in section 100. There is little drafting that cannot be polished up by parliamentary counsel if they put their minds to it; and they did so in order to produce the new clause in amendment No. 1.
The amendment, which becomes new clause 1, consists of a new section, section 102A, to the 1986 Act, and replaces clause 1 as originally drafted. Subsection (2) sets out four conditions that a mythical person—whom we shall call A—has to meet before he or she can qualify for cash distribution. First, he or she must have met the two-year qualifying period. Secondly, he or she must have held a joint share account. Thirdly, he or she must have been the second named person on that account. Fourthly, and rather importantly, there must not be anyone with a prior claim over his or hers. That is why subsection (3) is needed.
If the first named account holder qualifies, it is important that the second named account holder should not qualify. It is not our intention that both should qualify. The first named takes priority over the second named, but, in the case of a widow, there is no first named, and the second named therefore qualifies.
Subsection (3) sets out cases where another account holder has priority—where there is a prior claim over the bonus. Subsection 3(a) covers the situation where the mythical person A has never been the first named holder of jointly held shares. In the first example, she marries, she closes her account and opens a joint one on which her husband is the first named account holder. He then has priority over her. If he meets the qualifying period, he receives the bonus, but if he does not, she receives it. That avoids them qualifying twice, but ensures that one of them qualifies on behalf of their joint ownership of the account, which is what has always been intended.
§ Mr. Alan Duncan (Rutland and Melton)
My hon. Friend's logic is absolutely impeccable, and I have been following it step by step. Are there circumstances in which there may be more than two account holders, and what would happen in that event?
§ Mr. French
The Bill does not provide for circumstances where there are more than two account holders. I originally decided to address the subject of second named account holders, and the Bill's limitations are set by its long title. Ideally, I should also like to address the position of third, fourth, fifth and subsequent named account holders. However, that would require a more broadly drawn long titlé.
In so doing, many complex issues that a small Bill of this type could not reasonably tackle would have come into consideration. The almost certain result would have 1090 been that, because the Bill had been cast too widely, the House would not have felt able to give it the fairly speedy passage that it has enjoyed so far.
§ Mr. Quentin Davies (Stamford and Spalding)
I am grateful to my hon. Friend for giving way, and I thank him for his interesting explanation of the point raised by my hon. Friend the Member for Rutland and Melton (Mr. Duncan).
My hon. Friend the Member for Gloucester (Mr. French) has obviously become an expert in the field, and he will have thought through the different aspects of the Bill very carefully during its long and successful passage through both Houses. Can he therefore inform the House to what extent he thinks that practical injustices and problems will be created by the Bill's failure to cover the theoretical existence of third, fourth and subsequent account holders?
What kind of family or other circumstances does he envisage may arise whereby third, fourth and subsequent account holders may have an equity interest in the account which ought to be recognised in the event of the acquisition of a building society but, as a result of the restrictive scope of the Bill which my hon. Friend has explained, would not be enfranchised as a result of the legislation's passage into law?
§ Mr. French
My hon. Friend makes a very important point, which I shall approach from a different direction. A significant number of people will benefit if the House approves the Bill's passage, including a substantial percentage of those who are currently excluded under its provisions.
The number who will not benefit because of the example given of third and subsequent account holders is very small. I fully accept that there is an element of unfairness in such cases, many of which have come to my attention. However, I argue that the Bill deals with the overwhelming number of injustices. I should have liked to see the very small number of remaining cases dealt with as well, but in the circumstances that does not seem to be a practical proposition.
My hon. Friend the Member for Rutland and Melton (Mr. Duncan) has asked for examples of cases in which third, fourth and fifth named account holders could suffer. For example, if an account had six named account holders and, for whatever reason, the first three names were removed, the account would not qualify for a bonus.
There are many variations of that example, and I could provide my hon. Friend with letters explaining them. However, in reality, the number of people involved is very small. When my hon. Friend the Minister of State introduces a more broad-ranging review of building societies—he has announced that that is his intention in due course—we will have the opportunity to address the remaining anomalies, of which the case of the third, fourth and fifth account holders is one, at that stage.
§ Mr. Anthony Coombs (Wyre Forest)
Many hon. Members are relying on the Library's excellent brief which explains the effect of the Bill. On page 16, it says that, on Report in another place, Lord Inglewood addressed the case of multiple accounts, particularly where an account is held by a mother, father and a child, and where both parents die. Lord Henley also referred to that case when he introduced the amendments to which 1091 we are now referring. For purposes of clarification, will my hon. Friend explain how the Bill as it is presently drafted will deal with that situation?
§ Mr. French
I propose to address that question a little later. That is the closest that the Bill gets to dealing with the position of someone who might be interpreted as a third named account holder. A clause was introduced in the House of Lords to deal with the subject of orphans. For example, if a mother and father die in an accident, the position of a child who may be named on the same account will then be brought forward to take the place of the first two account holders whose names have been removed. I shall address that one exception a little later in my speech.
§ Mr. Quentin Davies
I am grateful to my hon. Friend for giving way again, and I am very glad that his Bill addresses the case of orphans. That is obviously a rather dramatic example of an injustice that may have been created if the Bill had not addressed that sad eventuality.
I put to my hon. Friend another case, which I think that he will agree is not entirely theoretical, where an injustice might be created. If six people decided to open a joint account for some common purpose, perhaps in connection with a society or association—
§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
Order. The Chair finds it very difficult to hear the hon. Member for Stamford and Spalding (Mr. Davies) when he faces away from the Chair. His remarks are not catching the microphone and it is very difficult to hear what he is saying. I ask the hon. Gentleman to face the Chair.
§ Mr. Davies
I apologise, Mr. Deputy Speaker.
I was putting a case to my hon. Friend which I think he will agree should be examined, because it could arise in practice. A group of people—half a dozen, 10 or perhaps more—may decide to open a joint account with a building society for some common purpose, perhaps in connection with an association, club or some other venture in which they are involved.
As I understand my hon. Friend's legislation, if the building society where that account was opened is the subject of a bid, only the first named account holder would benefit from the bonus for the recognition of equity interest that that account represents. It may be a coincidence as to which of the individuals involved in that joint account—
§ Mr. Deputy Speaker
Order. I did not call the hon. Member for Stamford and Spalding to make a speech; I called him to make an intervention.
§ Mr. French
I shall respond to my hon. Friend's query in so far as I understand it. In that case, the account would qualify for the bonus entitlement via the second named account holder.
§ Mr. French
The account itself would qualify, and, if it is a joint account, it is right that all the account holders should receive one bonus which is shared among them.
§ Mr. French
I think that I should make some progress.
I turn to subsection (3)(b), which covers the case where a wife may have been the first named account holder for part of the period of the joint account. For example, a 1092 wife and a husband may change the order in which the names appear on the account—Mr. and Mrs. could become Mrs. and Mr.; but it is more likely that John and Joan would become Joan and John. Therefore, both will have been the second named account holder at some stage.
In that case, the subsection provides that the one who is the first named holder for the later part of the period will have priority. However, if the later first named holder has not held shares for the two-year qualifying period and the second named holder has, the latter would benefit.
Subsection 4 is a provision that was added to the original Bill on Report in the House of Lords in response to suggestions made by Lord Eatwell. It is the provision relating to orphans that my hon. Friend mentioned a moment ago, and I welcome it. For the sake of clarity I shall briefly explain the background again.
The measure deals with cases of multiple accounts held by a mother, a father and a child. When both parents die—it is deliberately limited to circumstances of death alone—the child account holder moves up to fill the space, and is allotted a position as if he or she had been the second named account holder. Effectively, it regards the two parents as one account holder and the child as the second named account holder, although the child's name may appear third. For that reason, in those circumstances, the account qualifies for distribution.
Hon. Members will realise from that that there are many variations and permutations, and I do not want to trouble the House with any more of them. Those who enjoy the minutiae will find much to savour in the speech of Lord Henley, in column 915 of the Lords Hansard of 15 March. Indeed, there was a suggestion that his Lordship's speech should become a schedule to the Bill. I have drawn on it fairly heavily, although I suspect that it is not necessary for it to become a schedule. However, it is there to be read, and I am grateful to those who drafted it for bringing clarity to what the House can see is a complex matter.
§ Mr. Nigel Evans (Ribble Valley)
If three people held the same account—mum, dad and a son—and the mother and father separated and then the mother, for whatever reason, died, would the son automatically become the first named account holder?
§ Mr. French
I think that in that case, if I understand the facts correctly—I would be happy for others to put their thinking caps on, because we are dealing with highly technical issues—the son would qualify in those circumstances if the father did not. I believe that that is right, but it is worth spending some time on such matters. Perhaps the Minister of State may wish to turn his attention to such examples when he speaks to us later.
I am deeply conscious that neither the new clause nor my original Bill attempts to cover every anomaly. Some have been mentioned, and in all fairness I should mention a few of the others. Obviously, the Bill does not cover cases in which there has been no continuity of saving through the two years. I never believed that it should do that, because the two-year requirement recognises loyalty, which is a sound principle.
Borrowers are not covered, either—that is a whole debate on its own, in which I suggest the House should not become involved today, if it wishes to complete 1093 proceedings on the Bill. The Bill does not cover personal representatives of deceased account holders, other than in the examples that have been mentioned.
§ Mr. Duncan
It strikes me that this is primary legislation designed to overcome a simple case of unfairness arising from the peculiar circumstances of a merger of building societies in my hon. Friend's constituency. As some instances are not covered by the new clause—inevitably so—does my hon. Friend think that the work of the building societies ombudsman, who was authorised by the 1986 Act which my hon. Friend's Bill would amend, could be enlarged so that his decisions could in future include the individual cases not covered by the Bill?
§ Mr. Alistair Darling (Edinburgh, Central)
On a point of order, Mr. Deputy Speaker. I may be doing Conservative Members an injustice, but I detect a whiff of a filibuster. Although the Government have restored the Conservative Whip to the hon. Member for Billericay (Mrs. Gorman), I gather that they are anxious not to hear her speak later.
My point of order arises from the fact that we are discussing building societies, while the Minister of State, Treasury, who is responsible for the regulation of building societies, is here. If the Government want to discuss building societies at length, and perhaps the ombudsman as well, would it be in order for the Minister to make a. statement on the Office of Fair Trading report on endowment mortgage sales that was published today?
Perhaps the hon. Gentleman would say whether he agrees with our call for an inquiry by the Personal Investment Authority, and for full regulation of the sale of mortgage business? The House would be better employed discussing issues of concern to the public and to those who may have been mis-sold endowment mortgages, rather than engaging in a filibuster to prevent the hon. Member for Billericay from speaking later.
§ Mr. Deputy Speaker
It is up to the Minister to decide whether to make a statement, and then it would be up to the Chair to decide whether it was in order. So far, the debate has been in order, and if it ever gets near being out of order, I can assure the hon. Gentleman that it will be ruled out of order.
§ Mr. French
I am grateful to you, Mr. Deputy Speaker. We are dealing with complex matters, and as the House did not have the opportunity to debate them on Second Reading, I felt that it was right to go through the new clause and explain its effect. Perhaps I have been more indulgent 'than I should have been in accepting interventions, but if I may now proceed, I shall finish what I have to say on the new clause.
The point that I was endeavouring to emphasise is that a reasonable balance has to be struck to focus upon the worst injustices with a reasonable expectation of success. That appeared to me to be a more attractive proposition than trying to put right every injustice related to building societies, and then failing altogether. My aim has always been limited.
The substantial correspondence that I have received, and the cases drawn to my attention by people throughout the country, lead me to believe that I have struck the balance appropriately. I leave the remaining injustices to be tackled in more comprehensive legislation at a later 1094 stage. If the Bill had been too wide-ranging, we would probably not be debating it today; it would not have 'got as far as it has.
At this stage, I remind the House of what Lord Hayhoe, who piloted the Bill so ably through the other place, said. He wisely and prudently advised that to introduce more complexities could have placed the entire passage of the Bill in jeopardy. That view was confirmed by Lord Henley, to whom I am grateful for having introduced the amendment, and amendment No. 2, which we shall debate next. Their Lordships agreed with the good sense behind that approach, and I believe that they were right.
The passage of the Bill, and of the clause which lies at its heart, have been followed closely in the country. The British like fair play, and the Bill seeks to deliver it. I have a particular interest in fair play for the widows in my constituency who save with the Cheltenham and Gloucester building society. If the clause and the Bill are accepted, some of them will receive substantial sums, ranging from £500 to many thousands of pounds, under the terms of the Lloyds bank takeover of that building society. The House should be clear that those widows will not get the money if the House does not approve the Bill today. They will be direct beneficiaries of the legislation.
The Bill's scope does not stop at the Cheltenham and Gloucester building society: it will also help members of the Halifax and the Leeds Permanent building societies, which have announced plans to convert to a bank after they have merged. Those societies have said that they will take advantage of the measure to give shares to second named joint account holders.
In that context, perhaps I should declare an interest as a small saver with the Halifax and the Leeds, although I emphasise that I am not one whose position would be changed by the Bill.
I must give other categories of hopeful recipients something of a warning. The Bill is permissive, not mandatory. It makes it lawful to distribute bonuses, but does not compel building societies to do so. One cannot know what other building societies may decide to do in the future.
As for the Cheltenham and Gloucester, its transfer document confirmed that it would include widows in its distribution if the law permitted it to do that; but the transfer document makes no mention, and therefore would appear to have no intention, of including the other categories that this Bill will make lawful. That is, of course, a matter entirely for the boards of Lloyds bank and the Cheltenham and Gloucester to decide. One has to assume that they had their reasons for excluding newly-weds, divorcees and separate taxation people. One can only speculate on what those reasons are, but I wish to record my disappointment with their approach.
One 1 February 1995, the Cheltenham and Gloucester announced that Lloyds bank had set aside £10 million, to be made available to second named account holders. Speaking in another place on 27 February, Lord Dubs—
§ Mr. Deputy Speaker
Order. The hon. Gentleman must not quote from the Lords Hansard, unless he wants to quote a ministerial statement.
§ Mr. French
The noble Lord's point was that he hoped that the Cheltenham and Gloucester intended to include all second named account holders, not just widows.
1095 By the time of the publication of the transfer document, the sum of £10 million had risen to £25 million, in recognition of the realistic approach that the C and G was taking to its responsibilities which might arise under the new legislation. But, sad to say, the restriction confining the society to cases of death only remained firmly stated.
As this debate and the one that follows it will deal with the improvements which, I submit, their Lordships made to the Bill, and since I know that proceedings in this House on Fridays can be rather peculiar at times, perhaps this would be the right time to place on record my thanks to Lord Hayhoe for piloting the Bill so ably through the Lords. I also record my thanks to Lord Henley, who tabled the amendments and explained them clearly and comprehensively. It was especially gratifying to find that, at all stages, support for the Bill in another place came from all parties.
Before concluding, I should also like to record my thanks to Lord Dubs, who introduced a similar Bill in another place in January, but who kindly withdrew it to support mine. We both had the same idea independently at the same time, and I am grateful for his support.
I should like especially to thank the Minister of State, Treasury, and his team of advisers. He will introduce his own comprehensive measures relating to building societies in due course, but he has been extremely supportive and helpful to me in assisting the Bill to make the progress that it has made.
I am also grateful to representatives of the Building Societies Commission, especially Commissioner Geoffrey Fitchew and Terry Matthews, who has been enormously helpful. I also record my thanks to Ron Armstrong of the Building Societies Association; he, too, has been most helpful.
Most of all I should like to thank the hundreds of people who wrote to me, sometimes supporting the broad principles in the Bill, sometimes setting out their own circumstances. The letters took a great deal of reading and replying to, but they were all interesting. If the House gives its approval to the Bill, I hope that, in some small measure, that will represent a response to the many people who wrote to me and who will benefit. This has been a team effort, to which I hope the House will this morning give its final approval.
§ Mr. Quentin Davies
I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his initiative. I was pleased and proud to be associated with it as one of the original sponsors of the Bill. I congratulate him on his success in bringing it this far, and on the great expertise and astuteness with which he has steered it through.
This Bill goes to the heart of the notion of equity interest in a co-operative or mutualised venture. It is perhaps rather unfortunate in this country that we have limited our consideration of this principle—an important one—to building societies, because they are only one type of co-operative venture. Indeed, they are only one possible type of mutual bank.
Unlike many other countries, in this country we do not have provision for mutual banks—apart from building societies. That is an unfortunate distortion and restriction in the framework within which deposit-taking institutions 1096 exist here. In the rest of the European Union, there are substantial mutual banks. Crédit Agricole is a mutual bank—a building society writ large—and is one of the largest deposit-taking institutions in the world.
The essential principle at which the Bill is directed is whether someone who opens an account at a deposit-taking institution which is a mutual institution, not a joint-stock company, has the equivalent of an equity interest in that business. My hon. Friend's Bill came into being to deal with what happens when someone acquires such a business and, naturally, wishes to make a payment to acquire the equity interest in that building society.
Then, to what extent and on what principles should the cash sum that that person pays over to acquire the equity interest be distributed between the customers or depositors of the mutually owned institution? In this case, we are talking about a building society, but I think that we can agree that this is the heart of the matter.
One aspect concerns what happens when there is more than one account holder. To what extent can we say that all the account holders have an equity interest? Logically, I should have thought that they all do. There is considerable artificiality in starting by looking at the first account holder and then extending the definition—in line with the terms of the Bill—so that, in certain circumstances and conditions, subsequent account holders can be taken into consideration. In certain very limited circumstances, such as those of the orphan about which we heard this morning, the third account holder can have his equity interest recognised—but no other account holder can.
Earlier, I asked my hon. Friend the Member for Gloucester a question which I believe was pertinent: what happens when several people come together to open a joint account in a building society? They may do that for any number of purposes—we do not need to go into them, because we live in a free society, in which it is quite natural that people should come together for some collective purpose.
Many collective purposes involve opening bank accounts, so there may be an account with a mutual bank or building society under a large number of names-10, 20, 200 or possibly even 2,000, at least theoretically. In those circumstances, only the first named account holder would be recognised as having an equity interest, and would receive a sum in consideration of that interest in the event that someone acquired the equity of the whole building society. I think that I properly understand the purpose and sense of the Bill before us.
The person who happens to be the first named account holder does not necessarily have a greater interest than the other account holders. The first named account holder might be there because he put down his name first or was the founder of the particular association, group or enterprise which caused the account to be opened. Perhaps his name starts with the letter A, and it was simply convenient to list the account holders in alphabetical order.
I think that my hon. Friend might be about to tell me that the answer is that the first named account holder would in such circumstances be compelled to account for any bonus received by way of transfer equity interest to the other account holders.
§ Mr. French
If I may say so, my hon. Friend is putting the position in a rather artificial way. The bonus 1097 entitlement does not get credited to the first named account holder as an individual but to the account. The eligibility for the bonus is determined by the position of the first named account holder, or, in the case of the Bill, the second named account holder.
§ Mr. Davies
Indeed, but if for some reason the first named account holder is not in a position to collect the bonus, all the other account holders would lose the entitlement to it, as I understand it, except in the narrowly defined circumstance when the second named account holder is a widow, or in the other circumstances that are foreseen in the Bill.
A separate point, perhaps, is the entitlement to equity in a building society. That raises wide issues—perhaps we should look at them in another context—which arise naturally out of our consideration of the Bill. We have already heard that the Bill is permissive. It does not establish what the rules are for recognition of equity interest by customers or depositors of building societies.
The Bill does not establish what rules have to be adopted on that matter by all building societies or mutual banks in this country. It simply permits building societies to extend the rules for recognising second, or subsequent, account holders, in very limited circumstances, as entitled to that equity.
I support the Bill. Indeed, as I have said, I was pleased and proud to be a sponsor of it, but we must recognise—I hope that it will complete its passage through the House this morning—that we have really only just begun to touch the very edge of this important issue. Everybody in this country, when establishing a relationship with a mutual bank or building society, whether as a borrower or lender, should know ab initio precisely what are the rules of the game, to what extent he or she is merely becoming a borrowing customer or depositor, and to what extent he or she is taking an equity interest in that particular bank or building society. If the rules are different from one building society to another, that is far from ideal. That is known in technical parlance as an informational problem. It is extremely difficult for the ordinary unsophisticated customer to know, when he is offered 5.75 per cent. on his deposit by the Halifax and 5.3 per cent. for the same term and on the same conditions by the Nationwide, the Cheltenham and Gloucester, the Swindon, or whatever. The equity interest that he or she is acquiring by placing a deposit on particular terms may be different in different societies.
It is possible to brief a lawyer to advise whenever one makes a deposit or gets a loan from a building society. Indeed, if one has the enviable financial resources that my hon. Friend possesses, one might even ask three lawyers to give an opinion on that subject—and no doubt get three different opinions as a result. That is not really a desirable situation for the ordinary citizen of this country who wishes to make a deposit.
It would be ideal if it were plain beyond peradventure precisely how one creates an equity interest in a mutual bank or building society; what activity and under what conditions and terms creates that equity interest; and what activity or relationship with those institutions does not create that equity interest. In that case, the Bill would not be necessary, because it would be defined in advance exactly who had an equity interest.
1098 A shared equity interest would be exactly the same as if a share is held in joint names—something with which company law has been familiar in this country for many centuries. As far as I know, no problems, ambiguities or informational gaps exist in that field. That would be a great improvement in the law.
Perhaps my hon. Friend the Minister of State will tell us later that we cannot go that far, for whatever reason, and that what I have outlined would be a rather prescriptive and sweeping form of legislation. If we cannot go that far, the next best thing would be that every building society—I imagine that this could be done simply by secondary legislation or by the kind of rules that my hon. Friend the Minister of State can simply promulgate—should be compelled to hand over to any potential depositor or borrower a clear set of rules setting out precisely at the beginning what rights are being created when a business relationship is started between any citizen and a mutual bank or building society. That is a slightly different position, in which the rules of the different societies remain different.
I suppose that one can say that we should not be too prescriptive in a free society. We should allow mutual organisations to be established on different principles and according to different rules. I find that argument, in many ways, seductive, although it conflicts with the earlier argument that I was making. At least it would be clear beyond peradventure, when somebody enters into a business relationship with a building society, whether an equity interest is being created, how it will be recognised, and, indeed, what it will be worth.
That brings me to my next point: there is an unfortunate degree of confusion at present. There is regrettable obscurity about how one evaluates those equity interests. We are spending a lot of time this morning deciding whether first or second named account holders, whether they are widows, orphans and so forth, should be recognised as having an equity interest in the event that a building society is taken over. We have already agreed in the House that that is an important matter that must be looked at carefully and deliberated thoroughly, which we are doing as a result of the initiative of my hon. Friend the Member for Gloucester.
All that is academic if we do not understand exactly how an equity interest is to be quantified. What is the principle on which it is to be determined? What level of bonus is to be shared out, and on what principle, to the various deposit holders or borrowers in a building society in the event that it is taken over?
It is all very well telling our constituents—those who hold joint accounts, perhaps husband and wife or the other eventualities that we have discussed—that they can rest assured that, in the event of a takeover of their society, both named account holders will stand to benefit, but what really matters to them, if they have a £2,000 deposit, is whether that means that they are likely to get £20 or £200.
§ Mr. Deputy Speaker
Order. I have been tolerant of the hon. Gentleman, but he is going rather wide of the debate. He must bring himself back to it. He knows the point I am making. The debate is not about all building societies or about what should be done in the future. We are debating the Bill in front of us.
§ Mr. Davies
I have the highest regard, Mr. Deputy Speaker—accumulated over the years I have been in this 1099 House—for your judgment in these matters. I stand very much corrected, and I shall try to narrow the focus of my comments.
I have set out the broad lines of the three main points that I wanted to make. I hope that my hon. Friend the Member for Gloucester agrees that one of the valuable results of his initiative in bringing the Bill before the House has been our consideration of the whole area relating to the rules affecting building societies, the framework within which individuals conduct their business with building societies and the extent to which the notion of equity in building societies or mutual companies is recognised in law.
That area will now receive the attention it deserves as a consequence of it having been discussed both here and in the other place. It will be difficult to forget about it now, in the way that we have done for a number of years.
The debates on the new clause, both here and in the other place, represent several good days work by Parliament. We began with the initiative of my hon. Friend the Member for Gloucester, which I much admire. He took outside legal advice from his three law firms. I hope that he and his family remain solvent and that generations of his descendants will not labour under the burden of the enormous liabilities that may have been incurred to pay for the quite awesome degree of professional advice. However, the fact that my hon. Friend was prepared to do that in the interests of better legislation counts enormously in his favour.
However, not content with that, we have also had the benefit of the expertise of many other people—for example, the noble Lords in the other place, parliamentary draftsmen, a Treasury Minister and various officials. We feel a sense of awe when we think of the intelligence that has been mobilised and focused on the text before us. When I rose modestly to my feet today to make a few general comments on the issues raised by the Bill, I found myself somewhat intimidated in taking on such an enormous corpus of wisdom.
The Bill has been carefully and thoroughly considered, and I hope that it proceeds to Royal Assent without delay.
§ Mr. Deputy Speaker
Order. Before I call the next speaker, I warn hon. Members that they must stick to the amendment we are considering, or my patience will become insolvent.
§ Mr. James Clappison (Hertsmere)
I shall certainly follow your stricture, Mr. Deputy Speaker.
I welcome the opportunity to make a brief contribution to the debate. Some of what I wanted to say has been covered already and my concerns have been allayed. Nevertheless, it is worth spending some time examining the provisions relating to joint account holders. The Bill went through its stages in this House very rapidly. It then went to the other place, where it received quite radical surgery. It is a technical Bill with drafting complications. Therefore, it is worth taking time to examine the way in which it would remedy injustices.
1100 The time spent examining the Bill in another place was well worth while. It would have been a shame if the debate there had been foreshortened because it produced this important new clause, and in particular subsection (4), which will assist orphans and others in particular circumstances.
It would be churlish of me not to congratulate my hon. Friend the Member for Gloucester (Mr. French) on the Bill. It is an important and worthwhile measure. It is a good example of how private Member's legislation can pass through the House, remedy injustices and help a number of people. As my hon. Friend said, it will assist many widows in particular, often at a time in their lives when they may be short of money and needing assistance.
We need to consider whether other injustices might arise. As I have said, the Bill presented considerable drafting difficulties. I want to make two points. The first and obvious one—although it is not my main point—is the definition in new section 102A(2) of "requisite period", which is set at two years. I appreciate that the purpose of the distributions is to reward loyalty and, as an important part of policy, to prevent the destabilising flow of funds between financial institutions and building societies on the basis of market rumours. I well recognise the importance of that, but is it really absolutely necessary to provide for a period as long as two years? By the time two years has passed, any market rumour will have been lost in history. In this day of electronic communications, rumours pass very quickly.
I am aware that my hon. Friend the Minister of State is conducting a review of building societies. Will he consider whether the two-years provision is necessary? I understand that a line must be drawn somewhere, but the provision might create an injustice for someone who has taken out an account for perfectly proper reasons—taking a long-term view, rather than on the basis of any rumour—within the two-year period. Would not such a person feel aggrieved at being excluded from any distribution?
§ Mr. Anthony Coombs
My hon. Friend touches on an interesting point that was raised by my hon. Friend the Member for Stamford and Spalding (Mr. Davies). It is difficult to quantify exactly what is an equity interest in a mutual society or company. It is possible that, 18 months before the merger or takeover, somebody might have deposited a large amount of money in a mutual society as a share account holder, but he would not be rewarded, whereas someone putting in a nominal amount of money, who could therefore be said to have less of a quantifiable stake, would benefit.
§ Mr. Clappison
I am grateful to my hon. Friend for his comments, which add force to my point. It is an example of how someone who is a serious, long-term investor in a society could lose out.
Although the new clause remedies the problem of orphans, concern remains about the position of married women and divorcees. I want to give the House an example of that, which was also touched on by my hon. Friend the Member for Gloucester. It is clear that we need to read subsections (2) and (3) together to judge their effect in a particular case. My reading of them may be wrong—I am often wrong—but in this case I take some consolation from the fact that the issue has taxed very much better legal brains than mine, in very eminent firms of solicitors. I want to explore, in a brief example, the 1101 effect of the two subsections on marriage and divorce. If a woman is an account holder in a building society and marries, she will create a joint account with her husband. It is a common-place point, but I suspect that that is the way in which the overwhelming majority of the population will create a joint account—as Mr. and Mrs.
Under the amendments, the wife would—to begin with at least—remain entitled to a distribution for two years. Although her husband would be the first-named account holder, he would not qualify until the account had been in joint names for the full two years. That is how I interpret the effect of new section 102A(2)(d).
Under new section 102A(3), the husband would have priority, but he would need to have held the shares for the full period of two years. After two years, he would qualify under paragraph (d) as the person entitled to a distribution, and he would take precedence over his wife, even if she had been the original account holder and had decided, after marriage, to put the account into joint names.
My argument may imply a comment on relations between the sexes, but as long as they remained married a problem would not arise because of their joint arrangements.
My concern involves the effects of divorce on the arrangement under the clauses. The position that I have described may be fairly common. After two years of marriage, divorce may take place. Under subsections (2), and (3), if the couple divorce and split the joint account the husband remains the account holder. As he has held the account for more than two years, he would clearly qualify as the first-named account holder. He would therefore be entitled to any distribution that might take place. A potential injustice exists. As long as he maintains his account with the building society, the wife will not benefit from any distribution, however long she holds the account, or however much longer she held her account at the building society than her former partner.
Under subsections (2) and (3), the only way in which the wife would benefit from a distribution would be if the husband decided to close his account with the building society and take his money elsewhere. She would then become the joint account holder and would be entitled to receive a distribution. That seems to leave the matter, at least as far as the wife is concerned, if not in the lap of the Gods, entirely at the discretion of her husband's decisions. Why should that be? Why should not the wife have a moral entitlement to receive the distribution as the longer account holder? Why should she be put at a disadvantage merely, first, because she placed the account in joint names, in which her husband comes first, as so often happens, and, secondly, as a result of her husband's decisions after divorce? The amendments leave a potential injustice at large.
10.45 pm I listened carefully to the excellent exposition of the Bill given by my hon. Friend the Member for Gloucester. I accept his explanation about the amendments and about the way in which they came to be drafted. As always happens with such legislation, the more one spreads the net in trying to remedy injustices and prevent potential injustices, the more complications and situations arise. Those who seek to remedy injustices eventually must seek to remedy just some of the injustices, and they may leave further injustices at large.
1102 A problem still exists in relation to divorce. I invite my hon. Friend the Minister to consider that carefully. I know that he is conducting a review of the Building Societies Act 1986. The problem is well worth considering. I do not see why divorced women should, potentially, be put at a disadvantage by the clauses. I wonder whether some other way exists of dealing with the question of distributions, perhaps taking a radically different approach from that proposed in the amendments and going much further towards a recognition of shares.
Obviously, one cannot give people more than one entitlement through an account—that would be unfair to all other account holders. A way must exist of dividing the account to prevent the injustices that I have outlined and other potential problems.
That is the reservation that came to mind after I carefully considered the amendments. It is difficult to draft a Bill such as this and to effect the worthy intention of my hon. Friend the Member for Gloucester, but a better way could be found, perhaps by better legal brains than mine, to deal with the matter so that we remedy potential injustices comprehensively. That should concern the House and is well worth considering.
Otherwise, I warmly welcome the amendments. As I have said already, they will remedy the injustice faced by widows, which is probably the most common injustice arising from the Building Societies Act. It is salutary to think that, I believe, 3 million widows live in this country and that 500 women are widowed every day. A large number of them will hold building society accounts; quite a lot of them will benefit from the Bill because they have been widowed within the past two years. The amendments will do a good job of remedying injustice for many people. My hon. Friend deserves warm congratulations on introducing the Bill.
§ Mr. Piers Merchant (Beckenham)
I should start by declaring a minor interest: I hold a small amount of money in a Halifax building society account. As the Halifax is merging with the Leeds building society, I hope that I might benefit by a small sum. Needless to say, the Bill and the amendments from the other place will not benefit me or alter that position.
I congratulate my hon. Friend the Member for Gloucester (Mr. French) on introducing the Bill under the ten-minute rule procedure. It was apparent that something needed to be done to right what had clearly been an injustice. It is a shame that we did not have an earlier opportunity to debate the Bill in this place, even though a fairly full debate has taken place in another place.
It is disgraceful that no Liberal Democrat Members are here today, bearing in mind the fact that the impact of present provision is felt by members of the public throughout the country and in all constituencies. It is important for the benefit of those people and for the many who may be affected by future building society mergers and changes of ownership that the law should be amended. For that reason, I strongly support the Lords amendments and the Bill.
I should like not only to support the amendments but to raise some questions on the clauses that cause me a little concern. I do not wish to frustrate the passage of the Bill, because it will put right the problems to which I have referred and which have become apparent only recently.
1103 It is worth noting that those problems were caused, as my hon. Friend the Member for Hertsmere (Mr. Clappison) so ably explained, by the artificial limit enshrined in the Building Societies Act 1986—the arbitrary two-year period. In other words, the deregulation proposed in the new clause will solve a problem caused by regulation in the first place.
Although I do not want to discuss the two-year limit in depth, it is relevant to the Bill. Its ostensible purpose was to prevent funds from being moved around in anticipation of takeovers. If such a legal requirement was binding on equity transfers in the stock market it would create a ludicrous situation and would totally change existing processes. Why such a limit, which is far too long, should apply to building societies completely escapes me. To suggest that "rumours", two years before a potential takeover might influence investing habits is difficult to accept in practice. That theory bears no resemblance to reality.
I first learnt about the impact of the 1986 Act when I received a letter towards the end of last year from Mr. Mahoney, of Village way, Beckenham, a certified accountant. He enclosed a letter that he had written to the Cheltenham and Gloucester building society as a result of its takeover by Lloyds bank. It aptly describes the difficulties that the new clause is designed to correct. He. wrote of the different criteria that applied:Is this fair in husband and wife cases, where there has been support for the Society for many years and unfortunately the husband dies—as opposed to the wife dying? You would give with one hand now and take it back at the worst possible time.How will a widow feel towards the Society if she is cruelly denied the expected 'cash payment', and, moreover, how do I plan for my other clients where the husband may be unwell and may not live until completion day?That professional cited a real problem created by the 1986 Act. My hon. Friend the Member for Gloucester introduced his Bill to remedy such problems.
I took up that case with the Minister of State, Treasury, who wrote back in less co-operative terms than are now apparent from the Treasury and said:For the reasons I have set out, we have decided that the controls on takeovers imposed by Parliament in 1986 should remain in place.I am glad to note that the Government have since realised that there is an urgent need to improve matters. I am glad that they support the Bill.
The background to the need for the Bill is the rapidly changing circumstances affecting building societies. There was a time when one was hardly aware of changes in the ownership of building societies. If such changes took place, they were often the result of quiet mergers between small and larger building societies. That pattern started to change with the flotation of the Abbey National. Since then, two major changes have taken place—the takeover of the C and G by Lloyds and the proposed merger between the Halifax and the Leeds building societies. There seems little doubt that that changing pattern in the operation and ownership of building societies will continue. The difference between building societies and banks is now so blurred as almost to eliminate that distinction in the foreseeable future. The law must now address the fact that many more takeovers 1104 and changes in ownership will occur in the future. The 1986 Act is therefore now anomalous because it has failed to match reality.
The new clause specifically recognises reality by protecting second account holders. The existing law discriminates against women in particular. I am sure that it does so through default and that that was not the intention of the 1986 Act. That discrimination may have arisen just because of the convention for the man's name to appear first in joint accounts held by married couples. It is purely a clerical device, yet it has caused legal complexities. It is right to end that active discrimination against women, as set out in the 1986 Act, as urgently as possible.
As I have already demonstrated, the 1986 Act allows for specific. practical discrimination against widows—that group in the population who are in most need of support. The account that falls to them might be their only major asset on which they are relying absolutely. The proceeds of the joint account may become more significant to the widow than they did before her husband's death. Such an account is often more important to widows than other accounts are to most of their holders, not least because, apart from all the emotional trauma of widowhood, women often face financial hardship as well. It is grossly unfair for that group of people, of all groups, to be discriminated against. I am glad that the new clause will correct that.
My hon. Friend the Member for Hertsmere quoted examples of problems that have arisen because of divorce. Problems also arise when a newly wed couple separate after two years. A single woman may have held an account at a building society for many years. On marriage, she may decide, for convenience, to put that account in joint names. Should that marriage unfortunately fail and should that woman seek to revert to being a single account holder, she will find that, under existing law—and even, I fear, under the new clause—she will suffer discrimination, should her former husband maintain his account at the building society. That woman may have held that account with the building society for many years in her own name, but by virtue of that sudden change in the title of the account, through marriage, she will, on separation, lose all her rights. My hon. Friend the Member for Hertsmere did the House a service when he drew attention to the problems for women who lose their rights as a result of separation or divorce. I hope that a device will be found to rectify that problem before too long.
Although the new clause gives building societies the power to act differently and to pay out in the cases that I have described, particularly to widows, I regret that that is not a duty on them. The final choice is still left with the building societies. When my hon. Friend the Member for Gloucester referred to the C and G takeover, which was the impetus behind his Bill, he said how, originally, that building society demonstrated a willingness to pay out to all those people to whom the law could enable it to do so. It encouraged a change in the law, so my hon. Friend felt that it would be pleased with the proposed new clause. He then said how the C and G was beginning to step back from meeting that guarantee.
I received a letter from Mr. Evans, the divisional manager of C and G, who had written to Mr. Mahoney. He said:C and G shares your views on the 'unfairness' of the situation where a first-named joint account holder dies.1105 Later, and somewhat erroneously, the letter continues:The situation is regrettable, but must have been the Government's intention when passing the Building Societies Act. It is not the fault of C and G.It is true that the situation is not the fault of C and G, but I am not so sure that it was the Government's intention when the Act was passed. The problem is more a consequence of other intentions in that Act.
The letter continues:Unfortunately, there appears little that C and G can do about this situation and I hope that you will recognise that it was always C and G's intention to allow as many investors as possible to share in the Lloyds Bank payment.As the society has made that clear statement, I hope that it will, once the Bill is enacted, honour its pledge and use the legislation to enable payouts to be made to all those who are defined in the Bill.
I shall now raise a few other questions, which my hon. Friend the Minister may be able to address, about the full scope of the proposed clause, the extent to which it operates and why it does not operate a little more widely. My hon. Friend the Member for Hertsmere raised the question of the difference between share and deposit accounts. It seems anomalous that people, whether joint or single holders of accounts, should find themselves in a different position as regards bonuses because of the name of their account.
§ Mr. Clappison
I am grateful to my hon. Friend for raising that point. He may know that before one of the building society takeovers, the society in question, before news of the possible takeover had come to light, urged investors to switch from share accounts, which would have given them an entitlement, to deposit accounts which did not. That action was urged on some building society members.
§ Mr. Merchant
That is an interesting revelation and adds strength to the need for further changes to do away with the legal distinction between share and deposit accounts, at least when bonus payments are made as a result of takeovers. From the point of view of the ordinary investing public, there is no discernible difference. I doubt whether many building society account holders are aware whether their account is technically a share account or a deposit account. It is true that building societies sometimes encourage investors to swap from one type of account to another without the investor knowing the full consequences. That point has some relevance to the proposed clause and I hope that my hon. Friend the Minister will address it.
I hope that my hon. Friend will also address, at least to a limited extent, the impact of the two-year limit and why it exists. I hope that further scrutiny will be given to the position of third, fourth and even subsequent names on accounts. I also hope that further scrutiny will be given to the exact definition of eligibility for bonus payments.
In the long term, it may be better if rather than tackling the problem via a complex, technical and narrow Bill—I accept that that is necessary, in the short term—we deal with it by legislation that clearly defines who should have the rights and on what basis they should have them. In other words, there would be a positive definition bestowing rights rather than a negative set of regulations 1106 which seek to protect individuals and building societies when they wish to exercise the powers that the law gives them.
The simplest way in which to achieve our aim would be to give a clear right based on an account rather than a name. Whoever happened to be in charge of the account would thereby get the benefit of a bonus payment made when there were takeovers.
I have some reservations about the limited scope of the Lords amendments and I believe that more needs to be done. However, I do not want to be carping about the very real achievement of my hon. Friend the Member for Gloucester in getting his Bill this far. I have no argument with the need for the Lords amendments because I recognise that from the point of view of drafting they are necessary to achieve my hon. Friend's purpose. For that reason, I very much welcome them. I wish the Bill a hasty final passage into law.
§ Mr. Tom Clarke (Monklands, West)
On a point of order, Mr. Deputy Speaker. Would you allow me to inform you and the House that, during a debate that has been drawn out and repetitive, many disabled people are here in the Palace of Westminster expecting what is called the Barnes Bill—the Civil Rights (Disabled Persons) Bill—to be debated on Report? That will not happen because, yet again, the Government have contrived to defeat the Bill, and—
§ Mr. Deputy Speaker
Order. The Chair will decide whether it is a point of order. I am listening to the hon. Gentleman's point, but it is difficult to do so because of the noise from Conservative Members.
§ Mr. Clarke
The House will not be able to debate the Barnes Bill, which is overwhelmingly supported on both sides of the House and unanimously supported by organisations of and for disabled people, because of the Government's blocking action. There were 100 amendments in Committee—
§ Mr. Deputy Speaker
Order. That Bill is in Committee, and so is not a matter for the Chair. That is not a point of order for me.
§ Mr. Deputy Speaker
If the hon. Gentleman has a point of order for me that is different from the one he has just put, I shall listen to it.
§ Mr. Clarke
I respect your view, Mr. Deputy Speaker. May I make it clear that the Opposition regard the Government's behaviour on disability as being so outrageous that we shall raise it with the Nolan committee and we shall speak—
§ Mr. Deputy Speaker
The hon. Members who are rising may wish to raise the same point of order, but I have already ruled on it. If it is a different point of order, I shall hear it.
§ Mr. Barnes
On a point of order, Mr. Deputy Speaker. My point of order relates to the issue raised by my hon. 1107 Friend the Member for Monklands, West (Mr. Clarke), but it is a separate point of order. I seek your advice, or advice from Madam Speaker through you, about the procedures that will be available to me once the Civil Rights (Disabled Persons) Bill has made its way through Committee; I am not discussing the quite serious problems in Committee. Once the Bill has made its way through the Committee, what avenues are open to me in my attempt to get the Bill returned to the Floor of the House? I understand that, technically, today is the last day that is available for debates on private Members' Bills.
§ Mr. Deputy Speaker
I can help the hon. Gentleman. The answer to his question is that he must name a day for the Report stage.
§ Mr. Skinner
On a point of order, Mr. Deputy Speaker. You, I and just a few others are regarded as Friday aficionados. We are here to oversee events and you do an excellent job in seeing that hon. Members keep to the narrow amendments, as evidenced again this morning. You will be pleased to know that a lot of us appreciate the way in which you do that job.
Can you assist in any way from the Chair, perhaps by passing on a message to the Speaker, in a matter that I have raised before, which has also been raised by my hon. Friends? Fridays are not satisfactory for getting through private Members' Bills. Do you agree that we are fast reaching the time when, instead of just having debates about relatively narrow Bills, matters that are controversial and important, like the Civil Rights (Disabled Persons) Bill should be debated? Yet we are fast reaching a time when those matters cannot be dealt with. I look forward to new improved Labour bringing about some changes in this matter.
§ Mr. Deputy Speaker
We can all look forward with hope, as I have been doing for a long time—hoping that I may hear a genuine point of order.
§ Mr. Darling
We are having a very long debate on a very uncontroversial new clause, on a Bill which has all-party support and which every one of us in the Chamber would like to see passed into law as soon as possible. It is surprising that the proceedings have been drawn out. Whether it is because of the Civil Rights (Disabled Persons) Bill or the fact that the Government, having returned the Whip to the hon. Member for Billericay (Mrs. Gorman), do not want to hear her speak in a later debate, I do not know, but it is curious that we are having such a long debate.
I shall first deal with the point made by the hon. Member for Beckenham (Mr. Merchant). He seemed to lay the blame for all the problems on too much regulation, especially too much regulation arising from the current legislation on building societies. It may surprise him to know that I tend to agree with him that one of the problems with the financial services legislation in general, and that on building societies in particular, is that there is too much regulation. That is an argument not for no regulation, but for reviewing the quality of regulation and for looking for a system of less regulation which works. It is important that, every time we introduce regulation in this sector, we ask ourselves what is it meant to do and 1108 what is it trying to achieve, and if it does not achieve what we want, we should get rid of it and introduce a different type of regulation.
I tend to agree with the hon. Member for Beckenham, although I do not at all subscribe to the view commonly held by Conservative Members—I do not know whether the hon. Gentleman holds this view—that regulations are the problem with the financial services industry and that we should return to the free-for-all, the self-regulatory regime, which I believe has been substantially discredited.
§ Mr. Merchant
May I put it on the record that I agree with the hon. Gentleman's analysis? I was suggesting not that there should be no regulation at all, but that complex regulation which is unclear in its effect is bad. We want a clear set of regulations which people can understand and which are practical.
§ Mr. Darling
I am glad that the hon. Gentleman has made that position clear. Indeed, I suspect that that is one of the reasons why his own Front-Bench team will not introduce new legislation in this sector, or replace the Financial Services Act 1986. They know that, among hon. Members of all parties, the majority believe that the present system of regulation does not work and that we need to revisit it, to draw up a clearer, simpler system of regulation that is readily understood and actually works. If the Government choose to fill some of the empty days that we have just now with Government legislation—
§ Mr. Clappison
On a point of order, Mr. Deputy Speaker. I have been listening to the hon. Gentleman for a few minutes and I seek your guidance on whether he is in order. He is not talking about the amendments at all—
§ Mr. Deputy Speaker
Order. The hon. Member for Edinburgh, Central (Mr. Darling) certainly must have been in order or he would have been ruled out of order.
§ Mr. Darling
As ever, Mr. Deputy Speaker, you are quite right. The hon. Member for Hertsmere (Mr. Clappison) may like to reflect on the fact that one can obtain video recordings of one's speeches in this House, although I have never got one.
§ Mr. Darling
I feel that once, I have spoken, I should leave the matter there. If the hon. Member for Hertsmere would care to nip down to the video kiosk, he would be able to find out that he, too, made what I might call a fairly wide-ranging speech. It is important, if such matters are to be raised, that they should be replied to and dealt with. I have on many occasions made the point about the need to revisit regulations, and I am pleased to see that it appears to have general support. A common thread has run through what Conservative Members have been saying. While they congratulate the hon. Member for Gloucester (Mr. French) on what he has done, they point out that there are still a number of other necessary improvements.
That brings me directly to the hon. Member for Gloucester. May I start in a non-partisan way by congratulating him on his tenacity of effort in the course of getting the Bill on the statute book? He is, at the moment, my parliamentary pair. I say at the moment because the future of that depends on how long he speaks in reply and on the next amendment. Some of us have pressing duties outside the House, some 400 miles away. 1109 At the moment, he remains my pair and I congratulate him. I am also very grateful to him for paying a proper tribute to my former hon. Friend, Lord Dubs, who introduced an almost identical Bill in the other place. All of us were trying to achieve the same thing.
We support what the hon. Member for Gloucester is trying to do. I support the new clause because it deals satisfactorily with the problems with which the hon. Gentleman originally attempted to deal, although I am bound to say that it still leaves many other people out on a limb, which he readily recognised, as have all hon. Members who have spoken.
I shall, however, make one observation. The hon. Member for Gloucester said that the Bill had sailed through all its stages in the House of Commons almost on the nod. In fact, I do not think that a word was said. Now we are having, within your discretion, Mr. Deputy Speaker, a rather wider debate than one may have anticipated on Lords amendments, which are normally dealt with fairly formally. I had exactly the same experience with what is now the Solicitors (Scotland) Act 1988, which passed all its stages on the nod. That is not a satisfactory way in which to legislate. Clearly, there is much interest in this matter, although if the other Bills due to be discussed today had not been tabled for debate, not quite so much interest might have been evinced.
Passing legislation on the nod is not a particularly satisfactory way in which to legislate, which is why I have always maintained that the extension of rights to the second signatories is a matter of public policy, and that the Government should have introduced appropriate legislation. Precious little Government business has been arranged as it is, as we can see from the business for last week, this week and next week. The Government have plenty of time to deal with the matter.
If the Government had introduced an appropriate Bill, they could have addressed the many problems to which Conservative Back-Bench Members have referred concerning people who have not been dealt with, for understandable reasons, by the Bill. The hon. Member for Gloucester was trying to identify perhaps the most glaring problem: the second signatories, typically widows, who are excluded.
The Bill does not of course make requirements mandatory but at least it opens the door, which brings me to the second point that has been raised on a number of occasions: building societies and banks which engage in mergers or acquisitions have discretion in many cases. The Halifax-Leeds proposals are quite different from the Cheltenham and Gloucester-Lloyds takeover. That is why I believe that the time has come to look at the Bill properly so that there are not any anomalies and so that people do not feel aggrieved because they think that they may have missed out.
We take the view that if we are to revisit the legislation, membership should be defined as widely as possible and people who think that they are members of a building society ought to be treated as such. When one goes to a building society and is invited to open an account, usually one does not have a clue whether one is a member and whether one may participate in the building society. I was recently told to change my account at my building society, which is not the subject of a takeover—unfortunately, because if it were, I would command better interest rates. 1110 Nobody mentioned, until I asked, that I would lose certain rights. Such practices cannot be satisfactory, and that is yet another reason why the Government should introduce legislation so that we do not have to come back with another private Member's Bill to try to patch up the difficulties to which all of us have referred.
§ Mr. Nigel Evans
The two-year delay has been referred to time and again. When such a delay was first raised by the Abbey National, we talked about six months. A number of widows still suffered because they had to keep their account there for six months and there had to be no alteration. Now we are talking about two years and four times as many people will be affected. Should that not be looked at?
§ Mr. Darling
I am happy to look at the two-year delay. I understand fully why it is in the Bill—to stop people shopping around. I am pretty sure that a large section of the population are now opening accounts in every building society that they can think of. The stable door is now slammed shut, but everybody is outside it. We should consider that question and we should ask ourselves—I return to the point that I made in my introductory remarks—what are we trying to achieve.
It is obvious that there will be a spate of takeovers. I spoke at a building society conference in October and said that I believed that there would be a lot of takeovers. I was told emphatically time and again that I was talking nonsense. The more that the building society people went on about it and said that it would not happen, the more that I thought that I had a point. In my experience, the more that people protest, the more one thinks that they may protest too much.
In that short period since October, we have seen a spate of takeovers. Only recently, the Abbey National has shown an interest in the National and Provincial. Such developments are another reason for the Government, who are supposed to be responsible for public policy, to take a hand. It may be too late to do that this Session, but a new building society Bill for the next Session, should not be beyond the Government's imagination. It is difficult to see what Ministers are doing at present, so that task is one to which they could give their attention. When the Treasury Minister comes to speak some time before 2.30 pm, perhaps he will explain the Government's proposals and comment on the general question of regulation.
There will be a spate of takeovers. Conservative Members highlighted a number of problems and I highlighted others. If we are to consider building societies, let us consider every aspect of them. Building societies have for a number of reasons enjoyed a great public trust, and justifiably so. It is not for us to say that building societies must retain their mutual status, but when the public are encouraged to surrender that status for a payment of £1,000, public policy considerations should to be taken into account.
The nature of building societies and the way in which they conduct their business are beginning to change. I referred earlier to the Office of Fair Trading report on the sale of endowment mortgages. I urge an inquiry by the Personal Investment Authority, and I want mortgage sales properly regulated. Many building societies have got away with things that other institutions would not have got away with because the searchlight was on them. The insurance industry was under the searchlight because of 1111 pension transfers. Banks have always been under the searchlight because of their charging regimes. Building societies have in some cases been getting away with murder.
I must not stray and test your patience too much, Mr. Deputy Speaker, but the point has been made that it is time thoroughly and comprehensively to review building society legislation. It need not take long. If the Government are prepared to review the Financial Services Act 1986, which has a direct bearing on the way that building societies conduct their business, so much the better.
I end as I began, in an unlikely alliance with some Conservative Members. We all know that the regulatory system is not working. Why will not the Government face up to that and introduce reform to benefit the hundreds of thousands of people who hold building society accounts and the millions of people who trade or operate in the financial services sector? They will look to the Government to take a lead, but I fear that they will look in vain.
§ Mr. Anthony Coombs
I agree with the hon. Member for Edinburgh, Central (Mr. Darling) that existing financial services regulation needs overhauling, particularly in respect of mutual and building societies. Coincidentally, there was provisionally to appear on the Order Paper today my ten-minute Bill, which I introduced two months ago, on an insolvency commission to beef up self-regulation.
The reason for lengthier debate than usual on Lords amendments is that we were unable to debate my hon. Friend's Bill when it first came before the House and the Lords amendments have significantly changed the Bill. I must declare an indirect interest, as my wife and son have a share account with the Cheltenham and Gloucester building society. Sadly, they are among the 27 per cent. of account holders who will not benefit because they have not held the account long enough.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) said that the Bill is an enabling measure. Although it addresses a particular inequity, it does not address all the inequities inherent even in the Cheltenham and Gloucester case. Although the two-year time limit in section 100(9) of the Building Societies Act 1986 seems to apply to that merger and to investors—of whom my wife and son are examples—it does not apply to depositors. If an account was opened before 31 March 1994, according to The Guardian report on the takeover in the Library brief, its depositor will not be eligible for the £500 per account. An enabling Bill does not necessarily mean equity, but I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his initiative on behalf of about 5,000 widows in the Cheltenham and Gloucester areas.
I am surprised that the hon. Member for Cheltenham (Mr. Jones) is not present for the debate. I am sure that he will be the darling of widows in Cheltenham and Gloucester and much further afield, and that there will be many more merry widows. I do not mean to be facetious or light-hearted, because although the Lord amendments remedy an inequity, that relates to a bonus that society members could not have anticipated. I cannot agree with Lord Dubs who, introducing his similar Bill in the other 1112 place, spoke of extreme hardship. That cannot be associated with not receiving a bonus that one could 'not have expected. Nevertheless, I am sure that my hon. Friend the Member for Gloucester will be warmly congratulated by the widows and others who will benefit from his Bill.
Such legislation will become increasingly important. There are 3 million widows in this country and, sadly, that number increases by 500 every day. As the hon. Member for Edinburgh, Central rightly said, rationalisation in the building society sector is proceeding apace and will continue. In addition to the Lloyds-Cheltenham and Gloucester merger, there is to be a merger between the Halifax and Leeds Permanent societies, and between the Abbey National and Provincial. Such mergers will be all the more likely, and bonuses all the more significant, if the Government adopt the deregulation task force suggestion that 5 per cent. of the value of a society taken over by, or merged with, another financial institution should be given as bonuses, compared with 1 per cent. at present, without a vote by members of the acquiring institution.
My hon. Friend the Member for Gloucester said that the Lords amendments address the flaw that confuses eligibility for a bonus with voting rights. One does not, and should not necessarily, follow the other. That interacts with section 100 of the 1986 Act. Schedule 2 of that Act defines representative joint holder. It would obviously be wrong for former wives, women who previously held an account in their own name and subsequently married or women who are the second account holders to be disfranchised if their spouse or a member of their family died. I was glad that my hon. Friend the Member for Gloucester was able to clarify that Lord Inglewood's amendment covering the situation when both parents die is taken into account by subsection (4).
Although the Lords amendments may be more rigorous in terms of the parliamentary draftsman, they are not necessarily more elegant than my hon. Friend's original proposals, following his expensive legal advice. In fact, the Lords amendments are precisely the opposite. It is ironic that my hon. Friend's Bill, which will benefit widows in the Cheltenham and Gloucester case, will benefit many others—but not in the Cheltenham and Gloucester case because that offer is particularly applicable to widows rather than to others caught by the situation.
It is also ironic that we are debating a relatively small amount of money—albeit significant to the individuals concerned. I note, as a surrogate member of the Cheltenham and Gloucester, that its chief executive, Mr. Andrew Longhurst, will, as a result of the merger, be able to exercise share options valued at four times his already substantial salary and emoluments, which are in the region of £350,000. One should consider—
§ Mr. French
My hon. Friend's statement implies that Mr. Longhurst might make that profit. It should be said that he is entitled to exercise options to that value, and the shares on which he will exercise his options can increase or decrease in value.
§ Mr. Coombs
I appreciate that. The takeover by Lloyds bank probably makes the former rather than the latter slightly more likely, and therefore he will benefit significantly.
Mainly because the Bill has been more narrowly defined to speed its passage through the House, it does not tackle the position that has been tackled by Lord Dubs in his new Bill on switched accounts—the position that arises when an investor switches, during the two years, from a deposit to a share account and possibly back again and, as a result, loses their eligibility for bonus.
I urge the Government, contrary to what Lord Henley said in the other place, to back that Bill. Although it is another example of the piecemeal legislation that we have said is not necessarily desirable in that sphere, it is a simple measure, and I hope that it would remedy that inequity, as the Bill of my hon. Friend the Member for Gloucester remedies the one that we have discussed.
As the hon. Member for Edinburgh, Central (Mr. Darling) said, the Bill should be regarded in the context of other desirable measures that are required to improve the accountability of building societies to their members. Obviously, indirectly, a clearer definition of what a member is in a mutual society should be part of that review. The definition of a member appears to be, not chaotic, but at least inconsistent.
I have a great deal of sympathy with what hon. Members, especially my hon. Friend the Member for Ribble Valley (Mr. Evans), said when they spoke about the two years and whether that period is necessary in a time when technology has speeded up the financial process.
I am pleased to see that the Minister of State, who will reply to the debate, said in a written answer on 24 February 1995 that the Government are committed, through primary legislation, to a series of measures that will make the relationship between building society members and building societies and other mutual funds more transparent. I especially express my support for an ending of the artificial distinction between shareholders and depositors as part of the definition, which was mentioned earlier. I also welcome the idea that any person who becomes a member of a building society should have a pack at the start, telling them of their rights. If we wish to ensure transparency in the relationship between a building society and its members, it is important that we improve the way in which building societies communicate with their members.
I have received several complaints from constituents about building societies, and other financial institutions, which have not informed their depositors or members of changes in interest rates on accounts, or of accounts that may have been withdrawn or effectively become sidelines for the mainstream operations of those building societies. As a result, perhaps as a result of their ignorance, those people have found themselves in lower-yielding accounts. That should not be necessary if they are given a regular update about changes in interest rates on different accounts and about what new accounts are available. I suspect, although probably it would be churlish to say so, that some financial institutions—certainly not the building societies about which we have spoken today—use that 1114 ignorance to their advantage and therefore are slightly more reluctant to communicate with members about changes in interest rates than they should be.
I urge the Government to introduce the primary legislation, which should be simplifying primary legislation, deregulating primary legislation, but nevertheless effective primary legislation. Subject to those reservations, I very much support the Lords amendments and congratulate my hon. Friend the Member for Gloucester on the work that he has done.
§ Mr. Duncan
My hon. Friend the Member for Gloucester (Mr. French) is in an unenviable position now, as obviously, if the legislation is passed, he will be besieged by a long line of rich widows in his constituency, wishing to express their gratitude.
The Bill will remedy an injustice. I support the clause which has been amended in another place, but, as has been said this morning, although that solves a problem, it does not solve some remaining problems. We are simply tackling an injustice which was seen, which was clear, which was understood, and which needed to be tackled formally so that a building society could properly pass on to its account holders the money that is obviously seen to be due to them. Even now, the Bill only permits building societies to do so; it does not compel them to do so.
However, the issue that I want to mention this morning, and which I mentioned in an earlier intervention on my hon. Friend the Member for Gloucester, is that we must look behind the clause at the regime that will remain even when it has succeeded in tackling the specific issue that the clause tackles.
My hon. Friend the Minister and I have been in correspondence through questions about the building societies ombudsman. It strikes me that the clause does not, but could, try to draw together the two extremes of the regime, the better to bring about the redress of grievances of building society account holders.
At the moment, the Bill tackles the specific problem, but there are other aspects in which it is obvious that a category of saver has been affected by a decision, but that category of saver will not have its problems solved under the current regime.
Let me give an example. I tabled a question to my right hon. Friend the Chancellor of the Exchequer, asking whether he would introduce changes to the Building Societies Act 1986, which is the Act amended by the legislation before us, so that, when the building societies ombudsman confirms that maladministration is proven against the interest of a category of saver, all such savers should be recompensed, not only those who have registered a complaint.
Under the regime of the building societies ombudsman, if an individual has had his account wrongly administered, that is specific to the individual. However, when an individual says, "Look at the way that the society has handled every single account of the sort I have," a reference to the ombudsman will give the redress of grievance only to that individual and not to all similar holders of the same account who have had their account administered.
We therefore have a complete stand-off. My hon. Friend the Member for Gloucester has introduced primary legislation specifically to tackle a problem, yet 1115 there are many other similar states of affairs where the ombudsman can only tackle the problems of an individual and not those of the whole category.
My hon. Friend the Minister of State, in answering my question, said:The purpose of the Building Societies Ombudsman scheme is to provide an alternative to legal action for settling individual disputes between societies and customers. Each case must be decided by the Ombudsman on its merits and the details of any two complaints are seldom identical.I agree with him. I think that is right. However, he also said:it would not be appropriate for the decision of the Ombudsman in one particular case to be applied automatically to a number of other cases which had not been submitted to him.I believe that that is rather disingenuous and wide of the mark, because it is quite possible—there is an example in the amendment in the clause that my hon. Friend the Member for Gloucester will, I trust, succeed in passing through the House this morning—that an individual case brought in the regulatory regime of the 1986 Act can highlight a single problem that applies to a category of saver. However, the system at the moment does not allow the effect of that individual's complaint automatically to apply to all people who are in the same predicament. That is wrong.
I should therefore be grateful if the Minister of State would consider once again the role of the ombudsman and the guidelines in the 1986 Act, which either would allow him to call on a building society to remedy such a defect for all its account holders or to continue with the regime whereby the Government simply allow the individuals to be picked off one by one, and the overriding problem is not solved.
If my hon. Friend the Minister of State could take that issue on board, it would solve the problem of the amendment dealing with only the problems identified by my hon. Friend the Member for Gloucester and leaving many other problems unsolved.
All we are asking for is a little nod and a wink from the Treasury suggesting that the Building Societies Act 1986 should include an understanding that where malpractice or simply injustice involving one category of saver is identified—such problems are normally identified by straightforward, common-sense observation—such difficulties can be addressed without the need to resort to more primary legislation of the sort that my hon. Friend has successfully brought before the House this morning.
Such a measure would solve the case of one my constituents, Mr. Adams, who spotted a deficiency. All similar account holders will not obtain redress unless they burden the building societies ombudsman with a series of individual cases that are exact repeats of the one brought before the ombudsman by Mr. Adams.
I fully support the amendment, and urge my hon. Friend the Minister of State to look, behind it and go further. I urge him to tweak the way in which the Building Societies Act 1986 works, so that it can improve the regulatory regime and address the specific problems which we know exist and which are not covered by the provision before 1116 us. By that simple step forward, we would have achieved a greater, more effective and more just regime for building society account holders.
§ Mr. Nigel Evans
I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his persistence in ensuring that the problem is resolved. I understand that, if the Bill is not enacted by 31 July, 5,000 widows will lose their entitlement to bonuses. There is a definite need to get the problem sorted out. In addition, as the hon. Member for Edinburgh, Central (Mr. Darling) said, more mergers and takeovers will probably happen in future. If that is so, many other people could encounter the same sort of problems. We must get the difficulty sorted out as quickly as possible.
I was in the House on 10 February when the Bill passed to another place. There was no debate then. There is consensus in the House that the Bill should become an Act. It is therefore important that we have the opportunity today to discuss one or two aspects of the Lords amendments that we believe will improve the legislation, so that many more people will benefit from it in future. As has been said, the Bill does not sort out all the anomalies. As was said in the other place, we want to ensure the Bill's swift passage. We may want to add all sorts of things to the legislation to improve it for many people, but in so doing we could jeopardise the Bill's passage.
The legislation is extremely technical, although it is a short Bill in itself. Many of us have spoken today about the two-year period during which the account should remain exactly as it is in order for someone to benefit from the bonus. As has been said, that provision should be considered in future. Two years is far too long a period.
I can understand the reason for having a length of time over which the account should have been opened. I can imagine the switching of accounts that would take place, particularly with the current speculation on mergers and takeovers, but I also agree with the hon. Member for Edinburgh, Central that there must be many people in this country who hold accounts with many building societies just in case there could be a future merger or takeover. That is not a problem that troubles me, as I have no money. I have been blessed with that, and I do not need to open accounts everywhere, but a number of people must be opening accounts all over the country just in case.
I am delighted that the new clause will have the same effect as that of the original Bill that my hon. Friend introduced on 10 February. It is most important to consider those widows who lost out under the Abbey National flotation of 1989. The account had to be opened and not changed for six months. Many widows lost out then, which was when the problem first arose. Now, with the two-year period, far more people will be affected.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) made an important point when he asked whether we should get so worked up, and said that some people think that it is only a bonus, not something that they already had. He said that we cannot talk about great deprivation when someone has never had the bonus in the first place.
I have never accepted the notion that what one has never had in the first place, one will not miss. I am sure that there are many people who, like me, look at the six 1117 numbers in the national lottery on a Saturday night, realise that they have lost and feel a sense of trauma because they have already spent the money in their imagination, and have lost. However, we must address the problem of injustice, which is what my hon. Friend the Member for Gloucester is doing with his Bill.
§ Mr. Nigel Evans
It is not deprivation, but we want justice to be seen to be done for many people.
There is also a problem involving the account details of newly married couples, which will, in many cases, be changed when new joint accounts are opened. There is no sense in that action resulting in people losing their bonuses. There is almost a common-sense justification for keeping both accounts open in an existing building society and not changing the details.
My hon. Friend the Member for Hertsmere (Mr. Clappison) has already said that there will be other problems for those who get divorced. That matter also needs to be considered. I understand that there was an initial prospect of reference under the Sex Discrimination Act 1975 because it was felt that the policy discriminated against women. It was decided not to progress with that measure, because it was felt that one did not necessarily have to open a joint account as Mr. and Mrs.
In 99.9 per cent. of cases, those accounts would be opened as Mr. and Mrs. when the married title is included. I know of no couples who are known as Mrs. and Mr. That is an anomaly, irrespective of whether one is not allowed to open accounts in the customary fashion of Mr. and Mrs. That issue must be considered.
Although the issue of third and fourth subsequent holders of joint accounts is not covered by the amendment, it needs to be looked at. I understand why, for the sake of the Bill's simplicity, it has not been addressed now, but I hope that it will be addressed in future. As my hon. Friend the Member for Rutland and Melton (Mr. Duncan) said, that may be something for the building society ombudsman to look at in future. Perhaps his powers will enable him to address such anomalies. I am sure that there will be many more problems that we have not even mentioned today.
It is also significant that the amendment deals with the situation in which a joint account was held and the mother and father die, leaving a son. I congratulate Lord Inglewood on dealing with that problem.
The legislation is not a cover-all; there will be many other anomalies in future. But so many people will lose if we do not resolve the problem that we must ensure that the Bill is enacted as quickly as possible.
I am therefore delighted to support the legislation. I hope that it passes through the House as quickly as possible, so that we can help the many people who will lose if we leave it as it is. I congratulate my hon. Friend the Member for Gloucester on his persistence and determination in ensuring that a wrong is put right.
§ Mr. Jenkin
I join my colleagues on this side of the House in congratulating my hon. Friend the Member for Gloucester (Mr. French) on bringing the Bill to this stage. I look forward to seeing it reach the statute book.
Some aspects of the new clause represent a continuing trend rather than an end to the argument. We are perhaps opening the way to allow the transfer of accounts through 1118 a chain of account holders without losing equity share, and staying within the guidelines of the two-year rule. We are perhaps also creating a situation whereby litigation may lead to splitting accounts which would continue to hold equity within the building society.
The point I shall address specifically—I will speak only briefly in the debate, as I wish to see the Bill progress—is the fact that the Bill's provisions are not wide enough. The two-year rule was introduced to prevent new account holders from opening accounts with a building society immediately before a change of ownership. Building societies were not designed for the transfer of ownership in that way.
The issue we are addressing has arisen because of the trend for building societies to become more like banks, including in their manner of ownership. This issue shows that we have not found an equitable way of distributing the ownership of building societies among their members. I do not believe that sticking-plaster efforts such as the two-year rule, followed by amendments such as the Bill, address the whole question.
Unless we plan to allow building societies to remain rather diverse institutions, they shall continue to be forced to become more and more like banks. If that is to occur, surely it is sensible that they should be owned in the same way as banks. The ownership of those societies should be transferable among account holders in the same way as shares are transferable among the stockholders in a bank. Maintaining the fiction that building societies are owned by their members is to maintain an uneven distribution of their ownership.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) referred to the heads of building societies receiving large financial benefits from a change of building society ownership. One can see why there is a temptation the ownership of building societies to change. Senior executives in a bank that has a full quota on the London stock exchange can raise their sights and advance their careers far more readily than those who are trapped in an institution such as a traditional building society.
One suspects that there must be a temptation for chief and senior executives of building societies to merge with other financial institutions not directly for the benefit of their members. They can limit the benefit to members; they can sugar-coat the pill in order to gain the consent of members who did not join the society originally to secure a capital gain.
§ Mr. Darling
I am interested in what the hon. Member is saying. Does he agree that nothing would do more to damage the reputation of the building society movement than if its chief executives indulged in excessive share options and rewards in the course of takeover bids? If the Government are looking at introducing legislation in connection with building societies, they should ensure that that sort of irresponsible and greedy behaviour does not occur in the building society movement in the same way as it has occurred within the privatised utilities.
§ Mr. Jenkin
It is Bernard, actually; my stature has not grown to that extent.
I do not wish to cast aspersions on any senior executive in any building society. Whereas the hon. Member for Edinburgh, Central (Mr. Darling) leaps immediately to the 1119 conclusion to which the politics of envy lead him, I refer to the temptation that must exist because there is no instantly fair and equitable way to distribute the benefits of a change of building society ownership.
I ask the Minister of State to consider whether we should make membership of building societies transferable. By all means still apply the two-year rule; building societies are not intended to be instruments of speculation, and the two-year rule would preclude short-term speculation. Why should not an individual who has a potential or an actual benefit in prospect as a result of holding a share account in a building society be allowed to sell that benefit to someone else in some kind of regulated market? We could speed up the process by adding some equity to it.
Once ownership became directly transferable through the holding of accounts, control would be gained through the acquisition of enough accounts. I think that that would be a fairer way in which to transfer ownership, provided that there was legislation—perhaps similar to that which applies to the transfer of companies—in order to prevent the suppression of minorities.
I leave that thought with my hon. Friend. The Bill addresses cases of injustice. Many of my constituents have written to me about the Cheltenham and Gloucester building society, and I am pleased to see their cases have been dealt with. However, we have not faced the truth about the way in which building societies are developing. They are evolving into completely different types of institutions.
They were invented originally as local, mutual self-help groups for borrowing and lending purposes, but they are becoming vast financial institutions, which, thankfully, are having a very positive effect on retail banking in this country. They are making the market much more sophisticated. Many more accounts are held per employee in building societies than in the average retail bank. That will have the positive effect of forcing efficiencies to occur in retail banking in the future.
We are not yet facing the full consequences of the development of the building society industry in this small measure, welcome though it is.
§ Mr. Nelson
This has been an extremely valuable and thoughtful debate on the Lords amendments to the Bill introduced by my hon. Friend the Member for Gloucester (Mr. French). I join those hon. Members who have welcomed my hon. Friend's initiative and endeavour, the manner in which he has spoken to the amendments today, and the efficient organisation that has enabled his original ten-minute rule Bill to reach its final stages in the House of Commons.
Many thousands of people outside the House—not least in my hon. Friend's constituency—will be very grateful for the efforts that he has made on their behalf today. The Government are also grateful to my hon. Friend, and we are happy to pay a tribute to him today.
There are some 37 million building society accounts, and this debate will be of keen interest to those account holders. Although the purpose of the Bill and the amendments that we are considering are somewhat narrow, wider issues have been raised in the course of the debate which will have a resonance and will generate interest far beyond this place. Some 37 million building 1120 society accounts means many account holders. Therefore, I was very surprised to hear Opposition Members suggest that we were dragging out debate on this very important issue.
It is not for us to determine the priorities of business in the House today, but as you will have observed, Mr. Deputy Speaker, that it is almost exclusively Government Members who have contributed to the debate. Not a single substantive speech has been made by a Back Bencher from either the main Opposition party or any of the minor Opposition parties. Of course, the hon. Member for Edinburgh, Central (Mr. Darling), as always, made a pertinent speech, and I shall endeavour to say a word or two about that in a moment.
However, it should not go unmentioned that there has been virtually nobody on the Opposition side of the House today. People will make their own judgments about how real an interest the Labour Opposition take in the matters of personal finance and savings that are of such importance to my hon. Friends, as demonstrated by their presence and their speeches.
It is certainly not true, as the hon. Member for Edinburgh, Central alleged, that we have dragged out the debate in any way. I know that he is anxious to get away, because he said so, but I intend, as usual, to do hon. Members the courtesy of responding to the points that have been raised.
The speech by my hon. Friend the Member for Gloucester spoke for itself, and I have little to add to it. He presented the arguments extremely well for the amendments moved by Lord Henley in another place, and he has also demonstrated that he has been flexible within the narrow intention of his Bill in trying to deal with a wider range of anomalies that have arisen during the takeover.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) raised a theme that has subsequently been reflected by others—the nature of people's interest in mutuals, whether mutual banks and building societies or friendly and provident societies, of which there is a substantial and long-standing tradition in this country.
The 1986 Act provides that investors and borrowers are members of a building society. Linking what my hon. Friend the Member for Stamford and Spalding said with what my hon. Friend the Member for Colchester, North (Mr. Jenkin) said, it is important to appreciate that mutual societies are those in which, historically, people have had a provident interest, and a joint and several participation in the whole of the assets and the organisation.
Often, that mutuality springs out of the provident requirement that in certain circumstances they will obtain benefits. Although those have become more closely defined and structured with the development of building societies and their service accounts, the fundamentals remain the same.
With all due respect to my hon. Friend the Member for Colchester, North, who seemed to imply that mutuals should in some way become companies, or non-mutuals, with members having shares that could be traded, it would be difficult to move from the status of a mutual to a traded interest in non-corporate concerns. However, I should like to reflect on what he and others have said about that idea.
1121 My hon. Friend the Member for Stamford and Spalding said that, when people join a building society, they should know rather more about the nature of the mutuality and the interest that they are acquiring, be it latent or direct, in that society, and about their rights therein. Indeed, that has been a theme and a conclusion of both stages of the review of the Building Societies Act 1986, which we have now finished.
My statement at the end of that review made it clear that we intended to introduce requirements to ensure that building societies communicated clearly, and as a matter of course, with their members about the nature of their interests and about the rights, entitlements and responsibilities involved in taking out an account. Indeed, many already do that. Much progress has been made, but until the recent spate of mergers, conversions, takeovers and proposed takeovers, many people were unaware of the latent interest that they had in their building societies.
My hon. Friend also asked how those values should be assessed. That is a difficult issue, given that people have varying amounts in their accounts, and do not necessarily deposit a given amount in a building society account on the basis that they are buying an increased share of the net assets of the business or of its profitability. Presumably they deposit money on a market basis, seeking to obtain a reasonable rate of return on their savings. It does not necessarily follow that the value of their interest in the society, or the value of the society as a whole, can be assessed on that basis. However, when a society is valued, as has had to be done by the commercial and financial advisers of the companies that have made bids, that is done on a conventional basis.
Both in the 1986 Act and subsequently, we have been anxious to ensure that building societies as a movement continue, and that to the extent that change and amalgamations take place, and the number of building societies is whittled away by takeovers, that should happen in an orderly way.
At the turn of the century, there were more than 1,000 building societies; there are now about 83. Recent events have led to some speculation that that process of diminution of the sector may gather pace. I do not know about that, and it is not for me to urge the process on or to speculate about it. But I am concerned to ensure that the good banking and savings practices of building societies, which have proved enormously popular, are not done away with. To use the colourful phrase that I used at the time, I do not want there to be a duck shoot of building societies.
For that reason, in the initial stages of the review of the Building Societies Act 1986, we tried to ensure that we did not reduce or sweep away through repeal of that Act the thresholds and requirements placed on bidding companies, so that we did not make it even easier for them to decimate the building society sector.
On the other hand, no Government should be in the business of trying to preserve a sector or institutions against the interests of its customers and members. In striking that right balance, the Government have sought to introduce measures to increase not only the powers but the accountability of the building societies, and thereby to bring them up to date.
§ Mr. Jenkin
If transfers of ownership are purely in the interests of the customers, why are they always given a windfall gain on transfer? Why is not the benefit of a 1122 transfer of ownership an end in itself? It seems to me that the point of transferring ownership is to release the good will contained in the businesses, because the building societies are businesses at the point of their being transferred.
If they are to be treated as businesses, there is a case for the proper and fair distribution of the equity, rather than an arbitrary distribution of equity by means of a fixed bonus distributed to various account holders, with other people benefiting in different ways.
§ Mr. Nelson
I agree with the latter part of my hon. Friend's intervention, but he will be aware that it is possible to make differential consideration offers to members of building societies in the event of a takeover. That is not possible with share distribution. If shares were offered by way of consideration, there would have to be a standard offer in the case of a takeover. However, certainly for those who have been members for more than two years, cash incentives of differential levels can be provided over and above that. I believe that the proposals of the Halifax and Leeds merger and conversion may intend to provide for such a procedure.
I hope that my hon. Friend was not suggesting that building societies do not have a value. They do, and that has to go somewhere on takeover. Clearly it would be wrong if it just went, for no consideration, to the bidder. There is a value that is owned by the members of the building society, and can only be owned by them. It is not owned by anyone else, such as the executives or other people with no equity interests in the society.
The aim is to come to a fair conclusion about how one can estimate the individual value within the building society, given that there is no natural share, and bearing in mind the fact that the amount of money that people may have in a building society account is not necessarily a representation of their true interests in that society, because they may have deposited the money only yesterday. That is not necessarily a sign of an abiding interest in the growth and development of a society.
My hon. Friend the Member for Hertsmere (Mr. Clappison), in an excellent speech, asked, as did others, whether a period as long as two years was necessary. The 1986 Act, which set the period, was inevitably arbitrary. Some rough justice does occur as a result. The fact that the Act included this proviso or precondition, specifically to prevent the sort of building societies' duck shoot to which I referred earlier, is open to criticism; but it was designed to ensure that any change should be orderly and that there would be no disorderly movement of funds between building societies in speculative ways.
There may be better ways of tackling the problem, but we cannot think of one that is significantly more equitable than the provision set down in the original legislation. It is a fact which the House must recognise that lots of anomalies do and will continue to flow from the arbitrary and capricious nature of a two-year threshold.
My hon. Friend the Member for Hertsmere was also worried about injustice that may occur following divorce—as was my hon. Friend the Member for Beckenham (Mr. Merchant). The problem that arises is that many people would consider it inequitable if a single joint account gave rise to two bonus distributions. Who precisely should qualify? It is a difficult choice. 1123 For divorce, it would be wrong to stipulate in legislation that both people, on separation of their marriage and their account, should have rights to consideration, because that would be to impose a settlement on the divorce process itself. Where there are assets on divorce, the couple's worth should be assessed, and would be subject to judicial separation. So I do not think that it would necessarily be right to carry forward separate and new entitlements to consideration by way of shared distribution.
The rule is that, when the first named account holder continues as a member of the same society, he or she will be the beneficiary of such a distribution. I agree that that can sometimes be seen as a little rough, but I am afraid that it is almost inevitable, given the undesirability of a dual distribution from what was one account. I reiterate, however, that I shall reflect on this and other points raised in the course of the debate.
My hon. Friend the Member for Beckenham spoke about the changing structure of building societies, which he said should be reflected in law. Indeed it is. It forms the basis of many of the substantive conclusions to emerge from the first and second stages of the review.
My hon. Friend also asked whether the Bill's scope was wide enough—for instance, where deposits are concerned. Lord Dubs has introduced a Bill in another place. We must wait and see what progress it makes there, but it would deal with part of the problem. That Bill, however, applies only to people who move from a share account to a deposit account, and not vice versa—whereas it is my impression that most of the problems arise when people move from deposit accounts to share accounts.
We have been looking into this matter. The House will be aware that one of the recommendations that I have announced as part of the review is that we should do away with the differentiation between a member's account and a deposit account. Most people going into a deposit account with a building society have not been aware that they are doing away with their enfranchisement rights in the society. We intend to put a stop to that.
The hon. Member for Edinburgh, Central spoke of anomalies, and made the slightly carping point that the Government, not my hon. Friend the Member for Gloucester, should have introduced the Bill. I certainly do not think that I could have done more justice to the issue than he has done, and I have no complaints about the fact that he is taking the Bill through the House, not I.
The hon. Member made a point, which you, Mr. Deputy Speaker, were kind enough to allow, about endowment mortgages, which of course are of topical interest. I cannot deal with them at length today, but I shall read carefully Sir Bryan Carsberg's report on endowment mortgages. I do not intend to give a peremptory reaction to it today.
The hon. Gentleman will be aware that endowment mortgages, unlike repayment mortgages, are covered by the Financial Services Act 1986; and that, from the beginning of this year, the new regime for disclosure will—we hope and intend—substantially improve the avoidance of problems of mis-selling. I shall wish to consider carefully the cases that have given rise to concern—especially the disappointing persistence rates with endowment mortgages, which are referred to in the 1124 report. I shall also wish to examine methods of redress to allow people who feel that they have been sold a pup to go most legitimately to the regulator.
§ Mr. Darling
I am grateful for the Minister's remarks, but I wish to press him on this point. He said that he was willing to consider cases of redress. Presumably he is not inviting people to write to him personally. Would it not be better to ask the current regulator, the Personal Investment Authority, to investigate these matters, so that, if people think they have a problem, they can go to someone to have them investigated?
§ Mr. Nelson
I said what I said not because I am uninterested but because it is not appropriate that people should write to me about these issues. I shall want to read the report before saying what, if anything, I think should be done. But it is a matter of fact that people can go to the regulator about mis-selling if they feel aggrieved. I want to consider whether there are implications for the PIA in all this—but I do not want to be drawn any further today.
My hon. Friend the Member for Wyre Forest (Mr. Coombs), who was courteous enough to let me know that he could not stay for the rest of the debate, said that the Bill did not deal with people switching between accounts. He was rather in favour of sweeping up such circumstances in legislation. But, as I said before, we are ending the distinction between deposit accounts and shareholder accounts: that should largely deal with the problem.
Moreover, as I have told a number of hon. Members in correspondence, my hon. Friend's point would not solve any problems in respect of Lloyds bank and the Cheltenham and Gloucester, since legislation to enfranchise such people for distribution would have to be retrospective, and that would not be justifiable.
I also rather doubt whether people who have had a deposit account in a building society for some time and who then suddenly switch to a member's account in that society should be entitled to a distribution. This, too, may be one of those areas of rough justice owing to the demarcation set out by the two-year rule and all that flows from it, but we have no proposals at present to move beyond what is set out in the Act.
My hon. Friend the Member for Rutland and Melton discussed the ombudsman's decisions. He said that, when the ombudsman has investigated a case and decided that there has been maladministration or improper dealing with people, his decision should apply generically to other cases. I shall consider the representations that my hon. Friend has put to me; each case, as he said, may be very different.
I also have to be mindful of the compliance burden. Presumably, a complaint investigated by the ombudsman would have to be promulgated in some way so that the conclusions were known to all other building societies, which might, in some cases, have to review, identify and reassess an enormous number of accounts. That might be perfectly justifiable for a case of significant maladministration or injustice, but I doubt whether I should recommend to the House that we implant in legislation an automatic requirement that it should happen in most cases. 1125 The way in which it should work is that the Building Societies Commission, which is there as the regulatory body to oversee these matters, should take note of particular criticisms, of substance raised by the ombudsman, and should, through its prudential note procedures or in other ways, try to ensure that injustices are not reflected elsewhere. I would like to consider that point.
§ Mr. Duncan
It seems that the sort of instance that I described falls between two stools—regulatory and primary legislation. Does the Building Societies Commission have the power at the moment to compel a building society to remedy a defect for a category of account where an individual case has shown the administration of that account to have been universally wrong?
§ Mr. Nelson
No, it does not specifically have that power. The Building Societies Commission is a pretty intrusive body—in the best sense of that description—and it can, through prudential notes generally, and through advice and discussion specifically, carry a great deal of weight with the building societies. One of the reasons why I think that sector has been so popular with the saving public, and why there have been no collapses of building societies—as, I regret, there have been of banks—is in part because of the excellent job that the Building Societies Commission has done over many years in maintaining the integrity and fairness of the rules and operation of the building societies. If I asked the first commissioner of the Building Societies Commission about these matters, I would expect the commission, if a serious issue was raised as a result of an ombudsman's report into an individual case, to do something about it. If it did not, I hope that my hon. Friend or others would hold me to account. Let us see whether we can make such criticisms and reports work better within the existing system. If they do not work, perhaps we shall have to look at the matter again.
My hon. Friend the Member for Ribble Valley (Mr. Evans) made an excellent speech in forthright support of my hon. Friend's Bill and the amendments that we are considering today. He said that, "a wrong had been righted," but also acknowledged that there were further anomalies, which he felt should be addressed. We will consider, both in the process of secondly legislation and in possible future primary legislation, a number of the points that he raised in his speech today. I am grateful to him for making those points.
My hon. Friend the Member for Colchester, North (Mr. Jenkin), whose speech I referred to earlier, made an additional point about the incentive or personal interest of senior executives in building societies in takeovers. I must be quite frank. That is matter that has concerned me. I have the highest regard for the integrity of the boards of building societies and for the record and popularity of those institutions over many years, but it is a fact that, until recently, or until my proposal to change the regulations, building societies have not been under an obligation even to report to their members that they have been in receipt of a takeover bid or offer. One can only speculate about the reasons why they might not transmit to their members why they had received such an offer and decided not to proceed with negotiations. That is not at all satisfactory. Although some people have suggested that such approaches should be notified immediately they 1126 are received, it is difficult in law to differentiate between firm approaches and scurrying discussions. Therefore, I have proposed that such proposals should be brought forward at the next annual general meeting of building societies.
That is only part of the issue. My hon. Friend is concerned, quite rightly, that such are the remuneration packages that are on offer—the big money that is available—to senior executives in building societies on takeovers, and so great might be the inducement, that they would be looking to be bought out or to move with alacrity out of the building society sector into becoming plcs. The responsibility of the Government and the House in that regard is to ensure that there is adequate transparency.
I refer my hon. Friend to the regulations of 1988, which require that the prospectus for a takeover discloses the full details, including share options and the rest of it, of any remuneration package that would form part of a takeover bid. I am anxious to ensure that, before members consider or vote, even with the highest threshold requirements in building society takeovers, they are aware of the remuneration packages being proposed and the consideration that might be available to the senior executives. That is as far as the Government should propose to go for the time being, unless there were the most obvious abuse, to the detriment of members of building societies. I do not see such abuse at the present time. The figures involved have been given some publicity. I think that the right way forward—here, as in other areas—is to ensure that transparency is uppermost at all times.
With those remarks, I hope that the House will conclude that I have answered a number of the legitimate and important points raised by my hon. Friend the Member for Gloucester. His Bill and the amendments thereto put right an anomaly—an injustice, to use the word of some—and will be of very real value to many people, particularly widows.
I hope that the measure will enjoy the whole-hearted support of both sides of the House. I congratulate my hon. Friend on what he has done so far in achieving that end.
§ Mr. French
With the leave of the House, I should like to respond as briefly as possible to a few of the points made by hon. Members.
I am grateful for hon. Members' many contributions to the debate, particularly as a number of them, I am sure, have pressing business in their constituencies. It is good of them to be here today to debate the Bill.
My hon. Friend the Minister responded in detail to most of the points. I am grateful to him for his kind remarks and for the thorough way in which he dealt with them. He demonstrated that the forthcoming programme on building societies that his Department will introduce not only has an obvious coherence but will bring together, combined with provisions in the Bill, a regime under which building societies can operate and under which, one hopes, the vast majority, if not all, the anomalies that have been addressed this morning will eventually disappear.
There were a number of recurring themes, very much set off by the opening remarks of my hon. Friend the Member for Stamford and Spalding (Mr. Davies), who posed the important question: what is an equity interest? That same theme was echoed in the remarks of my hon. Friend the Member for Colchester, North (Mr. Jenkin), 1127 who drew attention to the fact that the operations of many building societies is now becoming much more like banks. It is necessary in law to recognise that that is happening. An ingredient of the transformation that is taking place is, of course, the current distinction between share and deposit accounts, which my hon. Friend the Minister has indicated he is minded to bring to an end. The reason why these matters were not relevant to my Bill is that my Bill seeks to amend the 1986 Act, which deals with share accounts only. Deposit accounts would, inevitably, have fallen outside the scope of what I have endeavoured to do.
I want to comment on the points made by my hon. Friends the Members for Beckenham (Mr. Merchant), for Ribble Valley (Mr. Evans) and for Colchester, North about the necessity or otherwise of the two-year qualifying period. It is clear that it is destined to be the subject of further debate. My instinct is that there is some justification for a two-year period because it recognises the contribution made to the business in question by its regular customers. That is an important ingredient in the concept of mutuality—so when dealing with a mutual institution, there are strong arguments in favour of the two-year qualifying period. I recognise that in the event of changes by institutions from mutual to non-mutual status, my arguments would have less force. I also accept that there will be changes in due course.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) mentioned depositors. In Lloyd's bank's takeover of the Cheltenham and Gloucester building society, the position of depositors was determined by the High Court; it did not fall under the 1986 Act. The High Court made a declaration on how the current law stood. The consequences for depositors in the society was that if the account had been opened before March 1994 it qualified for a bonus, but if it had been opened after March 1994 it did not. As my hon. Friend the Minister has made clear, that problem will be resolved in future because the distinction between deposit accounts and share accounts will be brought to an end.
I was interested in the points made by my hon. Friend the Member for Rutland and Melton (Mr. Duncan) about the ombudsman, and in particular about the consequences of an injustice having been identified in the case of one saver. He questioned the degree to which that might affect other savers in the same category and whether the ombudsman, having identified the injustice for one saver, had the power to take steps to deal with other savers in the same category.
My understanding of what my hon. Friend the Minister said is that, currently, the Building Societies Commission can go some way towards remedying the problem, but obviously it is another area that requires further consideration and debate, perhaps in the context of my hon. Friend's building society review.
My hon. Friend the Member for Hertsmere (Mr. Clappison) has shown that if I ever have to go through this process again, I will not need to consult three firms of solicitors; instead, I can turn to my hon. Friend to do the job for me. Of course, what I do not know is how his fees compare with theirs, but no doubt I shall find out.
1128 My hon. Friend said that in divorce cases, if the wife withdraws from the joint account and opens a new account, but the husband keeps the existing account in operation, he will qualify for the bonus but she will not. My hon. Friend is correct. However, what happens in divorce cases is far removed from the scope of the Bill. It must be a matter for agreement between the divorcing parties. It would not be possible to devise a system in which every aspect of divorce could be accommodated. It is important that as well as ensuring that the law is what it should be, there must be a certain amount of good faith among those affected by the law.
The hon. Member for Edinburgh, Central (Mr. Darling) contributed to the debate, but has kindly apologised to me for the fact that he has had to leave on urgent business. I still have the privilege of being his pair and he mine. He made the point that the Bill was not adequately considered on Second Reading because it went through on the nod. I remind him, however, that the Bill went through on the nod on 10 February to avoid congestion in the Committee that considers private Members' Bills. It was not in order to avoid debate on the Bill in the House, but it was very much in order to accommodate other Bills in which he and the Opposition in particular have a special and legitimate interest. I hope that the shortage of debate on 10 February has been made up by this morning's thorough debate, and once again I thank all those who have taken part in it.
Question put and agreed to.