LEAVE. FIRST READING. (Hansard, 29 April 1873)

§ MR. WINTERBOTHAM,

in rising to move for leave to bring in a Bill to amend the law relative to Building Societies, explained that it was a Bill of only 11 clauses, and was for the better regulation of these societies. The necessity for such legislation was shown by the three or four Bills for that purpose which had been introduced by those interested in such societies during the present and previous Sessions. The Government had fully recognized the necessity for such legislation, and they had, as the House would remember, appointed a Royal Commission to inquire and report upon the subject. The Royal Commissioners had fully considered the matter, and reported thereon in 1872; and the House was under great obligation to the Commissioners for the care 1191 bestowed upon the investigation. The Report was presented too late to enable the Government to prepare a satisfactory measure last Session, although they had been pressed to do so by those acting on behalf of the societies. Had they done so without due consideration, it would have been treating with slight respect the elaborate Report made by the Commissioners. The Government had now fully considered the subject and the Bill introduced by the hon. Member for South Lancashire. In 1836 an Act was passed for the management of building societies, incorporating certain Acts then in force with respect to friendly societies, under which Act all building societies were now carried on; and, although originated and conducted as friendly societies, they had outgrown the original intention and developed to enormous proportions, being now of a totally different nature. The Commissioners in their Report pointed out that, in the place of terminating societies originally existing, permanent societies now predominated, and powers to regulate them were now necessary. He did not think the growth and change in the organization of these societies were to be regretted. Building societies had been the means of great good, and the Government were desirous to encourage them. The change in the character of these societies had given rise to difficulties, especially in three points. 1. It was doubtful which friendly society Acts, in fact, applied to them. 2. As to the exercising of borrowing powers, which, after being recognized for 20 years, had been declared illegal, and again in 1869 partially recognized. Next, as to the mode of issuing fully-paid-up shares, which had been questioned by the present Lord Chancellor when at the bar. Parliament should now, therefore, deal with this subject fully and definitely. The Bill introduced by his hon. Friend (Mr. Cross) dealt compulsorily with all classes of societies but terminating societies, extending their powers and confirming their past transactions. The Government were not prepared to go so far as that, and to deal thus compulsorily with societies varying so much in detail, and of which even now little was known, for the Royal Commissioners were unable to estimate even the number of them. Again, many of the existing societies were satisfied with their present position, and did not wish to be inter- 1192 fered with. Their members might fairly object to finding themselves members of societies of much more extended character. The main feature of the Bill which he now laid before them was, that it was wholly permissive. Secondly, if any building society chose to register under it the effect would be simply to incorporate it without change of any kind as to its organization or the liability of its members—a most important consideration; in fact, the societies were of many different kinds. Thirdly, the Bill would give powers to societies so incorporated to extend their purposes, to acquire powers to borrow, issue paid-up shares, and to confirm any past transactions as if such powers had existed. The Government had not desired and did not intend, as had been suggested to make Joint Stock Companies of them. That would be an impossibility. The hon. Gentleman then quoted from the Report of the Royal Commission to show the essential difference between a Joint Stock Company with a fixed capital divided into shares and building societies, whose capital was constantly fluctuating. It was necessary now to find some simple law for these incorporated building societies. The law as to Joint Stock Companies was clearly inapplicable. A new and special law was contained in the 40 clauses of Mr. Cross's Bill. The Government proposed to apply such clauses of the Companies Act of 1862 as were suitable to these societies. If hon. Members would take the trouble of comparing the clauses with the 40 clauses of the Bill already before the House, they would find a singular parallel. He would point out that every clause of the Companies Act had been thoroughly discussed in the Law Courts, and the advantage thus gained over a Bill of which every clause would have to stand the test of litigation was, in his estimation, very considerable, The code proposed in the Bill of Mr. Cross must go through a like ordeal; whereas the Act of 1862 was entirely understood, and its clauses applying to building societies were thoroughly workable. It must, however, be distinctly understood that, if they gave a new status to building societies, Government responsibility must cease, and the registration be an open one. At present the Registrar certified to some extent the legality of the rules; but this must no longer exist. The registration 1193 must be absolutely free from Government control or responsibility. He was aware that in this matter they were at variance with the Royal Commissioners; but there must be no misunderstanding on that score. The societies must be totally free—free to do as they liked, and not subject to the control of the Government at all. Government were anxious to show their good will to these societies; and were prepared to say to them that, although it would be impossible to justify the enjoyment by these large societies of the fiscal exemptions they had enjoyed as friendly societies, yet he had the authority of his right hon. Friend the Chancellor of the Exchequer in saying that, if this measure were accepted, every exemption which they had hitherto enjoyed should be secured to them. [Mr. ASSHETON CROSS: And new societies?] No. Societies to be hereafter established must not expect and would not enjoy any such exemptions; and they would have to be formed under the proposed Bill of the Government—that is, under the Companies Act. Save as to these exemptions, old and new societies would be in exactly the same position. He would ask the House to fully consider the details of this measure, and compare it with the Bill already before the House he would also ask those acting on behalf of the building societies to fully consider it; and he trusted that all parties would help to the passing of such a measure as might be found advantageous to the interests concerned. [Mr. ASSHETON CROSS: What day does the hon. Member fix for the second reading.] Monday week.