HC Deb 27 May 1919 vol 116 cc1156-60

In this Part of this Act—

The expression "houses for the working classes" has the same meaning as the expression "lodging-houses for the work-classes" has in the principal Act.

The expression "public utility society" means a -society registered under the Industrial and Provident Societies Act, 1893, or any Amendment thereof, the rules whereof prohibit the payment of any interest or dividend at a rate exceeding six per cent. per annum.


I beg to move, after the word "Act" ["has in the Principal Act"], to insert the words The expression' sell' includes the power to sell in consideration of an annual rent charge, and the expression 'sale' has the corresponding meaning. This, I understand, should really be inserted in this Bill, to make it quite clear what is intended.

Amendment agreed to.


With regard to the next two Amendments standing in the name of the hon. Member for Consett (Mr. A. Williams), I am not quite clear whether they are merely definitions or whether they are bringing in new bodies to receive the 30 percent., and in that way imposing a charge. Perhaps the hon. Member will make it plain.


I beg to move, after the word "thereof" ["Industrial and Provident Societies Act, 1893, or any Amendment thereof"], to insert the words ''or a company registered under the Companies Acts. These words are intended to allow the bodies which will receive this help to be registered either under the Companies Acts or under the Industrial and Provident Societies Act. I suggest that it would not necessarily increase the number of societies receiving help, but would simply give them the option of registering themselves under the one or under the other. The position at present is that to be a public utility society you must be registered under the Industrial and Provident Societies Act. I believe that was put in under the impression that a company registered under the Industrial and Provident Societies Act must necessarily be of a democratic and semi-philanthropic colour. But it is not so at all. You can register under the Industrial and Provident Societies Act almost any kind of business enterprise, and you can register the same thing under the Companies Acts, with a slightly different wording. If the Government and the country are under the impression that, by Having societies registered under the Industrial and Provident Societies Act, rather than under the Companies Acts, they are getting any security whatever for high motives or philanthropic purposes, I am quite sure they are very much mistaken. The Act does not make any difference at all. I have been told, "Oh, the Industrial and Provident Societies Act requires certain auditing on conditions laid down." Elsewhere this Bill now before us enables the Local "Government Board to insist upon any auditing that they like. The fact of limiting the registration to the Industrial and Provident Societies Act works out quite absurdly in some cases. A well-known company was not allowed to borrow a penny of its funds for housing because it was registered under the Companies Acts, yet I guarantee that the constitution of that company was as public-spirited as any society that was ever registered under the Industrial and Provident Societies Act. I hope that this really absurd distinction,-which is supposed to represent some security to the public, and which gives the public no security whatever, will be done away with, and that these bodies, being bodies corporate, will be allowed to be registered either under the one Act or the other, according as the circumstances make it most suitable. It is well known that with a small capital it is better to register under the Industrial and Provident Societies Act, and that the same business with larger capital would be better registered under the Companies Acts. But, from the point of view of public spirit, it makes no difference whatever.


I beg to second the Amendment,


I think the Amendment is a definition.


I am afraid I cannot adopt the view of the Mover of this Amendment. I think there are very vital differences between a public utility society and a limited company. In the first place, there is the matter of expense. With a public utility society the whole business can be done for five shillings net, whereas with a limited company you have the solicitor's costs, a not inconsiderable item. I do not want this measure to become an architect's or a solicitor's endowment Bill, but to remain a Housing Bill. A limited company has many difficulties in increasing or diminishing its share capital, but in a public utility society, on the same principle as the co-operative society, the share capital can be called up at any time by a resolution of the members, and paid off or extended at any time by a resolution of the members without any application to the Courts or the expenses incidental thereto. Under the Friendly Societies Act, the whole scheme of management is entirely different. Instead of a board of directors you have a committee of management.


It is the same thing.


Oh no, the whole thing is entirely different. There would be no kind of protection that the State would not be asked to lend money for purely commercial and speculative limited companies. I know perfectly well that many companies are registered under a memorandum of articles, and with a purpose and ideals that are of the highest and loftiest type — the first Garden City, for example. But many other companies not actuated by any such motives, and when you have the Friendly Societies Act, under which you can register in an inexpensive, simple, clear and understandable procedure, surely it is very foolish to adopt, instead of that procedure some carefully prepared and ingenious interpretation of the ordinary Companies Act which may or may not be designed to meet the purposes that are clearly met by the Friendly Societies Act. To suggest to people who are registering, under the Friendly Societies Act, a public utility society for housing, and where the procedure is so clear and simple, that they should resort to solicitors and professional advisers to show them how to embody under the Companies Act a really altruistic company, is an absurd and unnecessary proceeding. It may be there are companies already registered which ought to receive some special consideration. But in beginning de novo, as we do under this Bill, with rules and regulations clearly set out, with the Registrar of Friendly Societies in close co-operation with the Housing Department of the Local Government Board, so that any ordinary set of persons can, with the least possible difficulty frame a society designed to meet the requirements of the Act, and with a procedure so simple that any-one can work it, to abandon that procedure and to embark on a selection of different methods of forming companies with different articles under the Companies Act would be a dangerous and foolish procedure. I want to keep this Housing Bill, when it is an Act, as clear as possible from any kind of money-making practice or profiteering exploit. I want to safeguard it against all those ingenious people who take an Act of Parliament and turn it into a money-making method for themselves. Although there are many high-minded people, like my hon. Friend (Mr. A. Williams), who could and would form a company and make it perfectly safe within the limits of this Act, yet there are hundreds of ingenious people who would be only too glad to form a company under the measure and make it a money-making concern.


The Government do not see any advantage in accepting the Amendment. In our opinion, nobody would be prejudiced if the Bill remained as drafted. It is quite easy for such an association as the Mover had in mind to come within the four corners of the Bill as it is. Our regulations make that quite easy. Some supervision is necessary, and it is easier to exercise that supervision if the body is registered as proposed in the Bill, and not as proposed by the hon. Member.

Amendment negatived.