HC Deb 23 February 1968 vol 759 cc893-902

Order for Second Reading read.

3.34 p.m.

Mr. Douglas Houghton (Sowerby)

I beg to move, That the Bill be now read a Second time.

Mr. Marcus Worsley (Chelsea)

I take it that the right hon. Gentleman the Member for Sowerby (Mr. Houghton) has resumed his seat, so that I have no need to move the Second Reading. He has done it with an eloquence which was unlimited if brevity be the soul of wit. None the less, I feel that a little more ought to be said about the Bill. I say at once that my object is to support it and in no way to impede its progress.

I am sorry that the hon. and learned Gentleman the Member for Northampton (Mr. Paget), whose Bill this is, is not in his place. I sympathise with him. Looking at the Order Paper today and in this way, that would help the Chancellor. It should make him more optimistic about this Bill.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 16, Noes 61.

Division No. 65.] AYES [3.25 p.m.
Allason, James (Hemel Hempstead) Pym, Francis Weatherill, Bernard
Channon, H. P. G. Quennell, Miss J. M. Worsley, Marcus
Grant, Anthony Renton, Rt. Hn. Sir David
Langford-Holt, Sir John Rodgers, Sir John (Sevenoaks) TELLERS FOR THE AYES:
Mitchell, David (Basingstoke) Russell, Sir Ronald Sir Stephen McAdden and
Nott, John Sinclair, Sir George Mr. Simon Wingfield Digby.
Page, Graham (Crosby) Smith, John
Bidwell, Sydney Jenkins, Hugh (Putney) Roebuck, Roy
Boston, Terence Lever, Harold (Cheetham) Ryan, John
Boyd-Carpenter, Rt. Hn. John Lipton, Marcus Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Brown, R. W. (Shoreditch & F'bury) Loughlin, Charles Short, Mrs. Renée(W'hampton,N.E.)
Dalyell, Tam Luard, Evan Silkin, Rt. Hn. John (Deptford)
Davies, Harold (Leek) Lyons, Edward (Bradford, E.) Snow, Julian
de Freitas, Rt. Hn. Sir Geoffrey MacColl, James Stewart, Rt. Hn. Michael
Delargy, Hugh Macdonald, A. H. Stonehouse, John
Dickens, James Marks, Kenneth Strauss, Rt. Hn. G. R.
Edwards, Robert (Bilston) Mendelson, J. J. Swingler, Stephen
English, Michael Millan, Bruce Taverne, Dick
Ennals, David Molloy, William Walden, Brian (All Saints)
Evans, loan L. (Birm'h'm, Yardley) Morris, Alfred (Wythenshawe) Wells, William (Walsall, N.)
Fletcher, Raymond (Iikeston) Moyle, Roland Whitaker, Ben
Foot, Michael (Ebbw Vale) Noel-Baker, Rt.Hn.Philip (Derby,S.) Williams, W. T. (Warrington)
Freeson, Reginald Ogden, Eric Wilson, William (Coventry, S.)
Gardner, Tony Oram, Albert E. Winnick, David
Gregory, Arnold Orbach, Maurice
Henig, Stanley Pannell, Rt. Hn. Charles TELLERS FOR THE NOES:
Hilton, W. S. Pavitt, Laurence Mr. Eric G. Varley and
Hooson, Emlyn Rankin, John Mr. Ernest G. Perry.
Houghton, Rt. Hn. Douglas Robinson, W. O. J. (Walth'stow, E.)

seeing such a varied menu—adoption, the theatre, sweepstakes and all the rest—which one might well expect to inspire the interest of the House, no hon. Gentleman could be blamed for thinking that the fourth Order of the Day, even though it stood in his own name, was unlikely to be reached. Like other hon. Members on both sides of the House I regret the hon. and learned Gentleman's absence, because he could have explained this considerable Measure in detail.

I have long had a great admiration for the societies, and I believe that the hon. and learned Gentleman is doing a service to the House in introducing the Bill. I shall not attempt to analyse all its complicated Clauses, but as far as it goes it has my full support. My criticism is that I wish that it went further. Over the past decades the societies have done an enormous amount to build up what is now called social security. They started long before the State operated in this connection or was dreamt of by the most Utopian reformer as being capable of doing so. I do not regret that the State has moved into many areas formerly occupied by voluntary societies. Voluntary effort has been the instigator of much admirable social reform of many kinds, and the societies have perhaps done more in blazing the trail than any other group of institutions.

They still have a very important role to play, but since they started their work many changes have taken place. The Explanatory Memorandum is marvellously complete for a Private Member's Bill, but then, it is introduced by a very remarkable hon. and learned Gentleman. The first paragraph makes clear that the basic law under which the societies now operate dates back to 1896. It was framed in a totally different society, in which the State did not intervene in these matters. Changes have subsequently taken place, but only in limited respects, particularly in terms of financial limits. Therefore, the Bill deals with only part of the problem which the House should tackle.

I hope that the Bill is a non-party matter. It would not be too much to say that we on this side of the House put particular emphasis on the individual's being able to provide for himself over and above the State's basic contribution.

The Bill covers only a relatively narrow area. As it makes clear in its long Title, it deals with the accounts of the societies, their auditing and the rules and valuations. In other words, it deals with the bookkeeping side. I understand that it has the societies' general approval, and therefore I hope that it will receive a Second Reading. But I feel that we should be considering the problem of these societies in a very much broader way than we have done so far. The law, as I have indicated, goes back to 1896. It is not only, I suggest, these particular provisions, these bookkeeping provisions, which are out of date but many aspects of the general law about these societies.

I hope that the Financial Secretary will indicate something of Government policy in this matter. I am not absolutely clear whether we should have an inquiry into the matter—in other words, whether there is enough doubt and enough need to assess the situation to warrant a full- scale inquiry, whether it be a Royal Commission, a Departmental Committee or an Interdepartmental Committee—or whether there is within the recesses of Government Departments enough information to bring forward a more comprehensive Measure to deal with other aspects of these societies. I hope that the Financial Secretary will have a chance to cover that point.

I should like to indicate some of the ways in which, in my humble opinion, the law needs attention. The most obvious point relates to financial limits. I indicated earlier that since 1896 there have been various alterations in the top limits under which friendly societies can operate. I understand that the current law goes back 20 years to 1948. Last Tuesday we gave a Second Reading to a Bill which, among a great many things, gave the Government power by Order to vary fees and charges in a very wide range of Acts specified in a very long Schedule to the Bill. I accept this principle. I think it ought to be possible for the House and, in particular, the Government to vary charges, fees and limits as they become out of date as a result of what has, alas, in our lifetime become something that we have almost taken to accept as inevitable—the lowering value of the £. There ought, therefore to be, a simpler system than we have at present to vary these limits.

Therefore, I should like to see power put in the Bill, if it proves possible under the long Title, for the Government to provide by Order for increases in the limits under which the societies operate—by Order which would be subject to a vote in this House were there to be strong feelings.

It is not because there are strong feelings against these limits being increased that they have remained so long static. It is simply that the time passes on and they have become out of date. In the House it needs a Second Reading and all the paraphernalia of legislation to make a change, and so no change is made. But for the societies, and, what is very much more important, for the individuals who benefit from their work, these obsolete limits become, as the years go by, gradually more of a straitjacket. Therefore, I think that much the most important aspect which should be added to the existing Clauses of the Bill relates to the financial limits. I hope that the Financial Secretary may find it possible to indicate that the Government can give general support to that proposition.

The criticism of the Bill and, therefore, of the 1896 Act in its present operation, goes rather wider than that. It is almost bound to be the case that if a Bill like this operates for a period of over 70 years certain things will become obsolete. That is particularly the case since the whole relationship between private and State provision has been so radically changed.

There are a number of technical matters with which I will not weary the House, But I am told by these societies that they would like to see changes in the regulations under which they operate. The State has moved into areas in recent years in which the friendly societies have traditionally operated—although the societies now operate in supplementation—and they feel that they ought to be given the chance without much difficulty to move into other areas. They find that the procedure for starting up a subsidiary for such a purpose, which they may wish to do, is exceedingly complicated under present legislation. Transfers and mergers of friendly societies, which hon. Members would regard as desirable, are made extremely difficult by the obsolete character of the current legislation.

I am grateful to the right hon. Gentleman for introducing the Bill. I support the Bill and I hope that it is given a Second Reading, but I also hope that in Committee we shall be able to broaden it and to make it a more useful piece of legislation. I hope that the Financial Secretary to the Treasury will indicate that the Government give broad support to a broadening of the Bill.

3.47 p.m.

Mr. Michael Alison (Barkston Ash)

In intervening briefly in the debate I cannot resist the temptation to express my pleasure at seeing the Financial Secretary to the Treasury back in his place, and I am especially gratified to believe that it was the arrival of this Bill and not the arrival of the International Monetary Fund team which occasioned his return from his foreign travels.

This is a Bill of importance, but although I give it my warm support, I am a little uneasy about some of the special provisions relating to auditors. It seems to me that the rôle of the auditor in the Bill, and particularly the scope and appointments of lay and qualified auditors, is of the essence of the changes which the Bill would introduce. I have one or two misgivings about the Bill in respect of the auditors, and I am particularly disturbed by the very close definition in Clause 8 of the type of person who may be appointed, be he qualified or approved, as auditor for friendly societies.

The limitation placed on a qualified auditor by reason of his possible association, distant or near, with the kind of activities on which the society is engaged, may under certain circumstances be a disadvantage. I have particularly in mind the type of society which is springing up in the Metropolis and also in other parts of the country, where groups of well-meaning citizens have joined together to form local housing associations or housing trusts. I am a member of one such society operating in the Borough of North Kensington. Its activities are relatively limited but certainly very desirable. The society acquires and purchases small properties as they come on the market, does them up professionally and satisfactorily—or employs many voluntary helpers in that task—and re-lets the premises at reasonable rents for those who cannot rehouse themselves or be rehoused by local authorities.

Mr. Worsley

For the record, it should be made clear that there is no such place as the Borough of North Kensington. It is the Royal Borough of Kensington and Chelsea.

Mr. Alison

I take my hon. Friend's point and extend my apologies not only to him, but to the citizens he represents.

Returning to the general point, one of the problems of the small housing associations or societies is that, on the accounting side they need the assistance of gentlemen who are professionally qualified, in the terms of the Bill, who often give their services voluntarily. In one or two cases about which I can speculate, the situation arises in which the most valuable kind of auditor for these small societies is one whose professional employment might be in connection with a major building society. This would qualify him to be an auditor, whether approved or qualified, in the technical sense, under the terms of the Bill for one of the small local societies. As at present drafted, by the constricting definition of those who may be eligible to be appointed as qualified auditors, the Bill necessarily restricts the scope of appointment.

May I ask the Financial Secretary to elucidate one point, upon which I feel he is particularly expertly qualified to pronounce? On Clause 8(1,c) may I ask whether it is possible for a person to be "a body corporate"? Is this not a contradiction in terms? Is not a body corporate, in the nature of the definition, a plural rather than a singular concept? Can this phrase properly apply to persons under Clause 8(1)? No doubt, the Financial Secretary will be able to help on that point.

The special feature of the Bill to which I want to draw the attention of the Financial Secretary is the curious distinction drawn between a qualified auditor, as described in Clause 7, and the appointment of lay auditors in the case of exempt societies as defined in subsections (2) to (7) of Clause 4. This is a curious feature of the Bill. Apparently it is conceived that two lay auditors are tantamount to one qualified auditor. I would like reassurances that the doctrine underlying the inclusion of two lay auditors is that it is held that two people are naturally and necessarily a check and balance upon one another, or that it takes two good men to do what one qualified professional can do.

The particular aspect which then comes into play is whether the phrase "a lay auditor", as set out and defined in Clause 4, can or cannot include an off-duty qualified auditor.

Mr. Speaker

Order. This is a Committee point.

Mr. Alison

I am sorry. I will present this question in the more general context of seeking the Financial Secretary's reassurance that the scope of auditors will not be unduly constricted by the application of Clause 7.

I move, at your direction, Mr. Speaker, to a point which emerges with some prominence and necessity from the special features of the Bill which relate to the appointment of auditors by direction—that is to say, direction of the Chief Registrar—be they approved or qualified, in the case of an exempt society. This seems to give rise to some confusion, and I think that we need some illumination on it. There is the curious situation under which exempt societies do not have to have qualified auditors, except in circumstances which it is rather difficult to anticipate, but under which the Registrar feels it is necessary to appoint a qualified auditor.

That raises complications in the matter of the annual meeting, because the Bill lays down that there is to be an annual meeting of a society to appoint or remove the qualified auditor. What would be the position of an exempt society which would not normally hold an annual meeting for the appointment or removal of a qualified auditor because such an auditor would not normally be an officer appointed to such a society? What will be the position in the event of such an exempt society having an auditor appointed by direction of the Registrar? Will it have to hold an annual meeting under the terms of Clause 5? If an exempt society to which a qualified auditor, has been appointed by the Registrar has to hold an annual meeting, will it be empowered to reject or replace the auditor, or will that replacement have to be sanctioned by the Registrar to whom the qualified auditor owes the appointment?

These are one or two rather special features of the Bill which strike me, as one who is interested in the whole question of audit, particularly in its wider applications, as requiring elucidation from the Financial Secretary.

3.57 p.m.

Mr. James Allason (Hemel Hempstead)

I am sorry that the hon. and learned Member for Northampton (Mr. Paget) cannot be with us this afternoon to explain the Bill, but a Master of Foxhounds, or even a Master of Foxhounds elect, has considerable duties at the weekend during the winter.

Mr. Speaker

Order. The hon. Member must come to the Bill.

Mr. Allason

I am sorry, Mr. Speaker, but I have several questions which I hope will be answered.

I should like to try to help my hon. Friend the Member for Barkston Ash (Mr. Alison) who wanted to know what the definition of a person was. I think that it is the Interpretation Act, 1889, which says that a person is almost anything, and certainly includes a local authority.

The exemption limits in Clause 4 seem rather strange. The Clause says that the assets of a friendly society shall be £5,000, and that its turnover shall be £5,000. Below that figure it can claim exemption if its membership is below 500. This seems peculiar when one realises that, in relation to a housing society such as that to which my hon. Friend referred, there would be no question of the figures rising as high as that. How have the figures been arrived at?

Clause 9 deals with the auditors report. Will it be the sort of report which the auditor merely certifies at the bottom that he has inspected the accounts and found nothing wrong with them?

The Financial Secretary to the Treasury (Mr. Harold Lever)

The hon. Gentleman is doubtless aware of the time, and of the enthusiasm with which the Bill was greeted by his hon. Friend. Is he anxious to see it become law, or does he want to talk it out?

Mr. Allason

I have no desire to talk it out. In that case I shall sit down.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).