§ Mr. Freeson
I beg formally to move Amendment No. 12, in Clause 2, page 3, line 5, after 'consent', insert '(a)'.
§ Mr. Deputy Speaker (Sir Myer Galpern)
With this we may take Government Amendment No. 13, and Amendment No. 17, in the Schedule, page 6, line 19, leave out:'this Act'.
§ Mr. Durant
I wish to speak on Amendment No. 17, which concerns banks which might be permitted to enter into the scheme.
It has been put to me by the Shelter organisation that the list we were given by the Minister in Committee in relation to the Protection of Depositors Act 1963 included a number of banks. In that list I find, to my horror, the Julian S. Hodge Ltd. bank, which is not a bank that we would wish to include in the scheme. That bank has a bad history of pyramid selling, it has caused a great deal of anxiety 1409 among a large number of immigrants, and I am concerned at its being involved in the Bill.
Amendment No. 17 seeks to make the situation clearer—namely, that the Minister should have more jurisdiction over which of the banks can be included. It seeks to cut down the list as provided in Committee. It seeks to delete from the approved list the name of Julian S. Hodge. I know that he is a friend of the Prime Minister, but this is not something that we would desire to see in the Bill and I am very anxious about the position.
The Minister assured us in Committee that that bank was not included. He then provided the list, and there was the name of that bank as large as life. The Shelter organisation has written to me expressing great concern and asking that this name be struck from the list because there has been so much bad experience with that bank in its pyramid selling and strong-arm stuff on repayments and a bad history in lending money on property. This occurred some time ago. I accept that it is not current practice, but we feel that it would be wiser not to have such a list associated with the Bill.
§ 7.0 p.m.
§ Mr. Rossi
While the Minister was far too modest to extol the virtues of his own amendment and asked the House to take it for granted, I thank him for trying to meet some of the points that we raised in Committee concerning the Government's approach to the authorised institutions that will participate in this house purchase assistance scheme.
The right hon. Gentleman will recall that we strongly criticised the approach that there should be included in the schedule a list of lending institutions to which borrowers could go in order to obtain the loans and the tax-free bonus provided for in the Bill. The matter to which we took the greatest exception was the part of the schedule which enabled any banking company or discount company which is authorised for the purposes of the Protection of Depositors Act 1963 to be a participant institution in this scheme. As my hon. Friend the Member for Reading, North (Mr. Durant) has said, the Minister produced a list of 1410 authorised institutions under the Act, and they are a very varied range indeed.
The comment that has to be made is that the Protection of Depositors Act 1963 is exactly what its title proclaims—an Act to protect depositors. One finds in the Long Title that it isAn Act to penalise fraudulent inducements to invest on depositin banks or discount companies, and also a measure to regulate the accounts of those companies and the advertising for deposits in them. In other words, the whole emphasis of the Act is to protect people lending money to the banks and institutions concerned.
In this Bill, however, the emphasis is quite different. What we are concerned with here is to help the borrowers, and that is an entirely different situation, because many of the banks in the list that the Minister gave us as authorised depositors are those which no doubt protect their depositors very well indeed, as they are required by the 1963 Act to do, and offer them highly attractive interest rates for the money deposited with them.
In the Bill, however, we are concerned with a poor section of the population seeking to buy houses with Government assistance up to a certain value, and they are the last kind of people who should find themselves involved in many of the companies whose names are listed as authorised under the 1963 Act, because they are companies which pay high interest to depositors and consequently charge even higher interest to borrowers.
Surely it is in the interests of those seeking assistance under the Bill to direct them away from that kind of lending institution. Therefore, in Committee we criticised the fact that the 1963 Act appeared listed in the schedule as it is, and our Amendment No. 17 now seeks to leave out from the schedule any reference to the Protection of Depositors Act.
If we did that, we would be left with the simple proposition that the companies which would be authorised institutions for the purpose of lending money to people seeking Government assistance would be those which satisfied the Secretary of State that they ought to be treated as a banking or discount company. One would have thought that the Secretary of State, in exercising his discretion under that kind of provision, would wish to 1411 satisfy himself that people were not going to be asked to deal with banking institutions or bank houses which by the nature of their business charge more than the prevailing rates of interest.
The Minister is seeking by his amendment to meet the objections that we raised in Committee, but he is doing it in an inverse fashion. He is saying, in effect, "Let the list under the Protection of Depositors Act 1963 remain as it is; prima facie, all these organisations can participate under the scheme. Let them go ahead and lend money at whatever rates they do their business, but if the Secretary of State finds that some of the circumstances are not those which satisfy him he will bring himself to take action and remove those banks or discount houses from the approved list."
I would prefer the right hon. Gentleman to look at it in another way, do a bit of work to start with and begin examining now the banks that should be included in the scheme. There is an abundance of evidence that he can obtain from the City and other major financial sources about what the attitude is and what kind of business these institutions carry out. He can start by drawing up his list of those which are approved, and not at some later, unspecified date draw up a list of those disapproved. Although I thank the right hon. Gentleman for trying to meet some of the objections we have raised—I appreciate the spirit in which he has tabled the amendments—we feel that his approach is not quite the right one.
§ Mr. Freeson
This short debate and the one we had in Committee have been very useful. Many of the points made on both sides in the debates have validity. We indicated in Committee that we would consider the matter further. I remain convinced that the definition of "bank" that we propose in paragraph 6 of the schedule is sound and useful and will save a great deal of new work.
I do not mind being exhorted by the hon. Member for Hornsey (Mr. Rossi) to do more work in connection with the operation of the Bill. I am not short of work, and we will do it when necessary. But I do not think that I necessarily wish to effect duplication of effort in this respect. There is ample opportunity in the Government to establish the experience 1412 elsewhere in other Departments—as is the case here—which can be used for our own pursposes in connection with the Bill. It is certainly not my wish, and I hope that it will not be the hon. Gentleman's, simply to create unnecessary new work in a life that is well pressed for time and effort already. I hope that the hon. Gentleman will appreciate and accept that his proposal would mean a repetition of much work already done.
The definition in the schedule relates to banks which have satisfied the Secretary of State that they should be treated as discount or banking companies for the purposes of the Protection of Depositors Act 1963. This provides, without further additional and separate work on our part, an assurance of financial repute. That being said, I accept the objective of Amendment No. 17. I appreciate the concern felt by hon. Members about the need to be able to include further banks of particular interest to ethnic minorities and perhaps the need to be able to exclude some banks whose behaviour in relation to the scheme proves not to be of the high standard that we will demand. I shall explain why I prefer my approach to the problem.
Clause 2(1) already provides the Secretary of State with power to add further institutions to the schedule. We propose to use this power to include any reputable banks, whether ethnic or not, which apply and which satisfy the Treasury, the Bank of England and the Secretary of State as to their suitability for inclusion.
In order, however, to cope with the possible need for exclusion of an institution in the schedule, I have tabled Amendment No. 13, which is designed to give the Secretary of State power to remove institutions from the list. Thus, if the need arose, whether because an institution had ceased business, wished to stop participating in the scheme or had seriously abused its position in the scheme, the Secretary of State would be able to delete that institution from the list of recognised bodies. The amendment provides that before any order was made an institution would have an opportunity to make representations to the Secretary of State.
That summarises the position. I believe that we have met both points that were raised in Committee and which have been repeated briefly today. I think that there may have been misunderstanding in some 1413 quarters, arising from the preparatory work on the Bill, as to whether we were including certain banks in some parts of the country which could validly be so included. I believe that my hon. Friend the Under-Secretary reassured the Committee that that was not the position, and I hope I have reinforced the assurance which he gave at that time that when further information on other institutions comes before us we shall consider it and add to the list. That is the first point.
The second point is that I believe that the procedure we have tabled in our amendment will meet the concern that hon. Members have rightly raised about the continued inclusion in the list of banks which have not been operating in the way that is appropriate for them in connection with the scheme.
§ Mr. J. Enoch Powell (Down, South)
The right hon. Gentleman used the expression "ethnic bank". Would he define the meaning of that term?
§ Mr. Freeson
It is a term which was used during the course of the Committee proceedings. I accept what I think is the implied concern or query in the right hon. Gentleman's mind. I have queried the rather loose usage of the word, but I must confess that I am slipping into the same trap. It is a bank which represents, in a proper fashion, a financial interest created by people within particular communities. There are certain banks which derive their resources and their organisation from certain Asian communities. I believe that there have been attempts within the West Indian community to act similarly, as, indeed, within other groups. If I may say so, I have operating in Kilburn, within my on constituency, as have other hon. Members in their constituencies, the very well established Allied Irish Bank, which has been there for some years. I suppose that that would also come within the category of ethnic banks that we have within the country.
§ Amendment agreed to.
Amendment made: No. 13, in page 3, line 5, at end insert—
'(b) by order made in the case of a body named in it direct (but only after giving an opportunity for representations to be made on the body's behalf) that it be no longer a recognised institution'.—[Mr. Freeson.]
§ 7.15 p.m.
§ Mr. Michael Morris (Northampton, South)
I beg to move Amendment No. 14 in page 3, line 11, at end insert—2(a) The Secretary of State shall at any time prior to the Secretary of State making an order under Section 6(2) of this Act make an order specifying the considerations by reference to which a person is or is not to be treated as a first time buyer of house property.".
§ Mr. Deputy Speaker
With this we may take the following amendments:
No. 15, in page 3, leave out lines 19 to 21.
No. 16, in page 4, line 12, after "(6)" insert "and 2(2)(a)".
§ Mr. Morris
Clause 2 is essentially to do with the administration of the Bill, and the amendment seeks to go to the very heart of the scheme, in other words, the definition of a first-time buyer.
We recognise that there are all sorts of elements in the running of the scheme in regard to which it will be necessary for the Secretary of State to make variations from time to time, and to do it by way of an order. But when we consider that the primary purpose of the Bill is to help first-time buyers, we believe that there is a case to be made out that the Secretary of State should seek the approval of Parliament for what he, at that point of time, seeks to define as a first-time buyer.
We are not suggesting that the Secretary of State is in any way unable to arrive at a satisfactory definition, but the more we look at the Bill, the more concerned we are—the hon. Member for Isle of Wight (Mr. Ross) referred to this earlier—that there are distinctive groups which may or may not qualify under the Bill. In the case of the first-time buyer, it would be appropriate that Parliament should have the opportunity to comment on the definition of those whom the Government of the day sought to benefit by the Bill.
The general consensus in Committee was that it would not be applicable to pensioners, although an argument could be put forward in regard to pensioners who are housed in public housing and who seek to leave an inner city or inner urban area in order to move, for example to the seaside, as many do, and thereby to go into private housing, becoming first-time buyers. That would be to the total 1415 benefit of the community in terms of resources, and it might be thought that they should be encouraged in that respect.
But more important is the single-parent family. I admit that this may not happen initially, but one can envisage a situation in which a couple have had the benefit of the scheme, and there is then a divorce, or perhaps widowhood. As a result, the single parent may again wish to take part in the scheme and become an owner, in his or her own right, as a single parent. I do not know whether the right hon. Gentleman envisages that that situation will be covered. I must confess that I have not raised it with the right hon. Gentleman before, and it is perhaps a slightly unfair ball to bowl at this stage.
The fundamental point is that the House wishes the Bill a fair passage, but in the final analysis the House has the right to ask that the Secretary of State of the day should propose the definition and that the House as a whole should approve it.
§ Mr. Freeson
This is an important point, and therefore I want to deal with it carefully, even though we went over the ground to some extent in Committee and I have again had a discussion with the hon. Member for Hove (Mr. Sainsbury) on the matter between the completion of the Committee stage and today's proceedings.
We originally considered, and have considered further at some length, the question of which matters should be in the Bill, which in orders, and which in directions. Important matters, such as the framework of the scheme, are in the Bill. Major changes to that framework, such as altering the amounts of the assistance, are matters for Parliament and will be contained in orders. More minor matters, too important to leave to the discretion of the institutions involved but not of sufficient importance to justify detailed oversight by Parliament, we propose to specify in directions.
My firm view is that to use orders would involve Parliament in overseeing detailed matters of administration. For the future, the Government need the ability to use directions to respond flexibly and rapidly to changing circumstances and problems. I believe that 1416 Opposition Members, by restricting their amendment to this one, recognised the force of these arguments generally, although they are making a particular point in the amendment. I have tabled my own amendment, dealt with earlier, on the minimum loan provision.
I believe that I have the right balance, and that the intention of the amendment, which seeks to define the first-time purchaser by order, tips the balance the wrong way. I ask the House to reject it.
There are two main objections. First, it would be wrong in principle for the definition to be dealt with in the manner proposed. The expression "first-time purchaser" practicaly defines itself. The Secretary of State has little discretion in the matter.
Secondly, the amendment could delay the introduction of the scheme for at least six weeks, since the institutions could not be expected to embark upon printing expensive leaflets explaining the scheme, training staff and programming their computers, until the details of the scheme are certain. The order would mean waiting for the expiry of the 40-day period. I am sure that that is not what hon. Members would want, but that would be the effect of the amendment. It would delay the introduction of the scheme.
Perhaps if I explain what our broad consideration will be in this matter when preparing directions, hon. Members will be reassured. The Secretary of State's power under subsection (3)(c) will be used to lay down a simple test to be applied by the lending institutions to decide borderline cases. One of them has been mentioned already and I shall mention some others in a moment.
The test that we have in mind is to treat all purchasers of the freehold or a long lease—which means a lease of more than 21 years—of house property as first-time purchasers unless they have previously owned such an interest in their home. This is the test in England and Wales. In Scotland the Scottish equivalent would apply. The test would effectively exclude all those who were previously owner-occupiers within the normal meaning of that term. All those who had not previously been owner-occupiers would be first-time purchasers, including, for example, those living with their parents or in lodgings, or who were tenants under short leases. The Secretary 1417 of State's power cannot be used to direct that those making a second or subsequent purchase should be treated as first-time purchasers. Nor can it exclude those buying who had not previously owned property. This is basic. There is no question of a discretion being applicable in such circumstances.
It is as simple as that. But by confining the definition to directions—which can be amended flexibly and swiftly—we leave ourselves able to react to changes at the margin, and can give help to institutions with doubtful cases. But if this amendment is accepted we shall need to come to Parliament on incredibly detailed points, with all the delay and inflexibility that is entailed.
I have, of course, promised to make the directions publicly available, and copies will be placed in the Library. I hope that hon. Members will agree that this is an issue to which the Government have given great thought and have reached the most appropriate conclusion.
I did say that I would give a brief indication of the kind of borderline headings, such as those mentioned by the hon. Member for Northampton, South (Mr. Morris), which have come to mind during our considerations so far. There is the question, which I think was mentioned in Committee, of tied accommodation. The classic example is that of the retiring Church minister who wants to prepare the way for retirement but who would obviously not be expected to occupy his accommodation straight away. He will still be in his existing tied accommodation. We would like to use our discretion to define for the institution, for the purpose of the Bill, such a person in that situation.
Another category consists of separated persons. They would be eligible if permanently separated and if he or she had not previously bought in his or her own, or joint, names. With regard to joint purchasers, each must be a first-time purchaser. This follows from the nature of the assistance. A kind of new social dimension is appearing in some of our urban areas as to the nature of household and joint purchase to which we must be prepared to adjust but which we cannot define closely at this stage. Then there are self-build societies, which also provide a 1418 variety of action in this area and which we should like to see included.
These are just examples of the kinds of cases that have already been in our minds. Others about which we cannot be clearly aware at this stage, may well emerge. The main points that I wished to make were my earlier ones. I hope that I have made clear that which cannot be the subject of discretion. I therefore hope that the House will accept what we are putting forward.
§ Mr. Sainsbury
Can the Minister say whether those who are part of a co-operative housing movement would be disqualified as having previously owned property? Can he also say anything, either now or by writing to me, about the community leasehold scheme which is equivalent to half-and-half ownership?
§ Mr. Freeson
I spent a good deal of time discussing these matters before we brought the Bill to the House. The position on co-ownership schemes—co-operative schemes—is that some schemes involve individual mortgages and others do not. People who have collective mortgages would not qualify for benefits under this Bill because they are not individual owners of the mortgage. But other co-owner-ship schemes—more generally referred to as community leasehold schemes—where individual mortgages are taken out on a long-lease basis, would qualify. Similarly, those participating in shared equity schemes would qualify to the extent that they have part of the equity.
In other words, the benefit of the scheme would apply to co-operative, co-ownership or shared equity schemes where individual mortgages were involved. Where there is a participation in a collective mortgage, which rests with the corporate body, the individual members of that body would not qualify. However, they would qualify the moment they left such a co-ownership or co-operative and participated in a different kind of co-ownership involving individual mortgage or went into conventional owner-occupation. I hope that that satisfactorily clears up the matter.
§ Mr. Michael Morris
One is always reluctant to consent to dismember Parliament's control over what is a fundamental fact and key point in this scheme. Since we first raised this point, the Minister has gone a long way and has made clear that 1419 there is to be considerable openness and publicity with regard to those who qualify.
I ask the Minister to think about the situation of the widow who, having previously been a joint owner, marries for a second time, this time to someone who has not been an owner. I hope that that will not preclude the new family from benefiting from the scheme. These are flexible details, which I know the right hon. Gentleman wants to look at. Given that consideration, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.